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Other people's money - would more domestic fiscal effort lead to greater efficiency?

May 12, 2011

  "Other people´s money — would more domestic fiscal effort lead to greater efficiency?"

Robert Hecht, Results for Development Institute

In the current debate on how to improve effectiveness and efficiency in AIDS programs, especially in low and middle income countries, a lot of excellent thinking and analysis are being done on the technical aspects of this problem. Members of the IAEN are playing an important role in this.

But what about the politics of who pays for an expanded AIDS effort in the coming years? I argue here that this is also having an influence on effectiveness and efficiency, and could become an even more important driver than it is today, if used in the right way.


On the technical side, national AIDS experts and their international colleagues are looking carefully, for example, at how to target HIV prevention efforts better at the sub-populations where the most new infections are occurring (aided by the new "modes of transmission" methods) and at the interventions that we know, or feel more confident from recent analysis, are really working. Again, new insights from cost-effectiveness studies and program evaluations are being nicely fed back into policy decisions.

Ditto on the treatment side, where even more energy is going into parsing anti-retroviral therapy program costs and identifying ways to bring down the unit cost of treating AIDS patients commensurate with good quality and health outcomes. The plethora of analysis being conducted by many organizations, including PEPFAR and its collaborators from Boston University, CDC, and MACRO are adding tremendously to our knowledge and ability to identify ways to "make the money go farther" in treatment.


At the same time, there is increasing discussion and debate around who will pay for these expanding national AIDS efforts in low and middle income countries, even as these efforts become more efficient (fingers crossed). Governments and donors will be facing an AIDS bill for prevention, treatment, and orphan care in the tens of billions of dollars for years and decades to come, and unfortunately that bill can be expected to grow almost everywhere -- even with efficiency gains — as our own work for the aids2031 project has shown.

We have argued elsewhere that national governments should be paying a larger share of that bill than they are today. Many low income countries have become highly dependent on outside funds to support their national AIDS programs — as much as 90 percent or more in some countries such as Mozambique and Vietnam. This is dangerous for these countries and their HIV positive citizens, especially at a time when donor assistance for AIDS has plateaued and is by its nature unpredictable. It is also inequitable, especially when bilateral and multilateral aid (from the Global Fund, for example) is directed to middle income countries with concentrated epidemics such as China and Mexico. Surely these countries can afford to pay for their own national AIDS efforts.


But is there another link between increasing national financial (self)reliance for AIDS spending, and greater program efficiency? It may not be farfetched to imagine that national AIDS authorities, officials in national finance ministries, civil society watchdog groups, and others will be more concerned about value-for-money when it is the country´s own hard earned revenues, rather than donor funding. Do national authorities really make hard choices about prevention spending and lowering the cost of ART, when they are basically spending "other people´s money", as they do today?

The connection between "it´s my hard earned money" and "so I´m going to make sure it´s spent well" is far from straightforward and automatic, and no doubt there are examples of domestic funds for AIDS being squandered. But there is some anecdotal evidence to suggest that national authorities take the efficiency and effectiveness issues more seriously when they are spending their own money and not money flowing from Washington or Geneva.

In Cambodia, where donor funding is flattening and the future of outside support for AIDS is seen as highly uncertain, the government has decided to refocus its prevention efforts on most at risk populations, cutting its planned prevention spending by tens of millions of dollars. The link between this decision and a simultaneous move to expand the domestic share of the AIDS budget from 10 percent to 50 percent is certainly not accidental. Just ask the head of the Cambodian AIDS program.

In Thailand, too, where outside financial support has been cut in recent years and now accounts for just 3 percent of the country´s spending, the government is nearly obsessive about enhancing prevention effectiveness and lowering the costs of treatment. Ditto for South Africa, where about three-quarters of AIDS spending of over $2 billion a year is assumed by the government. There is a big push on in South Africa to lowering average treatment costs through better procurement of drugs and tests and less expensive clinic and community-based approaches to initiating and sustaining ART.


Has the time come to see hard talk in all countries, even the poorest, about who pays for AIDS services as an important part of the "effectiveness and efficiency" agenda?

IAEN Partners