Health Sector Reforms

In this note, Mattias Lundberg and Limin Wang aim to provide a guide for policy practitioners who wish to conduct an analysis of the impact of health reform or health policy changes on the welfare of households, especially poor households.
 
The authors discuss the rationale for and the types of reforms that are common in the health sector and highlight issues that are specific to the analysis of the sector. The scope of the health reforms implemented in developing countries varies substantially. It is useful, albeit rough and imprecise, to distinguish the reforms into those affecting the supply side  and those affecting the demand side of the health sector, that is, those involving the financing, management, and provision of services on the one hand and, on the other hand, those involving the demand for and consumption of services. The vast majority of reforms have focused on the supply side.

In practice, reforms are generally not implemented independently or piece by piece. They are often ambitious and far reaching, comprising a broad range of different actions. This has implications for the analysis, since it is difficult convincingly to identify the impact of components of reform programs. There are also important factors outside the reforms themselves through which the impact of the reforms is experienced by the poor. In particular, the demand for services will greatly influence both the level and the efficiency of supply, and the perceived quality of services is a major determinant of the consumption of services.

Health reforms commonly include changes in health financing and changes in health system organization and management. Changes in financing may involve cost recovery and user charges for publicly provided services, community-based financing schemes, insurance schemes (social and private), and changes in public expenditure and allocation. Changes in system organization and management may entail decentralization (authority, responsibilities, and functions) and changes in the ownership of service provision and delivery (privatization or a public-private mix). The authors highlight two types of more commonly implemented reforms: community-based health financing and the decentralization of health services.

The authors also discuss the stakeholders in reforms, the transmission channels for the impact of reforms, and ways to choose the appropriate tools and methods in impact analysis. They focus on two quantitative tools in particular: conventional econometric welfare analysis (derived from a model of household welfare in which welfare or utility is determined by health status and the consumption of other goods and services) and the experimental method of randomized controlled trials.

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