A New Compact for Financing Health Services in Ethiopia: A Pathway to Universal Health Coverage
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- 02 Oct 2024
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The role of health aid in improving health outcomes in low- and middle-income countries has been significant, but challenges remain in optimizing the allocation and impact of these resources. A new framework for global health financing, known as the "New Compact" approach, has been proposed to address these challenges. This approach advocates for aid to complement domestic resources by funding high-value interventions, enabling governments to focus on essential services.
The New Compact approach involves a shift in the way health aid is allocated and used. Instead of providing general budget support or funding specific programs, donors would focus on supporting high-value interventions that are not already being funded by the government. This would enable governments to focus on essential services and ensure that resources are being used efficiently and effectively.
A case study in Ethiopia explored the implications of the New Compact approach. The study analyzed Ethiopia's essential health services package and prioritized interventions based on cost-effectiveness. The study found that current health financing practices in Ethiopia are inefficient, failing to align resources with the most cost-effective interventions. This undermines goals for equitable health service delivery and Universal Health Coverage (UHC).
The study applied different financing scenarios to assess the potential impact of the New Compact approach. The scenarios included:
i. Business-as-usual: This scenario assumed that current health financing practices would continue, with donors providing general budget support and funding specific programs.
ii. Full New Compact: This scenario assumed that the Ethiopian government would finance top priority health interventions, while donor aid would extend coverage to additional high-value services.
iii. Partial New Compact: This scenario assumed that some donors would adopt the new financing strategy, while others would maintain existing commitments.
The study found that adopting the full New Compact approach could significantly enhance health outcomes, potentially increasing healthy life years (HLYs) by 15 percent. However, full implementation faces practical challenges, leading to the development of a partial New Compact scenario. This more realistic model retains most of the health gains by allowing some donors to adopt the new financing strategy while others maintain existing commitments.
The study emphasizes the importance of aligning donor aid with country priorities and demonstrates that even partial realignment can drive significant improvements in health service delivery and outcomes. The New Compact approach offers a promising solution to the challenges of health financing in low- and middle-income countries, and its adoption could lead to a more sustainable and resilient health financing system.
