equity implications of health sector user fees in tanzania

Pro-poor observations
Tanzania has undertaken important measures to strengthen its pro-poor financing strategies in the
health sector. Various documents reflect existing pro-poor expenditure mechanisms (REPOA 2001,
MOH/SDC2001, MOH/DFID 2002, Poverty and Human Development Report, PER 2004; see table
4.3). Resource allocations may be considered to be pro-poor if they put priority on addressing the
burden of diseases which disproportionately affect poor people 25 and an increased provision of
essential medical supplies and drugs (the latter is covered in the budget under the heading Other
Charges (OC)) (Poverty Human Development Report 2002:80). The new Equitable Resource
Allocation Formula (ERAF) takes the pro-poor allocations into consideration as well. The ERAF aims
to redirect resources towards the poor, the rural areas and priorities of the health sector. This is a clear
pro-poor approach which is in line with PRS objectives and the National Health Policy 2002.
Table 4.3: Documented Pro-poor expenditure mechanisms
Increase in Other
Charges
Increased
distribution of funds
to local councils
� There is an increasing share of OC expenditure from FY 97/98 to FY 01/02;
(1) 35% to 62% for the MOH administration, (2) 31% tot 50% for hospitals, (3)
36% to 54% for preventive services (including dispensaries and health
centres and (4) 33% to 53% in total government recurrent expenditure.
� An increased distribution of allocation to local councils implies that services
come closer to the people. The OC share to local councils increased between
FY98/99 and FY 0/02 from 5.8% to 58%.
� The overall block grants for health (Personal Emoluments and OC) to the
LGA are the primary source of revenue at LGA level. Allocation to Region
and LGS between FY01 and FY04 remained however fairly static.
� An increased public health budget for district-based health services is seen
Increased public
health budget
between FY97/97 to FY01/02 from 52% to 58%.
New allocation � A new formula for allocation of LGA resources has been developed
formulae for LGAs to
achieve a more
equitable distribution
of resources to
district level
26 . This
includes an allocation based on:
1. Population (70%) based on 2002 Census data. This reflects the importance
of the individual as main client-recipient of health care services
2. Mileage (10%). Mileage travelled by health sector vehicles within the district,
in order to reflect the higher costs of service delivery in rural areas and
scarcely populated areas.
3. Poverty (10%). This uses the basic needs poverty line weighed for council
population.
4. Under-five mortality (10%). This indicator was selected since it reflects better
the major causes of the disease of burden, including HIV/AIDS. The
allocation will be based on the Census 2002 data for each district.
Source: REPOA 2001, MOH/SDC2001, MOH/DFID 2002, Poverty and Human Development Report, PER
2004
Concerning observations
Although there are important pro-poor strategies underway in Tanzania, there are still major concerns
that require pro-longed attention. Various concerns are highlighted below.
� Tanzania had in FY 99/00 a sizeable financing gap of US$ 3.48 per capita in the public health
sector 27 . The current gap is Tshs 218 billion (US$ 6 per capita). The Development Partner Group
(DPG) has recently raised a concern that with the large funding gap and the insufficient size of the
current resource envelope the identified PRSP and MDG health targets can absolutely not be met
(DPG April 2004).
� The share of the Health sector in the Government Budget is declining. The overall GOT budget
figures for health show a continuous drop in the proportion of budget funds allocated to health
from 15% in 1996/97 to 10.4% in FY03. It is projected that this will be reduced further to 9% in
FY04 (PER 2004). This downward trend was critically reviewed by the donor community as this
seems incompatible with addressing key priority areas of the PRSP (DPG 2004).
25
This would imply an increased allocation towards preventive care and to district-based health services that are
easily accessible to the majority of poor people in the rural areas.
26
The arrhythmic calculation will be: C= (P*0.7*F) + (W*0.1*F) + (M*0.1*F) + (B*0.1*F): C=Total grant allocation
to eligible council, P=Population index, M=Mileage index, W=Population-weighted poverty index, B=population
weighted U5M index as proxy of burden of diseases, F=Total basket fund. For each of the 4 indicators, an index
for each council has been calculated to estimate the adequate allocation to the councils.
27
This is based on the World Bank figure of US$ 12, which is an estimate of the requirements needed to fund a
minimum health package.
Equity Implications of Health Sector User Fees in Tanzania 15