Op-ed – Why more government financing is needed for health

By Freddie Ssengooba

Health insurance has recently dominated discussions about how government should fund health programmes for Ugandans. Government is keen on introducing health insurance and a Draft Bill is making rounds in decision-making forums such as Parliament, cabinet and ministries of Finance and Health.

The National Health Insurance Bill, seeks to, among other things, fulfill Sustainable Development Goal 3 on ensuring healthy lives and promotion of well-being for all, as well as access to safe and effective medicines and vaccines.

According to the Draft Bill, civil servants will contribute 4 per cent of their pay to the insurance scheme, while government will top up 2 per cent. Private sector employees will contribute 4 per cent and their employer will top up with 4 per cent. The self-employed will pay Shs100,000/- per beneficiary, while indigents will make no financial contribution.

From the above provisions, as well as present discussions on health insurance, it’s clear there are already drawbacks. First, the base from which to build the insurance is small. Secondly, only about 10 to 12 per cent of the population is in the formal employment sector – a population that insurance programmes effectively target – and yet in its current form, the Bill does little to bring in the majority of people employed in the informal sector. As such, the most cost effective option is the current government funding for health programmes.

In April 2001,  African Union countries met and the head of states pledged to set aside at least 15% of their annual budget to improve the health sector, in what became the Abuja Declaration. While this was a welcome move, advocacy for additional funding based on the Abuja target has largely been unclear on specific country needs to warrant the 15% portion. For instance, some countries such as Uganda, have low tax revenues and a high healthcare burden – thus requiring more public funds to effectively insure the health of Ugandans.

While the current government financing to health is arguably the best option, health services have been characterised by challenges. Ask any Ugandan who has been to a hospital and they will tell you stories of inadequate medicine, absent or demotivated health workers and the huge bills they have had to pay to cover for these inadequacies.

The constant public appeal for financial support for treatment abroad, is another indicator of how inadequate government funding to the health sector is. The ineffectiveness of the funding revolve around two major issues; the expanding needs for health services and the increasing cost for providing these services. For example, every year, Uganda expects about 1,600,000 pregnancies. These translate into nearly 17 million visits (see table) to the health facilities, costing about Shs936 billion for pregnancy and child care services. This cost is half the total budget (Shs1.8 trillion) in this financial year (2017/2018) for the health sector. Here, I assume that government is fully responsible, given its policy of free health services to all Ugandans.

Service element Total number eligible (million) Annual cost (billion)
Antenatal care for 1.6m pregnancies 6.4m antenatal visits each at Shs9,000 Shs57.5
Malaria in pregnancy prevention for 1.6m 3.2m doses of antimalarial each at Shs4,500 Shs14.4
HIV testing during pregnancy for 1.6m 1.6m test kits each at Shs10,500 Shs16.8
Post-abortion care 345,000 cases each at Shs122,000 Shs42.3
Neonatal care for pre-mature babies 240,000 cases each costs Shs290,000 Shs69.6
Malaria treatment for 1.25m infants, 4 episodes per year 4,520,000 malaria episodes each Shs1,500 Shs6.8
Pneumonia treatment for 1.25m infants 2.8m episodes each at Shs750 Shs2.1
Full vaccinations for 1.25 infants – expanded vaccines 1.25m each Shs157,500 Shs196.8
Workforce costs across all components 17.1m episodes each at Shs31,000 Shs529.7
Total for main elements of maternal and child-care services Shs936.0

In the above illustration, the additional costs to the health system come from HIV testing services for pregnant mothers (16.8 billion), neonatal care for pre-mature babies (69.6 billion), and annual costs of newly-introduced vaccines for infants. This increases the cost from Shs87.5 to Shs196.8 billion every year.

Mindful of the Shs1.8 trillion that government provided for health services in the 2017/2018 financial year, it is clear that 50 per cent of that money is spent on services related to pregnancy and infant-care. The demands for other services are equally high and increasing rapidly owing to population increase. For example, every Ugandan gets about 2.5 episodes of malaria per year despite wide distribution of mosquito nets. If government was to provide malaria treatment with coartem at the subsidised price (Shs3,500) provided by the Global Fund in Geneva, about Shs306 billion would be consumed.  However, if the government bought the coartem without the subsidy, the entire Shs1.8 trillion would be used for malaria treatment alone.

Further, now that every person who tests positive for HIV is immediately started on life-long treatment (ARVs), the cost of sustaining about half a million Ugandans on HIV treatment for one year is Shs1.4 trillion – nearly 80 per cent of the total budget for health this financial year. Ultimately, adequate financing of health services will require more.


Although vital to the current financing of health programmes in Uganda, this ‘bailout’ of Uganda government by taxpayers in Europe, America and elsewhere poses major challenges. 

In the meantime, assistance from donor countries to finance health services has become prominent for optimal sustainability of vaccination programmes and for diseases such as HIV, malaria and Tuberculosis.  In 2013/2014 financial year, donor contributions were estimated at 47 per cent of the total health expending in Uganda. Although vital to the current financing of health programmes in Uganda, this ‘bailout’ of Uganda government by taxpayers in Europe, America and elsewhere poses major challenges.  For example, more than 90 per cent of the financing from the Global Fund is restricted to medicines and treatment of only HIV, malaria and tuberculosis, minus the big set of services for health promotion and prevention, as well as other medical care for the population.  For instance, indoor residual spraying (IRS) for preventing malaria is financed in less than 20 districts (out of 130) despite this being the most effective way to reduce malaria across the country.

Probably the biggest challenge of financing from external sources is the tendency to reduce allocation of government revenue to health services on the assumption that after all, donor finance will cover the gap. Ministry of Finance officials are commonly quoted in the news media saying donors are taking care of the health sector; hence government revenues are better invested in roads, power dams and other “productive” sectors of the economy.  Common wisdom in the community dictates that one can receive assistance of seeds to plant for a season. Waiting for the same assistance in subsequent seasons is not acceptable. Apparently our government hasn’t gone the memo on how to “plant” the seeds it receives from donors.

It’s essential for government to plan to progressively increase its budget provisions for health services. Given the small local revenue basket, it is also prudent to prioritise the financing of interventions such as family planning and IRS to reduce the escalating demand for curative health services.

Further, adapting new technologies, medicines and vaccines should be premised on the impact these additions will have and the added value to population health outcomes.

 Freddie Ssengooba is an Associate Professor of Health Policy & Systems Management and Team Leader – SPEED Project – Makerere University School of Public Health.