Historically, donors and multilateral organisations have channelled funding in health through vertical disease programs, typically focussed on one disease area and a set of short- and medium-term objectives. While vertical programs present many advantages (e.g. ease of management, greater accountability, strong financial control), they have been subject of controversy for over two decades. The most commonly discussed problems with vertical programs are (i) creation of parallel systems for funding and management, (ii) distortion of national priorities and (iii) lack of contribution to overall strengthening of the healthcare system.
In 2006, Jaime Sepulveda and co-authors argued for a “diagonal” approach to global health. They built on their experience as policymakers in Mexico, and the early work of the Disease Control Priorities Project, to suggest that specific health outcomes were best achieved using a set or package of highly cost-effective interventions financed and delivered integrally through the health system, rather than vertical programs with single-purpose organizational and financial arrangements and distinct coverage aims. We, and others, have argued that the “convergence” of verticals into a set of essential health benefits with pooled domestic and external funding to support its financing and delivery is the way ahead.
Since 2006 the major global health funders have made modest shifts in the financing and delivery of their vertical programs:
- Gavi and the Global Fund opened “health systems strengthening” windows that enabled a share of their monies to go towards investments like information systems or supply chain management;
- The Global Financing Facility was launched with the explicit aim of whole-system funding in support of better coverage and outcomes in reproductive, maternal, new-born, child and adolescent health and nutrition;
- The WHO and a few bilateral donors switched to a focus on universal health coverage (UHC) and health systems as the frame for goal-setting, technical advice and financial support; and
- The Bill & Melinda Gates Foundation began to promote and organize their funding around primary health care.
Equity in coverage and access has begun to gain policy attention, as these have improved pre-COVID; the recent Gavi replenishment underscored this policy goal. As COVID-19 has threatened health systems around the world, commentators have pointed out that integral support to health systems could be the most promising way to slow the spread of outbreaks. In this light, both the World Bank and the Global Fund have reprogrammed existing lending portfolios for more flexible use during the COVID emergency.
The status quo
Despite these movements, the big money from external funders remains mostly earmarked to specific diseases. There are exceptions and pilots of course, but the shift to diagonal programming, or to a health system approach, is still more aspiration than reality. External funding for HIV/AIDS services, for example, ranges from a (not) low of 40 percent of total HIV/AIDS spending in Mozambique, to a high of 80 percent in Rwanda and Tanzania. Kenya is another country where funding for HIV programmes is still 60 percent from external funders. Contraception has also been commonly and historically vertically funded and managed and as a result, some countries have excluded family planning from the public budget with the justification that those services are available through other mechanisms, as initially occurred under Ghana’s National Health Insurance Scheme. According to Avenir Health (2016) out of the 22 USAID family planning priority countries only six of the government-sponsored health insurance schemes include family planning in their benefit package: Ghana, India, Indonesia, Kenya, Philippines, and Rwanda.
Increased emphasis on convergence
Whether a consequence of transition from aid eligibility—or reduced revenues and aid alongside the COVID-19 and debt crises, or a change of philosophy amongst global health donors—the pressure to converge vertical programs into a health system approach, has become more pronounced in recent years. In particular there is heightened emphasis on health benefits packages developed as part of UHC policies with predominantly domestic financing. And it’s possible that a shift to budget support in aid in response to the COVID-19 crisis may speed this process.
That said, the experience of convergence using budget support or related instruments has been very mixed:
- In Bangladesh, three successive sector-wide approaches (SWAps) have been used to improve access to, and utilisation of, an essential package of health, the most recent of which has contributors from World Bank, Canada, Sweden, Australia, United Kingdom, Germany, and United States.
- In Cambodia, the Health Equity Fund, covering the poorest one-fifth of the population, relies heavily on external funding and has high administrative overheads.
- In Uganda, a health benefits package is set at the national level and funded by a SWAp, however, many donors do not fund specific interventions outside the government HBP in what is described as “a concurrent priority-setting process.”
- Rwanda—where more than 50 percent of total spending on health is external— successfully established co-financing mechanisms, where donor funding contributes to the HBP through co-financed premiums and performance-based financing.
- Ethiopia’s “One Plan, One Budget and One Report” helped create the conditions to pool funding for the financing and scaling up of Ethiopia's primary health care package.
- In Tanzania, the World Bank, the Global Financing Facility, and multiple bilateral donors (but not GF or Gavi) pooled resources behind a list of essential services, and seem to have made enormous coverage gains.
- In Liberia pre-Ebola, the Health Sector Pool Fund, which consists of DfID (now FCDO), Irish Aid, UNICEF, and UNHCR contributions, led by the Liberian Health Ministry, increased percentage of facilities providing the Basic Package of Health Services (BPHS) from 36 percent in 2008, to 82 percent by 2010.
- In Indonesia, where external donor financing makes up almost 60 percent of total spending for HIV programs, integrating HIV services into its national social health insurance program, JKN, is considered one of the strategies to ensure HIV programme sustainability, but has not yet been achieved.
- In Vietnam, HIV/AIDS programs have historically been funded separately by donors, but work has recently been undertaken to integrate these services into the social health insurance scheme.
As is evident, pooling or co-financing a defined set of benefits, (or health benefits plan HBP) including the verticals, is the principal way that governments have historically taken a health system approach to the verticals with external funder participation. Lower transaction costs, greater coherence in payment and delivery, and more patient-centred policy have been cited as benefits of the approach.
Challenges with convergence
However, pooling and budget support has its risks. Some countries moved towards “sector-wide approaches” (SWAps) in the past and saw a decrease in donor commitments, which may not be encouraging for countries that are highly reliant on external funding. There are also limited incentives for domestic decision-makers to omit certain services from the HBP development if resourcing (or indeed provision) of those services is being covered by external sources. For example, in Mozambique, the funds earmarked by PEPFAR for the HIV response amount to the equivalent of 143 percent of the public budget. In this situation, there is little incentive for the government to use public funds to procure ARVs, especially given other pressing needs across the entire health sector.
On the other hand, there may also be constraints stemming from donors’ operations and regulation when it comes to channelling funding to wider funding pools (including domestic funding) to achieve broader sets of goals (in this case implementation of UHC). Donors may have to reorient their operating modalities, in the case of the Global Fund, for instance, the Country Coordinating Mechanism (CCM). Attempts to reform the CCM have happened twice previously following Technical Evaluation Reference Group-commissioned evaluations, with limited success.
In short, convergence is not an easy task and the global health community has been struggling (and has not managed to resolve) budget support and pooling of funding for decades.
How to converge
In the coming year, we plan to look to countries that have made further progress towards convergence to offer insights on how they managed or are managing vertical programs and UHC plans. These insights could then be shared with countries considering developing a health benefits package as part of their UHC plans, such as Kenya, Zambia, and Cote d’Ivoire. The findings will help to inform whether incorporating vertical programs into UHC plans is feasible and a necessary key objective for a successful aid transition.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.