Addressing Fragmentation in Health Financing in Sub-Saharan Africa – Are Solutions Possible?

As countries worldwide strive for Universal Health Coverage (UHC), there is a deepened desire and commitment to ‘leave no one behind’. This means that everyone, regardless of their socio-economic status, has a right to quality health services [1]. Progress towards UHC can be accelerated by improved coordination in health financing efforts, a fundamental building block of the health system. However, the current fragmented health financing systems pose a significant obstacle to achieving UHC, often resulting in neglect of the poor, the ill, and vulnerable populations.

Following a rapid review of the literature, we summarize key learnings on the effects of health financing fragmentation in Sub-Saharan Africa (SSA), providing context-specific examples and proposed solutions to addressing such fragmentation. We go a step further and outline gaps in literature and by doing so, we hope to contribute to the research and learning agenda within the continent. The blog seeks to address three questions; 1) What is health financing fragmentation and its’ effects on health systems’ goals? 2) What would it take to reduce fragmentation? 3) What are some of the gaps in literature?

What are health financing fragmentation and its effects on health system goals?

Fragmentation generally means division without explicit means of coordination of functions or agents [2]. In health financing, fragmentation is the existence of multiple separate funding mechanisms with diverse interests and a wide range of health care paid from different funding pools [3]. While having multiple sources of health financing is not inherently problematic, the challenge arises when these funds are collected independently, managed by different entities, and allocated in non-coherent ways in the purchase of health services [2]. Pre-paid funds are the core of UHC. To achieve this, health revenue is mobilized in various ways; government funds, external funds, mandatory health insurance, voluntary health insurance, including; private health insurance, and community-based health insurance. These pre-paid revenues are accumulated or pooled for a specific population or the whole population.

Weak coordination in how mobilized resources are allocated creates a ripple effect, resulting in separate funding pools and purchasing arrangements. Pooling aims to distribute the risk of healthcare costs among the population. The presence of multiple pools limits income and risk cross-subsidization as healthier and/or wealthier individuals often contribute to different pools from the poorer and/or sicker members, whose contribution is usually low [4]. Additionally, the multiple pools are usually small in size. This reduces the redistributive power, resulting in inequalities in the level of care the different populations get. In 2001, Tanzania introduced a Community Health Fund (CHF) per district to extend coverage to the informal sector in pursuit of UHC. However, CHF faced challenges, including fragmented and small risk pools across districts. These challenges entailed; restricted benefits package at primary healthcare facilities, a lack of portability to alternate providers, and disparities between districts, with some falling behind in terms of service quality. This situation was exacerbated by healthcare providers shifting towards user fees [5][6]. To address these challenges, the Improved Community Health Fund (iCHF) was launched in 2007, aiming to expand coverage from the district to the regional level. Despite the observed increased enrollment to the scheme, the iCHF reform faces constraints such as limited involvement of beneficiaries, providers, and managers, leading to low popular support and ownership among key stakeholders [5].

Second, multiple pools increase administrative costs and inefficiencies [7]. They are also prone to overlaps and duplications [8]. For instance, a study in Kenya in 2021 found that the National Hospital Insurance Fund (NHIF) in Kenya was highly fragmented, with more than 70 different schemes and different benefits packages, which increased the administrative burden of managing these schemes [9]. Furthermore, some functions were decentralized to the 90 sub-national branches, with overlaps and duplication in areas such as accreditation, contracting, authorization, claims payment, and reconciliation processes, which led to increased administration costs and less efficient operations. Since then, there have been efforts to reduce fragmentation within the National Insurance Agency. With the recent reforms to shift from NHIF to Social Health Insurance Fund (SHIF), further reduction of the multiple schemes is proposed to ensure better quality and efficiency in health service delivery.

Third, multiple pools inherently result in diverse purchasing arrangements for the pooling agent, often the purchasing agent. The population covered by certain benefit packages and the range of services often differ within pools. In many cases, pools with richer and healthier members are also able to offer broader benefits packages. Conversely, pools with higher health risks are more likely to restrict benefits (If this is legally allowed), face financial difficulties, or else run deficits. Thus, the vulnerable group (poorer and sicker) is subjected to care dependent on the ability to pay rather than health needs leading to financial hardship [4][10]. As a result, the vulnerable population does not benefit from the health system services and thus is left behind.

In Uganda, multiple fragmented project-based programs were noted to offer different benefit packages which overall offered fewer comprehensive benefits than the Uganda National Minimum Health Care Package (UNMHCP). They also created overlaps in coverage in their target geographies or beneficiary types, leading to duplicative efforts and inefficiencies [11]. Ghana exemplifies what effective coordination of multiple funding sources to offer a streamlined benefit package to its population could look like. Through the National Health Insurance Scheme (NHIS), various funding streams, including insurance premiums, payroll tax, and earmarked value-added tax (comprising 72% of funding), are integrated into a unified system. This consolidation promotes a common benefit package [12].

Moreover, the management of numerous pools by different entities, each with its’ contracting, payment, and performance monitoring protocols, leads to misaligned incentives and diminished purchasing power. For example, multiple purchasers; and even health systems with a single purchaser are often characterized by the existence of multiple payment methods [13]. When providers are paid using different payment methods and different rates, then the purchasing power is weakened meaning that the purchasers are limited in incentivizing providers to improve productivity and quality of care [8]. The power is shifted to the providers who are at liberty to choose the method that benefits their self-interest without minding the beneficiaries. The provider thus changes behavior in ways that may result in resource shifting, service shifting, and cost-shifting all leading to poor service quality, segregation, and inequalities [13]. For example, where donors’ funds are earmarked for specific vertical programs with arrangements that incentivize providers, these healthcare workers often prioritize these programs over local priorities, resulting in gaps in service delivery [14].

The multiplicity of funding agents with diverse interests and employing different financing instruments and processes may also negatively influence efficiency at the health system level. For example, at the sub-national level in Kenya, the lack of coordination between the Ministry of Health (MoH) and the donor-funded vertical programs and among the various donors was seen to result in fragmented health information systems and monitoring and evaluation processes. This created a reporting burden for healthcare workers with negative implications for service delivery and quality and waste of resources [15].

Overall, more health for the money through strategic purchasing is the goal but the incoherence in purchasing arrangements acts as a barrier.

What would it take to reduce fragmentation?

The predicament lies not in the presence of multiple sources of resources but rather in the coordination of these funds. Decentralization of public systems does not inherently increase fragmentation, particularly when service provision is decentralized but funding remains predominantly sourced from a single or locally matched level [3]. Addressing fragmentation at the mobilization level through coordinated resource allocation can significantly enhance pooling of resources and purchasing of health services, through a system’s approach. This means a holistic view of the functions of health financing rather than separate entities.

To achieve UHC, countries must reduce fragmentation by increasing pre-payment through tax funding and/or mandatory health insurance. This allows for greater risk pooling and an equitable health system where ability-to-pay determines financing contributions and use of services is based on need. Promising efforts, such as Rwanda’s community health insurance reforms, serve as examples of progress in this regard.  Rwanda has undergone significant reforms in its Community-Based Health Insurance Scheme (CBHIS), leading to 91 per cent population coverage [16]. This achievement, coupled with government subsidies for health services, has resulted in positive strides towards the coordination of health financing efforts. This entails not striving for a perfect single pool but rather coordinating and streamlining the various organizations involved in health financing.

Establishing an overseeing body with representation from diverse stakeholders— including Government, donors and partners, the private sector, and the community—can enhance coordination of purchasing arrangements. For instance, in Thailand, The National Health Security Act (2002) that provides the legal basis for the Universal coverage scheme (UCS) which covers 75 percent of the population, offers an effective approach where all relevant stakeholders – especially civil society representatives – are fully engaged in the governing board, over sighting the UCS [17]. In Kenya, significant efforts towards coordination of health sector actors under the Kenya Health Sector Partnership and Coordination Framework have been realized. This framework employs hierarchical methods for coordinating government actors and network-based methods for state and non-state actors. The Joint Health Sector Advisory and Oversight Committee (JHSAC) offers overall leadership and governance to the framework. The committee unites and coordinates actors across various levels of the health system, including representatives from the MoH, major donors, non-governmental organizations (NGOs), faith-based organizations (FBOs), and the private sector [15].

While this journey toward reducing fragmentation is complex and influenced by various political and economic factors, the mere acknowledgment of the problems is insufficient. Tangible steps towards reform must be taken. It is imperative to note that there is no ‘one size fits all’ solution. Collaborative efforts, including the involvement of the beneficiaries, guided by expert insights and asking the right questions, will enable context-specific solutions to emerge from within. Through collective action and a commitment to reform, we can overcome the challenges posed by fragmented health financing systems and move closer to achieving UHC.

What are some of the gaps in literature?

Finally, our rapid review of the literature highlights several key gaps in research on health financing fragmentation. First, much of the existing research is descriptive and focuses on specific aspects of health financing without fully examining how fragmentation impacts overall health system performance and goals. While some studies link health financing to health outcomes, few delve into how fragmented financing specifically affects health equity and access to care. More empirical research is needed to understand how fragmentation contributes to disparities in health service delivery and outcomes across various population groups.

Second, there is a lack of empirical studies on effective strategies and mechanisms for integrating and coordinating various health financing sources. Research evaluating the effectiveness of policy interventions aimed at reducing fragmentation is essential for providing evidence-based insights.

Third, most studies offer a static snapshot of health financing fragmentation at a single point in time. Longitudinal research tracking changes in health financing structures over time and their long-term impacts on health systems would be highly valuable.

Finally, comparative analyses of different countries within Sub-Saharan Africa are scarce. Research comparing how different nations manage fragmented health financing and the effects on their health systems can provide important insights and inform regional policy frameworks. By focusing on these areas, the regional research and learning agenda can boost efforts to generate valuable insights and drive innovation in reducing health financing fragmentation towards UHC.

Blog by Dr Lizah Nyawira and Moreen Mwenda


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[12] A. P. Fenny, R. Yates, and R. Thompson, “Strategies for financing social health insurance schemes for providing universal health care: a comparative analysis of five countries,” 2021, doi: 10.1080/16549716.2020.1868054.

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[14] H. C. Karamagi et al., “Financing health system elements in Africa: A scoping review,” PLoS One, vol. 18, no. 9, p. e0291371, Sep. 2023, doi: 10.1371/JOURNAL.PONE.0291371.

[15] L. Nyawira et al., “Examining the influence of health sector coordination on the efficiency of county health systems in Kenya,” BMC Health Serv Res, vol. 23, no. 1, Dec. 2023, doi: 10.1186/S12913-023-09344-4.

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Addressing Fragmentation in Health Financing in Sub-Saharan Africa – Are Solutions Possible?

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