Innovative Financing Mechanisms for Health Systems, But No Magic Bullet

by Alanna Shaikh · 2009-06-30 10:17:00 UTC
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(photo credit: Photos8.com)

To follow up on yesterday's post on innovative financing mechanisms for health systems, I looked into the first two innovative mechanisms mentioned, the mandatory solidarity levy on airline tickets and expanding the use of the International Financing Facility for Immunization and other approaches to ensure predictability.

The mandatory solidarity levy, (that's a mouthful of a name, isn't it? From now on I'll just say "the levy") as currently conceived, is a tax placed on airline tickets to raise money for development programs. Imposed by a country's government, the levy is added to the cost of airline tickets and the funds raised go directly to a dedicated account for international development programs. The logic is that air travel benefits most from globalization, and that a mandatory levy has little effect on travel patterns. The idea was pushed heavily by the French government, but has not gained much traction so far. The US refused to sign on; so far only seven countries have - Chile, Côte d'Ivoire, France, Republic of Korea, Madagascar, Mauritius and Niger. The levy has, however, funded 72% of the budget for UNITAID in 2008.

The International Financing Facility for Immunization raises money for vaccination by issuing bonds based on donor pledges of future aid. This lets recipient countries receive their aid more quickly, and as lump sums rather than over a period of years.  (more detail here) They repay the bondholders using the aid as it comes in.

I really like the idea of innovative financing mechanisms for health. I really do. But I think we're looking for magic bullets where they don't exist. You don't get money from nothing. The mandatory solidarity levy seems close to neutral in its impact. I think that the International Financial Facility for Immunization may actually be harmful. Recipient countries get their money sooner, but they get less of it, and I am not sold on the advantages of a big infusion of money as fast as possible.

Alanna Shaikh
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