Prospects for Sustainable Health Financing in Tanzania

The U.S. government's support for these programs is substantial, with the President's Emergency Plan for AIDS Relief (PEPFAR) contributing US$295 million in FY 2012-2013. However, trends in external funding suggest a reduction in the number of active donors and in total volume. The Health Basket Fund (HBF) has been a key source of funding for the health sector, with contributions from various donors including the Canadian, Danish, and Irish governments. However, the HBF's expenditures have decreased in nominal terms from US$97 million in FY 2009-2010 to US$90 million in FY 2012-2013. The stability of funding for vertical programs will depend on continued USG and Global Fund support. Tanzania's local funding for health appears to be aligned with its share of the total population, with each region receiving a proportionate share of the budget. However, there have been large shifts in shares of funding after FY 2012-2013 due to administrative reforms. The Big Results Now initiative emphasizes fair health worker distribution to address regional inequities in the availability of key health resources. The government of Tanzania has made a commitment to universal health coverage under the Third Health Sector Strategic Plan (HSSP III) via social health insurance. A comprehensive health financing strategy (HFS) is also being developed, which will require mobilization of domestic resources and further growth in health insurance coverage using existing schemes. The HFS is expected to focus on a single national health insurer (SNHI), but its realization is likely to be many years off. Tanzania's total health expenditure (THE) was 8.2 percent of nominal gross domestic product (GDP) in 2009-2010, with a composition that has shifted over the past several years. External donor resources increased as public sector resources and households' out-of-pocket expenditure (OOP) declined. OOP still contributes significantly to THE, with the Ministry of Health and Social Welfare (MOHSW) reducing its management of THE and local government authorities (LGAs) and nongovernmental organizations (NGOs) taking on increased managerial roles. The GOT's allocation to health has increased over time, but has stagnated as a proportion of the total budget. In FY 2013-2014, the GOT allocated 8.9 percent of the discretionary budget (8.7 percent of actual spending) to health. Tanzania's allocation compares well with other African countries, but international and cross-country comparisons are problematic due to data limitations. The central level of Tanzania's health system procures the majority of drugs and commodities, which are then transferred to LGAs and higher-level hospitals. LGAs are expected to buy some commodities using their own resources and a fixed percentage of basket fund allocations, but the stipulation has been difficult to enforce. The Prime Minister's Office, Regional Administration and Local Government (PMORALG) is responsible for the payment of salaries.