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Health financing system

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A good health financing system raises adequate funds for health, in ways that ensure people can use needed services and are protected from financial catastrophe or impoverishment associated with having to pay for them.[1] Health financing systems that achieve universal coverage in this way also encourage the provision and use of an effective and efficient mix of personal and non-personal services.

Three interrelated functions are involved in order to achieve this:

  • the collection of revenues from households, companies or external agencies;
  • the pooling of prepaid revenues in ways that allow risks to be shared – including decisions on benefit coverage and entitlement; and purchasing;
  • the process by which interventions are selected and services are paid for or providers are paid.

The interaction between all three functions determines the effectiveness, efficiency and equity of health financing systems.

Health system inputs: from financial resources to health interventions

Like all aspects of health system strengthening, changes in health financing must be tailored to the history, institutions and traditions of each country. Most systems involve a mix of public and private financing and public and private provision, and there is no one template for action. However, important principles to guide any country’s approach to financing include:

  • raising additional funds where health needs are high, revenues insufficient and where accountability mechanisms can ensure transparent and effective use of resources;
  • reducing reliance on out-of-pocket payments where they are high, by moving towards prepayment systems involving pooling of financial risks across population groups (taxation and the various forms of health insurance are all forms of prepayment);
  • taking additional steps, where needed, to improve social protection by ensuring the poor and other vulnerable groups have access to needed services, and that paying for care does not result in financial catastrophe;
  • improving efficiency of resource use by focusing on the appropriate mix of activities and interventions to fund and inputs to purchase;
  • aligning provider payment methods with organizational arrangements for service providers and other incentives for efficient service provision and use, including contracting;
  • strengthening financial and other relationships with the private sector and addressing fragmentation of financing arrangements for different types of services;
  • promoting transparency and accountability in health financing systems;
  • improving generation of information on the health financing system and its policy use.

This section of the health system profile is structured as follows:


Analytical summary

Botswana operates a democratic system in which Parliament oversees the Government’s budgetary process. Budget ceilings are based on annual fiscal forecast. A dual budget process of separately reconciled recurrent and capital budget, all coordinated by the Ministry of Finance and Development Planning, is adopted. The ministries select projects based upon programme priorities determined by sector strategies. Government funding for health is distributed to the Ministry of Health (64%), National AIDS Coordinating Agency (9%) and the Ministry of Education and Skills Development (3%).

The remaining 24% goes to private financing agents such as insurance schemes, households and nongovernmental organizations. A cost recovery consultation fee of US$ 70 is charged for clients visiting public health facilities. Foreigners pay a little more (US$ 4). Antiretroviral and sexual and reproductive services are offered free to citizens.

Wages and salaries account for a large proportion of the Government of Botswana's expenditure. The country’s wage bill as a percentage of gross domestic product and of total Government expenditure was reported to be the largest in Africa in 2008. Salaries and allowances have averaged 55% of the Government’s recurrent health expenditure. The total health expenditure and the proportion of gross domestic product allocated to health exceed the 15% minimum of the Abuja Declaration.

Funding for health care is mainly from the Government, with international agencies contributing only modestly, mainly in the area of HIV/AIDS. Medical insurance schemes include the Botswana Public Officers Medical Aid Scheme, Medical Aid Society, Pula Medical Aid Fund, and Itekanele Health Scheme. There are some insurance brokers that provide health insurance coverage for those who move across Botswana and other countries.

Health care private sector spending increases public sector spending by one third (Second Country Assessment). Reflecting both the commitment to invest in health and the increasing burden of HIV/AIDS, the Government’s expenditure on health per capita increased from US$ 10 to US$ 330, and development expenditure on health increased from US$ 39.3 million to US$ 1.7 billion between 1975 and 2009.

The Public Procurement and Asset Disposal Act of 2002 uses a decentralized approach with public entities made responsible for managing procurement with the role of oversight, regulation, and monitoring and evaluation. Open bidding is the default procurement approach. The regulatory framework for procurement provides for an administrative review board, which is responsible for the resolution of complaints submitted.

The Government employs a computerized system for expenditure management accounting and financial reporting with commitment control being built into the system. However, some expenditure is still managed manually through a votes’ ledger. Tax payers are registered in a comprehensive database system that is directly linked to other relevant Government registration systems. The penalties for non-compliance are set sufficiently high to be effective.

Institution of measures to reduce salary bills and reconciliation of the budget for hospital care and preventive care to reflect emphasis on prevention are some of the areas that the Government still needs to address.

Organization of health financing

Health expenditures patterns, trends and funding flows

Funding sources

Pooling of funds

Institutional arrangements and purchaser provider relations

Payment mechanisms

Priorities and ways forward


Endnotes: sources, methods, abbreviations, etc.


  1. Everybody’s business. Strengthening health systems to improve health outcomes. WHO’s framework for action (pdf 843.33kb). Geneva, World Health Organization, 2007