Health Care Financing in Zambia: A Study of the Possible Policy Options for Implementation

Rationale: Though Zambia recorded sustained macroeconomic growth during 1999-2004, health status trends generally declined moderately over the period, with only a few improvements in selected health indicators. The lack of improvement in health status of the general population and the declining utilization of health care services stirred debate on how to mobilize additional resources for health service delivery without inhibiting the population's access to health care. Objectives: the study sought to: understand the macroeconomic context and constraints of health care financing; determine the costs and financing of the Basic Health Care Package (BHCP); explain the experiences with cost sharing and cost recovery of non-BHCP interventions (particularly the equity aspects of cost sharing); and explore issues of financing health service delivery through community initiatives. Methodology: some of the study's objectives were addressed through a time series analysis of the flow of funds from the Central Government and donors to the Ministry of Health and service providers; this analysis relied on Financial Administration and Management Systems and Ministry of Finance data. Other study objectives were addressed through a survey that collected primary data on cost sharing and cost recovery. The survey stratified Zambia's 9 provinces into 2 rural and 7 urban areas from which 1 urban and 4 rural provinces, respectively, were randomly selected. Three districts were randomly selected within each province and in each district structured questionnaires were administered to District Health Management Teams, all districts hospitals, approximately 30% of health centres per district, 5-10 patients found using health services in all the facilities covered in the survey and 2 community health initiatives per districts. Results and Conclusions: This study presents an extensive collection of results, conclusions and recommendations, only a tiny fraction of which can reasonably be highlighted here. We find that resource constraints on real output and real domestic revenue became marginally less severe after 2000. However, health expenditures declined, implying that growth in domestic revenue and output does not automatically increase health expenditure. We found significant resource mal-distributions between recurrent and capital expenditure as well as substantial resource gaps both across districts and between different referral levels. User fees contributed minimally to the overall health system's resource envelope, but significantly more to district level resources. Revenues from prepayment schemes were minimal even at district levels. Cost-sharing revenues were largely retained at health facilities, were managed with broad community participation, and were important in maintaining quality at critical moments in local level health service delivery. Though no obvious answers were found on the access impact of cost-sharing initiatives, we illustrate that poor households were directly disadvantaged to some degree as only 1% of exemptions were poverty based. On quality, most patients reported being satisfied with the care they received. Generally, health facilities had at least one month's drug supply. Nevertheless, we found that staffing levels, availability of trained staff, staff attitudes and the lack of diagnostic equipment needed to be improved. The study informed the Government's policy decision in 2005 to selectively abolish user fees.