Health Aid Is Allocated Efficiently, But Not Optimally: Insights From A Review Of Cost-Effectiveness Studies

Abstract

Development assistance from high-income countries to the health sectors of low- and middle-income countries (health aid) is an important source of funding for health in low- and middle-income countries. However, the relationship between health aid and the expected health improvements from those expenditures--the cost-effectiveness of targeted interventions--remains unknown. We reviewed the literature for cost-effectiveness of interventions targeting five disease categories: HIV; malaria; tuberculosis; noncommunicable diseases; and maternal, newborn, and child health. We measured the alignment between health aid and cost-effectiveness, and we examined the possibility of better alignment by simulating health aid reallocation. The relationship between health aid and incremental cost-effectiveness ratios is negative and significant: More health aid is going to disease categories with more cost-effective interventions. Changing the allocation of health aid earmarked funding could lead to greater health gains even without expanding overall disbursements. The greatest improvements in the alignment would be achieved by reallocating some aid from HIV or maternal, newborn, and child health to malaria or TB. We conclude that health aid is generally aligned with cost-effectiveness considerations, but in some countries this alignment could be improved.

Keywords: Developing World < International/global health studies; Financing Health Care; Health Economics.

Exhibit 2. Country-Specific Relationship Of Health Aid And Cost-Effectiveness Of Interventions

source Authors' analysis. notes The figure shows the relationship between health aid and the cost-effectiveness of interventions for disease categories supported by aid in Tanzania, where the relationship is downward sloping, with more money flowing to more cost-effective interventions, and in Vietnam, where the relationship is upward sloping, with more money flowing to less cost-effective interventions. Health aid estimates are for the entire period in the Development Assistance for Health data set, from 1990 to 2011. Incremental cost-effectiveness ratio data are extracted from articles published between 1993 and 2013. NCD is noncommunicable diseases. MNCH is maternal, newborn, and child health.

Exhibit 4. Alignment Of Health Aid After Reallocation Of HIV Aid To Other Disease Categories

source Authors' analysis. notes The x-axis is the portion of the country-specific HIV aid reallocated to another disease category, and the y-axis is the difference between the coefficient on the regression of the alignment between health aid and cost-effectiveness after reallocation compared with the baseline (0 percent reallocation). A negative value thus denotes improved alignment (reallocated coefficient is more negative than base coefficient), and a positive value suggests worsening alignment. The vertical dashed lines indicate the level of reallocation when the alignment becomes worse than the baseline. Health aid estimates are for the entire period in the Development Assistance for Health data set, from 1990 to 2011. The incremental cost-effectiveness ratio data are extracted from articles published between 1993 and 2013. Appendix section 8 shows a similar figure for reallocation of MNCH aid (see Note 20 in text). NCD is noncommunicable diseases. MNCH is maternal, newborn, and child health.