Macroeconomic Implications Of Health Sector Reforms In Uganda: A Computable General Equilibrium Analysis

1. Rationale/Objective Evaluation of healthcare reforms has been an integral part of healthcare system studies. In Uganda the effectiveness of the healthcare reforms that were systematically undertaken since 1992, has been widely studied. The partial equilibrium studies evaluating the reforms have concentrated on the economic impact to the health sector and impacts to the population’s health status. The functioning of the health sector generates cascade effects as it is interlinked with both productive labour supply and other sectors in the economy. The economy-wide impacts of healthcare reforms in Uganda have not been researched. The objective of this study is to assess the economy-wide impacts of changes in policies and strategies for healthcare provision in Uganda. Specifically, the study aims to: i) Present results from a dynamic computable general equilibrium (CGE) model for the Ugandan economy that includes healthcare reform effects. The aim is to represent the interaction of the healthcare system with the rest of the economy and incorporate key features of Uganda’s healthcare system in the model. ii) Present an updated Ugandan social accounting matrix (SAM) with a disaggregated health sector defined by three new accounts: non-government health, government primary health, and government other health. The aim of the enhanced SAM is also to capture health consumption expenditure by multiple households defined by residence and main economic activity (i.e. rural-farming, rural non-farming, urban-farming, urban-non-farming, Kampala-non-farming); and productive health sector labour by skill level (i.e. self-employed, unskilled, skilled). ii) Determine the impact of changes in healthcare policies and strategies on: a) factors of production; b) households; c) non-healthcare sectors; and d) macroeconomic indicators. iv) Assess how policies aimed at improving healthcare delivery compare. 2. Design and methods: The analysis is based on a dynamic computable general equilibrium model of Uganda calibrated to the enhanced Uganda 2007 social accounting matrix. The CGE method of evaluation is a move from the narrow internal focus on the health sector to wider national effects. Additionally, the study is in a developing country setting and hence lessons to draw on the likely macroeconomic impacts of healthcare reforms for low- and middle-income countries generally. 2.1 The Uganda social accounting matrix The Uganda SAM 2007 is a 122 by 122 matrix representing 50 sectors (comprising of agriculture, industry, and services); 6 factors of production (labour, livestock capital, physical capital, and land); and 8 institutions (enterprises, government, multiple households, and the rest of the world). My role in this pre-existing Uganda SAM 2007 is to disaggregate the health sector into three new accounts namely non-government-health, government-primary-health, and government-other-health; and balance the new SAM. While creating the new accounts, aggregate totals from the original SAM are preserved (that is, shares are used from other sources rather than actual numbers). Household health consumption expenditure and health sector labour supply shares are derived from the Uganda national household survey (UNHS) 2005 and the UNHS 2005 labour survey module respectively. Shares for capital and health intermediate inputs are derived from the national accounts and government health expenditure for 2007/2008; government health consumption shares are taken from the government medium term expenditure framework (MTEF) 2006/2007. 2.2 The model The analysis is based on a recursive dynamic model to capture the dynamics of health policy changes in the economy. The Labour force growth rates for the different policy simulations are exogenously supplied from a demographic model. I present two policy scenarios representing exogenous changes in the economic conditions of the country, which are compared to a baseline scenario of business as usual. The base run is for the period 2010-2025 and assumes government budget allocation remains the same throughout the model period. The first simulation considers reallocation of resources to the health sector. Thus, the base year government health expenditure is raised by some percentage (informed by the literature), as a share of GDP. In the second experiment, the reallocation of resources to health sector is coupled with improved efficiency in the use of resources. Thus, I increase health expenditure by some percentage from the base, with increased factor productivity in the health sector (both total factor productivity and health specific factor productivity). 3. Results/Expected Results The creation of three new health accounts (out of the original single account) in the Uganda SAM 2007 is my innovation. Specifically, the health sector is now represented by non-government-health, government-primary-health, and government-other-health. The scenarios described above are a work in progress and final results will be presented in the full conference paper.