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23rd March, 2015

Reporting health expenditure indicators


Topic
Health Budget Advocacy


Let's talk about the mysterious world of global health expenditure indicators. These indicators can be accessed for all African countries, over time, from the Global Health Expenditure Database or African Health Stats for example. 
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Let's talk about the mysterious world of global health expenditure indicators. These indicators can be accessed for all African countries, over time, from the Global Health Expenditure Database or African Health Stats for example. 

It’s a useful way of finding out how much your country spends on health, where this money comes from, and how spending changes over time or across countries. One warning though: the Global Health Expenditure Database only has data up to 2014, making it challenging to use for advocacy purposes… But to make the best of what we’ve got, do read on.

In this issue of the technical corner, we’re going to walk you through the units that this information is typically presented in, and which ones are most appropriate to use for which analysis.

There are three choices you typically have to make:

  1. Firstly, do you want to discuss total spending or per capita spending?
  2. Secondly, do you want to present the information in National Currency Units (NCU),US$, or Purchasing Power Parity?
  3. And thirdly, are you interested in spending expressed in current or constant units?

It’s not really as complicated as it sounds, we promise…

Firstly, the choice between total or per capita spending. “Per capita” is just a fancy word for “per person”. We have a choice between reporting what the government spends overall, or reporting what the government spends on each individual citizen. Usually, we would advise choosing the latter because people can relate to it – “Is my health only worth 10$?” – and because it provides a better link between health spending and outcomes.For example, if total health spending increases over time, but doesn’t keep up with population growth, spending per capita will decline. “Per capita” helps us understand what is happening to the health investment in each individual person.

Now let’s talk about the choice of currency: you can choose your own currency (National Currency Units), US$, or Purchasing Power Parity. If you want to compare spending in your country with others in the region or even globally, you will have to choose one of the latter two.

This make sense: 100 Francs CFA is worth about 15 Kenyan Shillings. So if we compared Burkina Faso and Kenya’s health spending by using national currencies, Burkina would mistakenly look like it was spending more.

Let’s imagine we are comparing spending in Kenya and spending in Burkina Faso by using US$. On the one hand, this is much better in terms of comparing like with like. But there’s still a problem – because the cost of living is higher in Kenya than in Burkina Faso, you can buy more with a single dollar in Burkina than you can in Kenya.

So although Burkina may have a lower level of health spending than Kenya, they can actually buy relatively more health workers, more health clinics, etc. with that single dollar. The last type of unit, Purchasing Power Parity, is a special exchange rate that captures that difference in the cost of living. This means that spending across countries becomes truly comparable.

There’s only one more choice to deal with…current or constant currency?

“Current” just means your normal currency and it’s best to use that unit if you’re not comparing spending across time. But what happens in you want to find out whether your government has progressively increased health spending, say over the last 10 years, as it promised?

Well, a problem with using normal, current currency is that there has probably been inflation over that period. Inflation is why a bus ticket now costs twice what it used to ten years ago. So if we want to compare health spending over time, we have to make sure we take out that inflation to make sure we are comparing like with like. That is what using “constant” currency units does.

So remember – use health spending per capita if you want to express health investments in each person, use Purchasing Power Parity if you are comparing spending across countries, and use constant units if you are comparing spending across time.

Easy!

Health expenditure indicators are a useful way of finding out how much your country spends on health, where this money comes from, and how spending changes over time or across countries.