Analytical summary of health financing in Malawi
(African Health Observatory - World Health Organization) - The Government of Malawi and its development partners signed a Memorandum of Understanding (MOU) to finance and support the SWAp Programme of Work (POW). The MOU provides for a common framework for health sector planning, budgeting, financing, financial management, and reporting and monitoring and evaluation. Other donors operate as provide discrete funding (through project support), but still as signatories under the SWAp MOU.
In 2004/2005 the total health expenditure as a percentage of Gross Domestic Product (GDP) was at 12.8% and in 2008/09 this decreased to 9.7%. The Government of Malawi (GoM) expenditure on health as a percentage of total GoM expenditure falls short of the Abuja Declaration target of 15%.
Health care programmes are services delivered by provider including curative, rehabilitation, medical goods to outpatients, preventive health programmes. According to the Malawi National Health Accounts (NHA) 2008, curative care is the largest health care function as a percentage of total health expenditure accounting for 40% in 2003/2004 and 48.3% in 2005/2006. Preventive health services were second biggest function accounting for27.3% in 2003/2004 and declined to 22.8% in 2005/2006.
There is no social health insurance system operating in Malawi. However private health insurance exists, but to a small degree largely due to the state provision of free health care and financing of health services, and in part due to the high levels of poverty. In recent years, however, private health insurance is becoming an important element of health financing. Those currently covered by insurance schemes such as Medical Aid Society of Malawi (MASM) are employees of institutions that provide either full or partial medical insurance cover and international utilisation of health insurance is almost negligible.
Government funding is the main source of health financing in Malawi. The majority of the people in Malawi is poor and cannot afford to pay for their health care. As a result, the Government of Malawi provides free health care at its health facilities to all residents in Malawi, as well as free referrals for specialized treatment outside the country. In addition, public health finances are used to subsidize the cost of health services at CHAM facilities through payment of salaries and other personnel costs. In turn, CHAM providers charge a fee to a client which is less than the subsidized amount.
Malawi’s health system faces absolute and relative inadequacy of financing resources to adequately fund EHP services. Despite the development of resource allocation formula, there appears to be no criterion for allocation of resources between cost centres, between regions and districts. The current resource allocation formula is based on population, number of facilities and existing resources and not on disease burden and prevailing poverty. There is need to review the resource allocation formula in order to ensure transparency in the allocation of resources at different levels.
Although public health services are offered free of charge, it appears that household out-of-pocket payments increased rapidly during the SWAp implementation period. This signals serious challenges with quality of health care offered in free public health care system. The capacity to regularly track health financing sources and their uses using National Health Accounts also appears to be weak.