Macroeconomic Implications Of Healthcare Financing Reforms: A Computable General Equilibrium Analysis Of Uganda

There are a lot of health sector reforms across the spectrum of high to low income countries. There are underlying pressures for reform regarding the role and responsibility of different actors in relation to healthcare financing, production, consumption and regulation. The health sector itself is usually a very significant economic sector in its own right, and thus changes to it have direct impacts on the economy and indirectly through their effect on health, yet there is little consideration of these wider macro effects. The wider macro-economic effects refer to the general equilibrium outcomes of the economy’s transmission mechanisms through wages,rents, factor demand and supply, foreign exchange rates and sectoral shares in output, which in turn affect changes at the macro level (including GDP, private and public consumption, investment, imports and exports, and poverty levels). There is an ever increasing attention to the question of how to increase financial resources for healthcare, particularly by governments. This thesis sets out to evaluate the economy wide impacts of healthcare financing reform policies, taking Uganda as a case study. Using a recursive dynamic computable general equilibrium (CGE) model, calibrated from a health-focused Social Accounting Matrix (SAM), the impact of healthcare financing reform policies is assessed. Three sources of fiscal space for health – prioritisation of the health sector, earmarked taxes for health, and aid for health – are analysed. Results showed that increasing resources to the health sector from any of the three sources of fiscal space for health coupled with the envisaged improvements in the population health status leads to higher GDP growth rates and reduces poverty. The tax for health policy showed the highest GDP growth rates while the aid for health policy achieved the highest reduction in poverty. Therefore, government should increase resources to the health sector in order to achieve the aspirations of the Uganda Vision 2040.