What are immunization financing options?
Immunization financing options are short briefing sheets that outline options for financing national immunization services. Principally intended for policy makers in Ministries of Health, Finance, and Planning and Investment, the briefing sheets bring together up-to-date knowledge about the major advantages and drawbacks of available financing options.
Why is understanding financing options important?
Immunization services can realize their potential for improving the health of children only with adequate and reliable funding. Solid financing is one of the several elements required to ensure continuity in services, and to fund continuous increases in coverage, quality and access to both traditional and newer vaccines. It is an essential contributing factor to an immunization programme’s ability to achieve current and future goals for access, utilization, quality, safety, and equity. Therefore, identifying and choosing among financing alternatives is a fundamental task of leaders in the health sector, and should be fully integrated into the planning and management of immunization services.
Decisions about financing arrangements can be complex ones: each source of funds (public, private, domestic and external), and each financial instrument that can be employed to access and use the funds (such as trust funds and revolving funds) carries with it a set of implications. For example, dependence on user fees (private, out-of-pocket payments) to finance immunization services can burden the poor. And creation of trust funds, while generating a steady stream of resources that can be ear-marked for immunization, may be administratively costly under certain circumstances. Understanding the implications—and accessing inter-national knowledge about what works and what doesn’t work—can improve decision-making, and ultimately benefit immunization programme performance.
What are the main options for financing immunization services?
There are four basic sources of finance for immunization (and all other) health services in any given country:
- Domestic public: funds derived from taxation or other sources of public revenues at the central and/or sub-national level, and allocated through a formal budgetary process; this may be current spending, or domestically or internationally held loans, which imply future spending;
- Domestic private: resources from households, employers and/or local philanthropists;
- External public: official development assistance, typically funds derived from taxation in donor countries, allocated according to the policies and practices of bilateral and multilateral international aid agencies; this includes the grant (also called concessionary) portion of development loans offered at below-commercial interest rates; and
- External private: resources from international philanthropists and/or commercial enterprises, such as pharmaceutical manufacturers.
The distinction between public and private sources is somewhat artificial. It is important to note that tax revenues, while collected and administered by public agencies, are fundamentally the product of individual citizens’ labour and ownership of property. And while the Vaccine Fund forms part of the landscape of international public entities, it is supported in large part by private philanthropic contributions.
Similarly, the line between internal and external sources of funds sometimes is blurred. In particular, loans from global and regional development banks have a mix of “external” and “domestic” features: Loans can be conceptualized as “external” because they represent a source of funds outside of the current national tax revenues, and are often structured like grants from bilateral and multilateral aid agencies. In addition, loans to low-income countries that carry below commercial interest rates imply a significant grant component. At the same time, development loans can be conceptualized as “domestic” because eventually domestic resources are used to repay the capital plus any interest. Development loans, they are referred to as “mixed domestic and external.”
In addition to the major sources of financing, there are financing mechanisms or instruments – national trust funds and revolving funds - that do not inject monies into the immunization programme, but rather structure and use the existing funds in specific ways. As with the financing sources, the financing mechanisms have important characteristics that determine how well they meet the needs of a given country and its immunization programme.