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Health economics, Applied econometrics, Epidemiological and economic simulation modeling, Impact evaluation, AIDS.
Mead Over is a senior fellow at the Center for Global Development researching economics of efficient, effective, and cost-effective health interventions in developing countries. Much of his work since 1987, first at the World Bank and now at the CGD, is on the economics of the AIDS epidemic. After work on the economic impact of the AIDS epidemic and on cost-effective interventions, he co-authored the Bank’s first comprehensive treatment of the economics of AIDS in the book, Confronting AIDS: Public Priorities for a Global Epidemic(1997,1999). His most recent book is Achieving an AIDS Transition: Preventing Infections to Sustain Treatment (2011)in which he offers options, for donors, recipients, activists and other participants in the fight against HIV, to reverse the trend in the epidemic through better prevention. His previous publications include The Economics of Effective AIDS Treatment: Evaluating Policy Options for Thailand (2006). Other papers examine the economics of preventing and of treating malaria. In addition to ongoing work on the determinants of adherence to AIDS treatment in poor countries, he is working on optimal pricing of health care services at the periphery, on the measurement and explanation of the efficiency of health service delivery in poor countries and on optimal interventions to control a global influenza pandemic.
In addition to his numerous research projects at the Center, Over currently serves as a member of PEPFAR’s Scientific Advisory Board and as a member of the Steering Committee of the HIV/AIDS modeling consortium funded by the Bill & Melinda Gates Foundation.
Recruited to the World Bank as a Health Economist in 1986, Mead Over advanced to the position of Lead Health Economist in the Development Research Group, before leaving the World Bank to join the Center for Global Development in 2006. Each spring since 2005, he has taught a module on “Modeling the Cost-Effectiveness of Interventions against Infectious Diseases” as part of the master’s degree program in health economics for developing countries at the Centre d'Etudes et de Recherches sur le Développement International (CERDI) at the University of the Auvergne, Clermont-Ferrand, France.
"Evaluating the Impact of Organizational Reforms in Hospitals," with Naoko Watanabe, Chapter 3 in A. Preker and A.Harding (eds.) Innovations in health service delivery: The corporatization of public hospitals. World Bank, March 2003
The Center for Global Development presents a brownbag seminar
Financing Universal Health Coverage: Lessons and Pitfalls
Friday, February 8, 2013
**Please bring your lunch--beverages provided**
Director, Health Financing Policy
World Health Organization
With DiscussantAdam Wagstaff
Research Manager, Human Development & Public Services team
Development Research Group, World Bank
Hosted byMead Over
Center for Global Development
The idea of achieving universal health coverage was introduced in high income countries after World War II and has since influenced rationale for health coverage policy worldwide. However, many health financing reforms introduced in developing countries - often involving ideas borrowed from their developed neighbors - have exacerbated social inequalities and fragmentation in the name of "starting insurance." Fortunately, recent reforms in several low and middle income countries provide an alternative approach, combining streamlining revenue sources and using output- and needs-oriented provider payment. The WHO noted in the World Health Report 2000 that "the path to universal coverage must be home grown," but should still be guided by lessons from experience. Joseph Kutzin will illustrate examples, best practices and pitfalls.
In mid-2011, one of the biggest developments in HIV/AIDS research took place. The HPTN 052 study found that early antiretroviral therapy treatment could reduce HIV transmission by 96% in couples where one partner is HIV positive and the other is HIV negative. The study was heralded as the breakthrough of 2011 by Science, and was hailed as a game changer by many others, including UNAIDS, The Economist and The Lancet. The World Health Organization wrote a comprehensive guideline for TasP, or treatment as prevention, in June 2012, asserting that “TasP needs to be considered as a key element of combination HIV prevention and as a major part of the solution to ending the HIV epidemic.”
Further, at the 2012 AIDS conference, the HPTN052 team presented their models assessing TasP in India and South Africa as “very cost-effective” as compared to delayed ART or no ART, using the WHO “rule of thumb” for cost-effectiveness (<1x or <3x an average GDP per capita). The strategy is already gaining traction on the ground: the Clinton Health Access Initiative announced plans to scale up TasP to 90% of the relevant population in Swaziland.
Yet even if TasP is cost-effective according to the GDP per capita rules of thumb, is it the most cost-effective use of resources to combat HIV/AIDS? When and how much TasP versus other interventions are needed? These critical policy questions can only be answered by mathematical models that optimize the mix of interventions and their coverage for HIV prevention for a given budget, not models that compare the cost-effectiveness of a new intervention to no intervention (no ART) or the status quo (delayed ART) with no budget constraint.
Till Barninghausen, David Bloom and Salal Humair have recently published the results of such a modeling exercise for South Africa, assessing “whether TasP is indeed a game changer or if comparable benefits are obtainable at similar or lower cost by increasing coverage of medical male circumcision (MMC) and antiretroviral treatment (ART) at CD4 <350/microliter” (see here, gated). The authors find that MMC is significantly cheaper than TasP in terms of cost per infections averted – $1,096 versus $6,790. Further, they find that most benefits result from high levels of ART coverage using the CD4 <350/microliter criteria.
Barninghausen et al conclude that the most cost-effective HIV prevention strategy in South Africa is first to increase MMC coverage, and then to scale up ART: this strategy would achieve comparable incidence reductions to TasP and cost $5 billion less, a figure comparable to total Global Fund expenditures on AIDS over a five year period.
While the Barninghausen et al study looks at all the benefits of TasP, there are certain benefits and costs they overlook. There are significant differences of benefits across different risk groups: for example, if MMC is targeted to the most at-risk men, including soldiers, policemen, truck drivers and MSM, it would yield higher benefits (for more on this by Mead Over and others, see here and here). Similarly, for costs, there are issues of diseconomies of scale in the production of TasP (South Africa; here). There are also certain tradeoffs, or production synergies, that have not received sufficient attention: a study from Burkina Faso shows that adding ART to existing health services did not increase the waiting time for non-ART services in Burkina Faso. Finally, there could be diminishing returns to program scale up due to the saturation of groups most willing to receive and use the intervention – this could apply both to TasP and MMC.
All in all, this evaluation shows that as new interventions become available, the need to assess and invest in the most cost-effective mix and coverage of interventions becomes more relevant. The UNAIDS investment framework is a start. However, if we want to get the most done with the money that we have available, reaching an AIDS-free generation, we need to maximize our impact on HIV incidence reduction – getting to the intervention mix and coverage levels that are optimal for that purpose, given resources available.
The Barninghausen et al approach is the way to go for the future. To maximize value for money, global health funders and technical agencies should support the development of these models –in close collaboration with country officials- for all of their major recipients.
One popular statistical software package in academia is Stata. CGD has always used it, and thus so have I. As my colleague Mead Over pointed out, Stata's business model is an interesting mix of private and public goods provision. The private corporation profits by cultivating a public free-software community on top of its core product. Stata sells you the main program, which includes commands to perform all sorts of analyses. People outside the company write add-on commands and share their code freely, all in return for...the satisfaction and prestige of seeing others use their work.
Stata has worked over the years to reward such sharing. One step was the founding of the Stata Journal (and before that the Stata Technical Bulletin) to give academics a venue to leverage their coding labors into career-boosting publications. A more recent step was the institution of an annual award for the best contributions to that journal in the previous three years. The first award was announced today. The recipient is: me.
The prize is awarded to David Roodman specifically for two outstanding papers in this journal:
How to do xtabond2: An introduction to difference and system GMM in Stata (Roodman 2009b)
Fitting fully observed recursive mixed-process models with cmp (Roodman 2011)
The titles alone are exciting I know! Ungated CGD versions here and here. My two papers were fortuitously timed for the period of this first award.
Born in Indianapolis, Indiana, in 1968, he grew up in Hanover, New Hampshire, and Binghamton, New York. Roodman’s formal education ended in 1990 with a Bachelor’s degree in theoretical mathematics from Harvard College. After years at the Worldwatch Institute and on a Fulbright in Vietnam, he arrived at CGD in 2002 knowing little about econometrics. He discovered that a great way to learn econometrics is to code it. His contributions to the Stata community since then were motivated by a desire to replicate and scrutinize complex, influential studies in development economics, which led him to write xtabond2, cmp, and other packages; and motivated by a pedagogic bent, which led him to document the packages and their mathematics in the Stata Journal.
I am humbled and happy about the award.
I wrote the first program as part of my appraisal of the literature on whether foreign aid causes economic growth. (See the technical Anarchy of Numbers and this non-technical guide for the perplexed.) At the encouragement of David Drukker of StataCorp, I then wrote my paper about the program.
As I blogged in 2009, the second paper documents a program I wrote in order to replicate the Pitt & Khandker study of the impact of microcredit in Bangladesh. It's the most beautiful program I've written. Philosophers argue about whether mathematical ideas are discovered or invented. The concept of this program, cmp, is so elegant that I feel like it was there waiting to be discovered.
I echo the end of the award announcement:
As editors, we are indebted to...a necessarily anonymous nominator for a singularly lucid and detailed précis of Roodman’s work.
I've followed an unusual track at CGD, teaching myself econometrics by coding it, doing so primarily in order to be an annoyingly demanding consumer of econometrics, trying to decide which studies to believe, abrading some people along the way. I feel fortunate to have had the opportunity to grow and contribute in this way, to realize my peculiar latent potential. But especially in the early years, I also felt bashful about this strange path---real economists are trained to produce research not just be annoying consumers of it---even as I felt compelled to cut that path. The validation is appreciated.
Of course, writing cool code is not the same as improving lives, which is CGD's reason for being. I only hope that the tools I have made, through their use in the hands of others, have in some small way advanced social science, especially as it relates to helping the world's poor.
It’s that magical time of the year when we bring you the top 10 most read entries on the CGD Global Health Policy Blog. Together, these top posts had a total almost 20,000 unique page views. This year the blog asked for your feedback on evaluating the quality of health aid, addressed the debate over entities like the GHI and AMFm, and discussed everything from cash transfers to priority-setting.
Thanks to all of you that have been reading the blog this year and who have shared your own thoughts in the comments. Happy holidays from all of us from the Global Health Policy Blog
Many currently believe that US domestic entitlements are too large, but disregard the fact that the PEPFAR program has created a new class of moral entitlements overseas – in the form of 4 million and counting people receiving US-supported life-sustaining AIDS treatment in low and middle income countries around the world. Of course, the approximately $2.7 billion that the US spent in 2011 (53% of the $5.3B 2011 budget) on supporting the treatment of these people is only about two-tenths of a per cent of the US’s annual expenditure on Social Security and Medicare. But I think the US has just as much fiduciary and moral responsibility to anticipate and plan for its current and future AIDS treatment entitlements overseas as it does for its much larger Social Security and Medicare entitlements at home.
The US government recently announced its dedication to continue to pursue the objective of an “AIDS-free generation,” a laudable goal which I hope we see in my children’s’ lifetime. However, before we can get there, we must first reach the tipping point where the number of people living with HIV/AIDS begins to decline. In the absence of a cure for AIDS, that can only happen when we succeed in suppressing the number of new infections below the number of deaths. Unfortunately, the latest UNAIDS numbers for Africa confirm that the number of annual new infections in Africa continues to exceed the number of deaths – and the gap is widening. As the chart shows, the annual increase in the number living with HIV/AIDS (the excess of new infections over deaths, or the red line in the graph below) has itself more than doubled since 2005.
The objective proposed by the new PEPFAR blueprint is to reduce new infections below the number of people newly added to treatment in a given year. But this isn’t good enough, because the total number of people in low and middle income countries who are living with HIV/AIDS and dependent on the US and other donors for their daily medication would continue to grow – along with the moral entitlement to support these people on treatment.
Moving forward, I suggest that the US should figure out how to convert the moral entitlements it has already granted into credible long-term enforceable commitments which are more analogous to the commitments it makes to Social Security beneficiaries in the US. My logic is that unless there is a lower bound to the US commitment in an individual recipient country, the recipient government will have little financial incentive to contribute its own scarce resources to AIDS treatment, because every penny it contributes might well be offset by the withdrawal of US resources. (Even if the Obama administration means to continue funding this treatment, future administrations are entirely too free to renege.) But just as the US must reform Social Security and Medicare to clearly establish a more sustainable upper bound for future payments, the US should clearly establish and communicate an upper bound to the US commitment to AIDS treatment in every beneficiary country. The combination of the long-term commitments to a lower and upper bound on US contributions will change the incentive structure in recipient countries, establishing that the recipient country is responsible for the balance of the treatment need – and that the country has much to gain financially as well as through improved health of its citizens by implementing effective HIV prevention as rapidly as possible.
The recommendation in my book, “Achieving an AIDS transition,” is that, in addition to all the patients the US has started supporting, the US should commit to support a fixed percentage of the new treatment need in each recipient country, which might vary from 20% to 80% depending on the country. The US government would have to plan how much would be required to meet each percentage point of need in each country and choose what percentage it intends to finance in every country to fit within the US’s projected future budget for AIDS treatment overseas. But such an arrangement would assure continued US support and generate strong incentives for the country and its citizens to improve their HIV prevention efforts.
The pressure is on for the US government to cut spending. In this environment, vague statements of administration support for meeting its moral commitments to AIDS patients in other countries provide unfair and perverse incentives to recipient government partners and provide insufficient guidance to Congressional and Administration budget cutters. The White House should append the blueprint just released with a firm multi-year commitment to AIDS treatment specific to every recipient country.
Graph above is created from UNAIDS data accessed on December 3rd, 2012 from the AIDSinfo database. Here is the Stata code to replicate the graph.
Around this time last year, world leaders called for “the beginning of the end of AIDS” and an “AIDS-free generation”, and committed to reaching the ambitious disease-specific targets for HIV/AIDS: the virtual elimination of mother-to-child transmission; 15 million people on treatment and a reduction in new adult and adolescent HIV infections — all by a rapidly approaching 2015. And this year, US Secretary of State Hillary Clinton recommitted to these ambitious goals in the release of the PEPFAR Blueprint, saying “An AIDS-free generation is not just a rallying cry — it is a goal that is within our reach”. While the overarching World AIDS Day message remains clear – we have made tremendous progress thus far, and there is still a long way to go in the fight against AIDS – one question remains: is this really the beginning of the end of AIDS?
To answer these questions, we have to define what the “end” is. A recent report by the ONE Campaign, titled “The Beginning of the End? Tracking Global Commitments on AIDS,” highlights that we are off-track to meet the 2015 goals unless commitments by countries are scaled up tremendously. The report defines the “beginning of the end” as the point where the number of people newly added to treatment surpasses the number of people newly infected with AIDS. On the other hand, our colleague Mead Over would suggest aiming instead for the point when the number of new infections falls below the number of deaths so that the number of people living with AIDS, and the associated cost and dependency, stops growing – an objective he calls the AIDS transition. But by either definition, we haven’t yet reached the beginning of the end. There are still 7 million eligible people who don’t receive treatment, 2.5 million new infections every year, and a $7 billion funding gap. And to reach the 2015 goals, 140,000 additional people have to be added to treatment and new HIV infections will have to decrease by 200,000 annually for the next three years (see figure below from the ONE Report).
This is not to say there is no progress. The latest UNAIDS report shows that for the first time, a majority of people eligible for antiretroviral therapy (8 million) are receiving it, and in 25 low- and middle-income countries HIV infections have declined by 50 percent in the past decade, resulting in 700,000 fewer new infections. These declines were achieved in part due to increased commitments by low- and middle-income country governments -- domestic investments rose from $4 billion in 2005 to $9 billion in 2011 and now make up over half of the total funds against AIDS. So, how do we capitalize on these gains and truly reach the beginning of the end? The ONE report outlines three areas critical to achieving maximum impact: eliminating mother-to-child transmission (PMTCT), ensuring access to treatment for 15 million individuals, and reducing new HIV infections to 1.1 million annually, by 2015. In order to reach these targets, the report highlights strengthened health systems as the key to addressing PMTCT, scaling up the pace of initiating treatment, and increasing focus on effective interventions. Combination prevention strategies, for example, have proven to be effective, but certain components such as circumcision are not scaled up in many settings. Of course, all of this is largely contingent upon one input: money. The ONE report shows how much bilateral and multilateral donors have committed thus far to the fight against AIDS, and concludes that all must ramp up their spending until 2015 – surely a tough message to convey in today’s fiscal climate. ONE recommends that both traditional and new actors must scale up their contributions to fighting HIV/AIDS, and maximize their impact through accountable planning and reporting. While more money is important, it is not enough. We must increase the value for money of existing investments and leverage more impact for each dollar spent. If global health funders coordinate to increase their commitments to proven interventions, and ensure their funds go to where they can leverage the highest impact, we might really reach the beginning of the end of AIDS by 2015 and have the data to prove it. The authors thank Jenny Ottenhoff for her contributions to this blog.
The US government spends about $6.4 billion a year on preventing and treating HIV/AIDS in the developing world, and 4.5 million AIDS patients depend mostly on US generosity each day for the AIDS medicines that keep them alive. The administration, and in particular Ambassador Eric Goosby, the head of the President’s Emergency Program on AIDS Relief (PEPFAR) have a unique opportunity to make that money stretch farther and do more good, at very little cost to US taxpayers: release the reams of data that PEPFAR and its contractors have already collected, at substantial cost—perhaps as much as $500 million each year. This would be a first step in what I hope will be 2013 drive to improve the efficiency, the quality and the accountability of the US’s most frequently praised foreign assistance program.
Since January, 2011, I have served on two of the working groups of PEPFAR’s Scientific Advisory Board , those on data and key populations. As I described in a previous post, Ambassador Goosby formally constituted this board in January, 2011 under the auspices of the Federal Advisory Committee Act and requested it to advise him and PEPFAR “concerning scientific, implementation and policy issues related to the global response to HIV/AIDS.” [From the SAB’s charter.] PEPFAR has recently posted the 22 presentations from the recent meeting as a downloadable 28 MB zip file. For those who are following the progress of PEPFAR, the US’s most prominent, most frequently praised and most costly foreign assistance effort, these presentations provide a wealth of fascinating perspective, information, opinion and advise. Because of the packed agenda, the SAB as a whole had little opportunity to review all of the material or to discuss each of the topics in the depth they deserved. Hopefully many of the issues raised will receive a fuller discussion in the public arena, including on blogs such as this one.
The Data Working Group
Since January, 2011, I have served on two of the working groups, the ones on data and on key populations. While I have long had an interest in improving the global response to the epidemic in key populations (an interest that was inspired by my early collaboration on an article with Peter Piot here and ungated here), my interest in data has only been instrumental. I have appreciated data not for their own sake but only as a means to an analytical end. But serving on the Data Working Group has opened my eyes to both the opportunities and the challenges that PEPFAR faces in the arena of data collection, management and disclosure. In a series of meetings and conference calls over the past two years with other members of the DWG and with US government staff of PEPFAR and other agencies, I have learned that PEPFAR and its contractors are spending a great deal of money, perhaps $500 million per year or even more, collecting and managing data, but neither the intended beneficiaries (the AIDS patients and vulnerable populations of recipient countries) nor the US taxpayer is benefitting as much as they could from this effort.
In our group deliberations, the members of the DWG based our recommendations on a set of “principles of data collection and management”:
Data should strengthen US government program management
Data are a public good (i.e. the consumption of data is neither “excludable” nor “rivalrous” and therefore its production and distribution require government support)
Data should further transparency and accountability of government programs
Data should be standardized for comparability through a common data “platform”
Data based analyses of the progress or problems of a US government program should be replicable by members of the public, who can also be a source of independent ideas (“Crowd sourcing”)
How do you, the readers of this blog, feel about these principles?
The DWG’s Recommendations to PEPFAAR
Proceeding from these principles, the Data Working Group arrived at a set of four recommendations which we delivered to Ambassador Goosby (the US’s Global AIDS Coordinator) in the form of a presentation that I presented at the recent October meeting. These were that PEPFAR should:
Establish and maintain a PEPFAR public access knowledge portal
Strengthen, streamline and publicly disclose PEPFAR’s collection and management of key program indicators
Establish, collect and publicly disclose activity-based budget, expenditure and cost data
Require each future grantee and contractor to submit a “Data Management Plan”
Since PEPFAR already has a website and collects indicators, the first two of these recommendations may seem anodyne. However, those who have attempted to retrieve more detailed quantitative information from the PEPFAR website already know how frustrating such an effort has been. PEPFAR does well on collecting its mandated indicators, but lags behind other US agencies both in the scope of its reports to Congress and in its ranking on the 2012 Aid Transparency Index. PEPFAR’s indicators also need to be strengthened (e.g. to better capture the retention as well as the enrollment of AIDS patients) and also streamlined (to minimize the collection and reporting of unusable indicators). See the full presentation for more details on both the strengths and the weaknesses of PEPFAR’s current efforts.
Recommendation 3, the collection and disclosure of activity-based budget and expenditure data, may be the most surprising recommendation to the average US taxpayer, who wants to be sure US foreign assistance is wisely spent. The taxpayer might well ask, “Aren’t the budget, expenditure and cost of PEPFAR funded activities already fully disclosed?” Unfortunately long before PEPFAR was created the US government ceded to its contractors the “right” to declare their detailed activity-based budgets and expenditure reports to be, get this, “trade secrets”, which the contractors can refuse to divulge to the public. These data that would intuitively seem to be the property of the citizens of any democratic country, are hidden behind so many layers of protection that sometimes even PEPFAR staff cannot access them. See this enlightening blog post by Till Bruckner who attempted to extract such information from US aid contractors using a Freedom of Information Act request.
The good news is that PEPFAR has taken aggressive steps to better understand the cost-effectiveness of its programs, but has not yet disclosed the underlying data to the public. The DWG recommended that PEPFAR build on its recent progress in this area by:
Regularly repeating its surveys of the activity-linked unit cost of anti-retroviral treatment and disclose the properly anonymized underlying data
Expanding its activity-linked unit cost analysis to other PEPFAR supported HIV/AIDS services
Releasing the properly anonymized activity-linked budget, expenditure and cost data at the unit of observation, which is the partner or program
Disclosing the anonymized activity-linked financial data on PEPFAR’s open web portal, freely browsable by the public
Recommendation 4 will be the most controversial in the PEPFAR research community. Researchers have many reasons, both good and bad, for preferring not to share their data. The good reasons are to protect the privacy of their patients or subjects and to respect the sovereignty of host countries (although one must ask whether the host countries preferences for data control should trump those of the American taxpayer and the global community in every case). The bad reasons have to do with researchers’ ambitions to squeeze out all of the possible publications from the data before releasing them for use by other researchrs. (As a researcher I have not been immune to this temptation.) Unfortunately, the two sets of reasons can become easily confounded, since a researcher wishing to retain private use of data over a longer time can often persuade the host country government to request the data not be shared.
Although I empathize with the researchers’ desire to have privileged access to data they have collected, at least for a while, as an economist I am aware that private incentives will always be slanted against optimal public disclosure of data. In this fourth recommendation, we on the DWG advise PEPFAR to represent the public interest as a counterweight to the various private interests of host countries and researchers and support the principle that publicly funded data should eventually enter the public domain and that US government contractors must establish an approved timetable for archiving their properly anonymized data for public use.
An opportunity for some quick progress.
Assembled in a blog post by CGD’s Lawrence MacDonald, four colleagues and I propose that those in the Obama administration with attention to spare from the task of avoiding the fiscal cliff could make a few immediate, low cost or free changes that would substantially improve US policy support for poverty reduction in poor countries for years to come. Building on what I’ve learned on PEPFAR’s SAB, my contribution to this list is to suggest that Ambassador Goosby and his staff move forward quickly towards greater public disclosure of existing data (DWG Recommendation #1) and towards mandating the Data Management Plans for contractors (DWG Recommendation #4). Looking forward to 2013, we can all hope and expect that further improvements in PEPFAR’s collection, management and disclosure of key program data will support continued improvement in the quality, efficiency and accountability of PEPFAR’s efforts against the AIDS epidemic.
Braving freezing temperatures and gusty winds, hundreds of development experts and members of the policy community packed a Washington hotel ballroom for a panel discussion on the outlook for global development policy in the new Obama administration, just four days before the inauguration of the new U.S. president.
On the panel were David Gergen, senior political analyst for CNN, editor-at-large at U.S. News and World Report, and advisor to four presidents; CGD president Nancy Birdsall; and CGD senior fellows Steve Radelet, Vijaya Ramachandran, and David Wheeler. CGD’s Lawrence MacDonald was panel moderator.
Gergen, a member of CGD’s board of directors, saw both opportunities and risks for greater attention to development under the new administration. On the one hand, new president Barack Obama has first-hand experience of poverty in developing countries, having lived as a child in Indonesia. On the other hand, Gergen said, Obama faces a crowded policy agenda and the immense fiscal demands of responding to a global financial crisis.
“We have an incoming president who will embrace development and accept some sacrifices to further the development agenda,” Gergen said. He added, however, that an anticipated flood of countercyclical spending to stimulate the economy would be followed by extremely tight budgets, possibly squeezing out development initiatives.
Birdsall responded that it is precisely in such a situation that sound policy ideas, such as those offered in CGD’s newest book, The White House and the World: A Global Development Agenda for the Next U.S. President, are most valuable
Discussion with David Gergen on Obama's Development Policy (video)
White House and the World (book)
White House and the World (briefs)
“I would ask the president to be a champion for development,” said Birdsall. “It’s not just about foreign aid. It’s about using all the tools that the United States has, including trade as a development policy, how to deal with climate change, how to maximize the development benefits of bringing the private sector to Africa, and how to think across the board about the relevance of development in making Americans more prosperous,” she said.
Panel members suggested ways that the United States could have a big positive impact on the economies of poor countries by making policy changes that also benefit Americans and cost relatively little in budgetary terms.
Ramachandran, author of a forthcoming book on ways to improve the business climate in Africa, outlined how the United States can help to foster private-sector investment to address the continent’s chronic infrastructure shortages, especially roads and power. For example, she said, U.S. companies are leaders in small-scale renewable power that could provide off-grid electricity to rural Africans.
Wheeler, an expert on development and environmental issues, said that his conversations with senior officials in China and India have convinced him that they are prepared to act to reduce their countries’ greenhouse gas emissions—provided that the United States first moves aggressively to reduce its own emissions, which on a per-capita basis are many times higher.
Radelet, who served as a senior official in the U.S. Treasury under both Democratic and Republican administrations, and is co-chair of the Modernizing Foreign Assistance Network or MFAN, urged the administration to create a National Strategy for Global Development. This would provide the basis, he said, for a grand bargain between the legislative and executive branches on modernizing U.S. foreign assistance, including new legislation to replace the burdensome and outdated Foreign Assistance Act of 1961.
Gergen said that these and other ideas in The White House and the World were “critically important for the future of the world and for redesigning American international policy.”
During a lively audience Q&A session, topics included trade, migration, corruption, and the U.S. response to humanitarian crises.
Summing up, Gergen said “Obama is incredibly strategic. This is a man who thinks long-term.”
Birdsall interjected: “That is why Obama can be a champion for development.”
“That’s exactly right,” Gergen responded.
Using panel data from Mozambique collected in 2007 and 2008, the authors explore the impact of the food crisis on the welfare of households living with HIV/AIDS. While HIV households have not suffered more from the crisis than others, infected people who experienced a negative income shock also expereinced a reduction or a slower progression in outcomes when treating their illness.
“Achieving an AIDS-free world by 2030 will require dedicated efforts today.”
—Assistant Secretary Toloui
Since the authorization of the President’s Emergency Plan for AIDS Relief (PEPFAR) in 2003, the world has seen tremendous accomplishments in the fight against HIV/AIDS. We’ve managed to transform the disease from a death sentence into a manageable chronic illness. Since 2005, AIDS-related deaths have dropped 29 percent worldwide. In a similar timeframe—between 2003 and 2015—the number of people receiving HIV treatment in low- and middle-income countries increased from 300,000 to 13.7 million. But looming challenges remain: my colleague, Mead Over, suggests the HIV/AIDS population, and thus the accompanying fiscal challenge, is likely to double every 28 years in the world’s poorest countries; HIV/AIDS programs are forecasted to grow (the US already provides about two-thirds of all international spending on HIV/AIDS and in some countries, the US share of total spending on HIV/AIDS remains extremely high). And bridging the gap between the health and fiscal worlds, which all too often fail to speak the same language, may be more important than ever.
At our recent event, “How Can Finance Ministries Support a Sustainable HIV Response?” representatives from PEPFAR and the US Department of Treasury came together to discuss an innovative partnership between them and with finance ministries around the world. The partnership aims to improve the coordination and productivity of resources devoted to combatting HIV/AIDS in low- and middle-income countries, and to strengthen the long-term feasibility of these efforts.
The PEPFAR-Treasury partnership focuses on providing technical assistance to governments on overall resource mobilization and public finance management. It aims to promote:
Stronger public financial management of precious health resources
Improved engagement and coordination between health and finance ministries
Effective mobilization of domestic resources over time in close collaboration with donors
Support from the US Department of Treasury and its Office of Technical Assistance (OTA) is demand-driven, and OTA only works with governments that are committed to reform. This is a tactic to promote country-ownership and self-reliance with the goal of sustainable impact. As Laura Trimble, associate director for Budget and Financial Accountability at OTA explained during the event, OTA works side-by-side with its partners. Decisions are made based on close collaboration between advisors and partners so that OTA advisors can work towards practical demand-driven policy recommendations and changes. There is great hope that with its experience in improving the budget process, increasing expenditure transparency, bolstering human capacity, and linking to system-wide improvements, the US Department of Treasury will offer great skills and expertise to this collaborative effort against HIV/AIDS.
What does this partnership mean for the future of HIV/AIDS programs?
The routinization of this partnership could help normalize and encourage the collaboration of the health and finance sectors to save lives and address diseases beyond HIV/AIDS. Ambassador Birx hopes to see this partnership lead to better data analysis that can help link investment to impact. In the short-term, the impacts of high levels of fiscal uncertainty and the high likelihood of funding cuts in the US still need to be addressed. Throughout the discussions, there was consensus that more needs to be done to improve the efficiency of HIV/AIDS programs, but there was uncertainty about what exactly that entails.
In their policy brief for the White House and the World series, Mead Over and Amanda Glassman made three policy recommendations to increase HIV prevention and adherence to treatment that could prove effective and efficient in the near-term:
Experiment with impact-based agreements to align policy, funding, and actions to drive progress towards an AIDS transition, with attention to rights and gender issues.
Measure what matters—new infections and AIDS-related mortality—to achieve maximum value for spending through better targeting and alignment of financial support with countries’ own financial commitments and progress on prevention and treatment.
Create incentives for co-financing by committing to a floor of support in hard-hit countries and developing matching funds for each additional person tested or on treatment.”
As this PEPFAR-Treasury partnership continues and develops towards long-term achievements in the movement towards epidemic control of HIV/AIDS, PEPFAR may want to consider implementing some of these policy suggestions above in order to accelerate the impact of the partnership. Altogether, these changes provide realistic hope that HIV infections will finally fall below the number of AIDS-related deaths and bring about greater epidemic control.
In the final installation of a three-part series, Mead Over estimates the fiscal burden of international AIDS treatment programs, and suggests ways that donors, governments, and patients can sustain current treatments while preventing future cases.
Navigating the global health funding landscape can be confusing even for global health veterans; there are scores of donors and multilateral funding mechanisms, each with its own particular structure, personality, and philosophy. For the uninitiated, PEPFAR, GAVI, PMI, WHO, the Global Fund, UNITAID, and the Gates Foundation can all appear obscure and intimidating. But if your head is spinning from acronym-induced vertigo, fear not! We are here to help you make sense of it all. How, you ask? With a clear method for donor identification: comparing the donors to your parents.
So what would happen if the donors were your parents and you asked them for a new car?
PEPFAR: Ok, we’ll buy you a new car, but we’re going with you to the dealership and it must be American-made. At least one seat must be devoted to abstinence and the delay of sexual debut. Before you drive the car, you must promise not to support prostitution. Each quarter, you must report how many miles you’ve driven with how many passengers, with a target of 1000 passenger-miles per month.
UNITAID: We’ve identified pediatric vehicles as a niche market which is currently underserved by the major transport providers. By buying cars for you and all our other children, we are helping to create a pediatric automotive market with new and superior transportation commodities. Prior to our innovative entry into the pediatric vehicle market, most of our potential beneficiaries were getting around using lower-quality forms of transportation, such as bicycles, buses, and walking.
GAVI: We will purchase and a deliver a car for you from a particular GAVI-approved dealership. However, you must co-finance the purchase with wages from your part-time job. Gas and insurance will require separate applications.
WHO: Sorry, we haven’t had a car budget in ten years. But we DO have a new set of guidelines on best practices for safe car driving, and a box full of old carfax vehicle reports that you’re welcome to look at any time. Please let us know right away if you experience any engine trouble; regular and reliable reporting allows us to maintain an up-to-date transmission failure surveillance system. And don’t forget to celebrate Vehicle Safety Day on May 11!
Gates Foundation: Of course, darling, we gave your boarding school plenty of money to buy a car. And since we’re on the Board, we’ll make sure they buy the right car. And you can drive it any time you want…as long as one of us is in the passenger seat to make sure you’re going the right way.
Global Fund: We’ve reviewed your proposal for a Range Rover and according to Consumer Reports it is a technically capable car for city driving. Here is a $70,000 check for you to go and buy the Range Rover, as discussed in your proposal.
When you think about it, the analogy makes a lot of sense. Like the donors, your parents provide disbursements for your wellbeing; likewise, they must balance between meeting your short-term material needs and creating “sustainability” by ensuring you receive the education and discipline to one day become self-sufficient. They are sensitive to your needs, but they have other bills to pay, and they don’t want you go out and blow their money on designer clothes or the newest gadgets. Like the donors, they can be paternalistic and have limited trust in your ability to make good choices; perhaps your new iPhone is tied to conditionality, contingent upon matched commitments (babysitting wages), outputs (taking out the garbage each day), or results (earning a 4.0 on your last report card). They may offer you general budget support (an allowance), technical assistance (a personal tutor), or in-kind commodities (lunch, clothes, and school supplies).
On a somewhat more serious note, this line of questioning can give the donor community some food for thought:
What kind of parent would you want to be?
When you were a teenager, what kind of parents did you want to have?
Now that you’re an adult, what kind of parents do you wish you’d had as a teenager?
Assuming that you’re currently an adult, how would you feel about receiving support from someone who behaves like a parent to you?
These questions are on my mind this week as my colleagues and I convene the first meeting of the Value for Money (VFM) working group, which aims to increase technical and allocative efficiency in global health. Among other issues, the working group hopes to analyze donors’ “toolbox” of funding models and mechanisms, looking for opportunities to increase bang for the buck in global health by reducing waste, misallocation, and inefficiency.
So there you have it: global health donors, as if they were your parents. Please mom?!
(Thanks to Amanda Glassman, Mead Over, Bill Savedoff, and Kate McQueston for their helpful comments and ideas.)
Our recent report on next generation financing models looks at how global health donors, specifically the Global Fund to Fight AIDS, Tuberculosis and Malaria, can enhance the health impact of grants for health service delivery by tying grant payments to achieved and verified results. Yet there are several ways to condition payments on performance and, as my colleagues and I have previously pointed out, (here, here, here and here), some ways would likely work better than others in any given setting. Can economic theory suggest specific features of contract designs which would generate more health for the money?
To answer this question, the Next Generation Financing Models in Global Health working group convened an expert meeting of economists, hosted in April, 2015 by the School of Public Health at the University of California at Berkeley. Han Ye at Boston University and Liam Wren-Lewis at the Paris School of Economics, wrote two path-breaking working papers for this technical meeting that apply the economic theories of regulation and incentives to the contracts between global health donors and service delivery organizations in recipient countries.
The two papers begin with the same basic assumptions about global health donors and their grant recipients. First, both papers view global health donors, such as the Global Fund and the US President’s Emergency Plan for AIDS Relief (PEPFAR), as purchasing agencies with the mandate to purchase health care services on behalf of poor beneficiaries in recipient countries. Second, they both adopt the notion that the contractors from whom donors purchase health care services have monopoly power in the delivery of the services to their beneficiaries and monopsony power in their bargaining relationship with the donor.
Under these assumptions, the donor’s objective of ensuring the delivery of quality services to beneficiaries at the lowest sustainable cost mirrors the problem of a regulator of a natural monopoly—a problem that has received decades of attention in the economics literature within the fields of mechanism design and the theory of regulation. As we lay out in the final working group report and as I discussed in an earlier blog post, from this perspective, the global health donor is a “principal” and the contractor in the recipient country is the donor’s “agent.” The relationship between the two is characterized by asymmetric information, a situation in which the agent knows more than the principal about the cost of quality service delivery and opportunities for cost reduction.
Han-Ye’s paper provides a broad survey of the incentive mechanisms proposed in the theory of regulation and asks how each mechanism could be adapted by a global health donor to make its contracting procedures more efficient. The paper weighs the pros and cons of each mechanism, and highlights the tradeoff between the power of each mechanism’s incentives and the cost of its information requirements. Some of the mechanisms reviewed are appropriate for a single contract between a donor and a recipient; others envisage a sequence of contracts over several years, each of which is more efficient than the last. The engagement of the Global Fund and other health donors in some of the world’s poorest countries that are home to the highest disease burden is likely to endure for a decade or more into the future. It is therefore in the best interest of both health donors and recipients to adopt contract designs that will enhance efficiencies over the long term.
Liam Wren-Lewis’s paper starts from the same assumptions, but goes deep rather than wide. As currently practiced by the Global Fund and other health donors, contracting is essentially input financing with cost-reimbursement. From the agent’s perspective, a cost-reimbursement contract has the advantage of minimizing its financial risk. Given the bargaining power of agents, the challenge is to find a contract design that applies incentives towards improved value for the donor’s money, while also being acceptable to the agent. Wren-Lewis’s suggested solution is for the health donor to offer a contract that would give its agent the option to choose, at the end of the contract period, whether to receive a conventional reimbursement of costs from the previous period or to receive a payment proportional to the number of verified units of output it had produced (up to a target output). Of course, a contract with only two payment options is the simplest version of an elaborate multi-choice menu contract in the mechanism design literature. Despite its simplicity, however, Wren-Lewis cites literature showing that this design can achieve up to 80 percent of the efficiency gains seen with more complex contracts. By using familiar elements like a cost-reimbursement contract to develop a contract design that enhances efficiency, Wren-Lewis offers the global health donor an incremental path toward more powerful contracting.
While Ye and Wren-Lewis’ papers were written under the auspices of our working group, their findings have wider implications for improving the efficiency of donor and government spending. For example, the contract designs they discuss could be used to structure the contractual relationship between a national government and its subnational entities such as states, provinces, or nongovernmental organizations that deliver health services. The lessons could also extend to other sectors, such as education or water and sanitation, where foreign aid funders are searching for ways to improve the efficiency of the spending they channel through government and non-government recipients.
I see these two papers as contributions to the broader literature on results-based financing, including cash on delivery models. They offer new ideas about how to shift from cost-reimbursement, or input financing, to payments for verified outcomes to improve value for money. In particular, I hope they spark the growth of a literature on the application of efficiency-enhancing mechanism design to the global health sphere.
Senior fellow Mead Over estimates the effect of AIDS on poverty in South Asia and analyzes public policy options to help the region’s predominantly private health care systems meet the challenge of treating AIDS. He finds that South Asian governments should play a larger role in AIDS treatment than in other aspects of health care, in the interest of both efficiency and equity.
A new year calls for a development policy wish list. My wish list is about what the rich and powerful global actors– mostly but not solely in the United States – can do to improve lives among the poor and vulnerable around the world in the coming year.
I find it harder than usual to make such a list this year. In our ever-more-global system the rich and powerful can have the largest impacts for good through global cooperation on collective action problems. (Think climate change, avoiding food and oil price hikes, minimizing global financial panics.) But global cooperation is becoming harder than ever to manage. Since World War II, the United States has led or at the very least been a willing follower. But the United States, gridlocked on key issues and preoccupied with a jobless recovery, seems less and less able and willing to lead.
There are some bright spots.
In 2010 the Obama Administration came up with the first ever presidential statement focused exclusively on development as an end in itself (and not only an instrument of national security and foreign policy, though very much that too) and promised greater multilateral engagement in its approach to development. And in the first-ever State Department review covering both diplomatic and development issues, Secretary Clinton committed to strengthening the “global” bureaus that deal with sex trafficking, climate, the global economy, the UN and other non-country, non-regional diplomatic challenges. (But for a broadside on that document see Anthony Cordesman’s post here.)
Given rising concern about U.S. fiscal deficits, I’ve focused here on wishes that cost nothing in budget terms (though many of them do require political will and the attention of senior policymakers, both of which are scarcer than dollars). One wish comes with a $10 billion price tag, but also with a suggestion on how the money could be raised, making the entire list zero cost.
Without further ado, my wish list:
1. With regard to global governance, I hope thatthe White House works with other members of the IMF and the World Bank to establish a credible selection process for the next leaders of those institutions. For the IMF that could come in 2011 if Dominique Strauss-Kahn leaves to run for President of France. For the World Bank the White House would probably like to ignore the issue this year – but shouldn’t. Fixing this costs nothing and could matter a lot, as I’ve argued with Arvind Subramanian here, for greater and smarter provision of global public goods.
2. For U.S. domestic climate policy (if you aren’t sure why this is on my list read this and this), I hope:
That the United States spends a lot more public money on clean energy research and development (David Wheeler recommended $10 billion a year here, which would double public spending per GDP on energy research to 0.06 percent, still less than what the United States was spending in the 1970s;
That one or more U.S. states implement a carbon-added tax (read about that idea here);
That the Obama Administration sends legislation to Congress imposing a variable gasoline tax (as a deficit reduction measure or if politically easier fully rebatable on a per capita basis), something I hoped for last year. This could easily generate the $10 billion needed for clean energy R&D, most of the benefits of which would go directly to Americans, while reducing U.S. carbon emissions with positive spill-over effects to benefit poor people in the developing world.
3. For U.S. international climate policy I wish:
That 90 percent of any new U.S. money available for overseas tropical forest protection (for example, from USAID, Millennium Challenge Corp., and Department of Interior) be disbursed (for example, to Brazil, Indonesia, and Congo) on a pay-for-performance basis, that is, only against verified progress, along the lines of Cash on Delivery Aid.
That in Durban (the 2011 round of international climate talks) the United States locks in agreements with other major polluters not on binding targets (which won’t happen) but on serious and systematic international verification of each country’s self-reported greenhouse gas emissions (which China has resisted but just might yield on). This would fall short of current UN inspections for nuclear weapons but would be headed in that direction.
4. With an eye towards reducing corruption, I hope thatthe Obama Administration will write a good rule enforcing the Dodd-Frank provision calling for full disclosure of all private corporation payments to foreign governments in connection with oil, gas and mining (for what this is about go here and here).
5. For migration, I hope that the United States allocates at least 5,000 visas annually to victims of natural disasters in low-income countries, and makes Haiti the first eligible sending country (as in the Clemens plan).
6. With regard to trade, I hope that the White House finds the gumption to commit the United States to offer the world’s poorest countries (the UN-designated LDCs) full duty-free, quota-free access to U.S. markets, for all products with sensible rules of origin, so that the United States will not be the only apparent hold-out on this issue at the Paris G-20 Summit (read all about it here). What’s more, lock it in as a grand gesture at the May 2011 UN conference on LDCs in Istanbul, thus giving the United States something to brag about the next time there is an MDG festival (see here for more on how this is included in the eighth MDG on the responsibilities of the rich countries).
I also hope that the Farm Bill legislation up for renewal this year does less harm to developing country prospects than the last one, and that the energy-wasting, Brazil-annoying subsidy for corn-based ethanol is eliminated.
7. I wish for Elizabeth Littlefield, the new head of OPIC, to take the lead (along with Ex-Im Bank) in putting together a package of U.S. investment in a continental road and/or power system in sub-Saharan Africa, along the lines suggested by Vij Ramachanran and Alan Gelb.
8. Regarding U.S. aid effectiveness, which ought to improve from a very low base in 2008 compared to other major country agencies, I wish that:
The 2012 foreign aid request to Congress increases, even if only modestly, the share going to any multilateral program providing global public goods . My favorites are UN peacekeeping, the Climate Investment Funds at the multilateral banks, and the International Consortium for International Agricultural Research. Even small increases in the share of the U.S. aid budget going to these small, high-value programs would be major for them; and that:
Raj Shah stays at USAID for as long as possible to lock in the unsexy but important progress there: on transparency with AID’s Foreign Assistance Dashboard; on a tough new evaluation policy (wow – it is rumored there will be full disclosure of failures not just successes, a hallmark of Ruth Levine’s approach, and that USAID will join the International Initiative for Impact Evaluation); with some breakthroughs on innovative delivery mechanisms from the Michael Kremer’s new Innovation Lab -- for example USAID in the lead on an advance market commitment for cheap clean off-grid rural electricity or a breakthrough in agriculture, or of course sponsoring a serious pilot of Cash on Delivery Aid (COD Aid).
9. For global heath, I hope:
That the United States sets a goal for AIDS cases prevented under the Global Health Initiative – along the lines Mead Over suggests here, i.e. commit the United States to reducing the number of new infections to about 140,000 by the year 2016.
Since smoking is a gathering storm of health problems in low-income countries, that the White House (Mike Froman, Gayle Smith, and/or Mark Abdoo at the NSC) submit the Framework Convention of Tobacco Control to the Senate for ratification; even if it then languishes there it would provide a basis for an advocacy campaign here and signal to developing country governments that they can legitimately regulate the worst of the U.S. tobacco industries’ marketing in their own countries.
That whatever turf or other battle is hanging up a decision to put someone and some agency in charge and accountable for the Global Health Initiative gets settled in 2011; 2012 will be too late in this administration for leadership to make a difference.
10. Finally, I hope that the successor to the late Richard Holbrooke will read our five letters ona better U.S. development strategy in Pakistan within the first week of taking up this nearly impossible job. And that if not the United States, then the United Kingdom will seriously consider – yes COD Aid for education there as we propose in letter # 5.