One of the main challenges that hinders access to quality health care is inadequate financing. In Ethiopia, public health facilities are increasingly unable to finance standard health care. Many facilities often fall short of operational costs and are usually unable to pay for standard medical supplies and equipments. This has led to a deterioration in the quality of services provided in public hospitals, decreased staff motivation and increased movement of health workers from public to private hospitals and to greener pastures abroad.

Although health financing has improved significantly over the years, adequate financing  remains a major challenge for the health system. The health sector in Ethiopia is majorly financed from the government treasury, grants and loans from bilateral and multilateral donors, NGOs, and private contributions. Though the trends in national health expenditure have increased over time (from USD 1.2 billion in 2007/08 to USD 1.6 billion in 2010/11), per capita health expenditure is still very low at only USD 20.8. This figure is by far lower than the expected USD 60 per capita expenditure recommended by WHO in 2015. By 2010/11 Ethiopian fiscal year, government only financed 15.6% of the total health expenditure (federal government 5.2%, regional and local government 8.1% and parastatals 2.3%). This vividly shows how critical financing the health sector is in Ethiopia.

It is against this background that the government of Ethiopia embarked on multiple efforts to mobilize adequate resources for the health sector. The Federal Ministry of Health developed a comprehensive health care financing strategy that was endorsed by the Council of Ministers in 1998. The major components of this strategy included; allowing health facilities to retain and utilize internally generated revenues, establishing private wings in public hospitals, as well as establishing community based and social health insurance schemes. A  description of the  above strategies is given below.

Revenue retention and utilization: In 2013/14 Ethiopian fiscal year, it was reported that 2,849 health facilities (101 hospitals and 2,748 HCs) were retaining and utilizing internally generated revenues to improve the quality of health services.² Retention of internally generated funds is believed to significantly increased the financial resources at the hands of the health facilities and improved health care provision. However, in Ethiopia, revenue retention has led to a declining trend in the budget allotted to operational costs for health facilities.⁴

Private wing: Private wing refers to an official arrangement which involves provision of medical services to patients on a fee-for-service basis, in public hospitals and health centers out of the normal office hours. The main purpose is to mobilize additional resources, increase health workers’ motivation and reduce attrition of highly qualified medical doctors. By the end of 2013/14 Ethiopian fiscal year, 48 public hospitals had opened private wing services in 5 regional states and two city administrations.² There are some positive elements even at the early stages of private wing implementation. From the assessment made by the Federal Ministry of Health (FMoH), private wing services have increased the financial resources at the hands of the public hospitals and as a result improved service availability and retention of key staffs.^2,5

Community based and social health insurance:

Community Based Health Insurance (CBHI) and Social Health Insurance are part of the Health Care Financing Reform established to improve health service utilization and resources mobilization. In June 2011, the Ethiopian Government introduced a pilot CBHI scheme in thirteen districts in the four main regional states (Amhara, Oromiya, SNNP, and Tigray) across the country. At the moment, there are 185 districts implementing CBHI. An evaluation of the CBHI scheme showed that CBHI generally increased health service utilization and financial resources for health facilities.³ However the evaluation also revealed that there are districts where enrollment is very low and some of these districts have poor operational and incentive structures for premium collection.

Finally, legal requirements for the Social Health Insurance (SHI)  scheme was completed a year ago but the scheme is not yet operational. The Ethiopia Health Insurance Agency has established offices at national and regional level for administration of the scheme. SHI has been established as a mandatory scheme and will initially cover government employees and their families as well as formal sector workers. Financing the SHI scheme will be a combination of employer and employee contributions. It is expected that the SHI in addition to the rest of financing strategies above will significantly increase the resources to the health sector.

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Reference

• Zelelew, H. (2014). Health care financing reform in Ethiopia: improving quality and equity.
• FMoH (2005) Implementation Manual for Health Care Financing Reforms, Final Document (Revised), Addis Ababa.
• Evaluation of CBHI Pilot Program in Ethiopia (2014) (Amhara, Oromia, SNNPR, and  Tigray Regions. Abt Associates Inc., Addis Ababa.
• HSFR Project (2009) Utilization of Retained Revenue for Quality Improvement: Guide for health Facilities, Addis Ababa.
• Establishing Private Wings in Public Health Facilities: Operational Manual, Addis  Ababa, 2005