Health financing

Budget matters for health: key formulation and classification issues

Health financing policy brief nr 18.4

Authors:
Helene Barroy, Elina Dale, Susan Sparkes, Joe Kutzin

Publication details

Number of pages: 18
Publication date: 2018
Languages: English
WHO reference number: WHO/HIS/HGF/PolicyBrief/18.4

Downloads

Language downloads

Overview

Robust public budgeting in the health sector is a necessary condition to enable the effective implementation of health financing reforms towards universal health coverage. Moving from input-based budgeting to health budgets that are formulated and executed on the basis of goal-oriented programmes can help build stronger linkages between budget allocations and sector priorities. This can also enable the implementation of strategic purchasing and incentivize accountability for sector performance.

While budget classification reforms relate to overall fiscal management, health ministries have a critical role in defining the scope, content and coverage of budgetary programmes as a unique way to better align allocations with sector needs. The process, design and implementation of programme-based budgeting reforms in the health sector have varied greatly both between and within countries.

Country budgets vary in terms of the relevance of budgetary programmes definition, their scope and structure, as well as the quality of performance monitoring frameworks. Despite past reform efforts, many countries plan health budgets by programmes but continue to spend by inputs. Several countries use hybrid or dual budget classification systems that mix health inputs, programmes and other classification methods, making it more complex to pool resources, spend and strategically purchase health services.

Institutionalizing budget formulation changes alone is not enough. It should be coordinated with other elements of overall public financial management reform (e.g. multi-year budgeting, cash management, financial information and reporting systems) to ensure that changes in budget formulation are consistent with the rest of the financial management system. The interplay between budget classification systems and provider contracting and payment arrangements is a key issue from a health financing perspective. A change in budget formulation is likely to be one of the necessary conditions for implementing strategic purchasing of health services. The introduction of programme budgeting should be sequenced appropriately in the health sector, especially where basic public financial management foundations are not in place to safeguard against the misuse of public resources in the sector.

This policy brief aims to raise awareness on the role of public budgeting – specifically aspects of budget formulation – for non-PFM specialists working in health. As part of an overall WHO programme of work on budgeting in health, it helps to clarify the characteristics and implications of various budgeting approaches for the health sector.

Related documents