Health Financing Innovation

The case for Epidemic Financing

Saumya Kailasapathy - SDAS
Disclaimer: The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views or
policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not
guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use.
Terminology used may not necessarily be consistent with ADB official terms.

Outline
1.

The Health Financing Landscape

2.

Innovative Finance & the right tool

3.

Health Security as a key public health issue

4.

The regions burgeoning Epidemic costs

5.

The ADB Epidemic Financing Proposal

2

Health financing is evolving: new financing

solutions are now needed for public health
The Challenges

Donor funding halting

DFAT, UK, & US ring-fences international aid
GAVI exiting
Global Fund Round 11 cancelled

Increasing cost of NCDs

Domestic health budgets insufficient

Recurring cost of Epidemics

Solutions
Long term financing
Target large scale
projects to transform
infrastructure and
systems

Target underfunded
public health concerns
3

Outline
1.

The Health Financing Landscape

2.

Innovative Finance & the right tool

3.

Health Security as a key public health issue

4.

The regions burgeoning Epidemic costs

5.

The ADB Epidemic Financing Proposal

4

Several innovative finance mechanisms

exist, but we should target the right
instruments for public health

Taxes and Levies

Philippines sin tax
$2.3bn:
subsidization of
health insurance.
UNITAIDs airline
levies raised an
average of
US$208m per year
from 2007 -2011

Blended Loans

Private sector

Incentivize

Public private

borrowing via
grants

collaboration

Public Sector

Bonds

Increase

Social Impact
Bonds mobilize
funding from
private sectors

The region needs the

right instruments

public
health
spending
Eg HI

Target
Underfunding
Epidemics
Health Systems
Target Scale &
Sustainability
Low incentives to
focus on RPGs
System
transformation
Target Long Term
Financing
Sustainability
Bridge financing
5

Outline
1.

The Health Financing Landscape

2.

Innovative Finance & the right tool

3.

Health Security as a key public health issue

4.

The regions burgeoning Epidemic costs

5.

The ADB Epidemic Financing Proposal

6

Health security is a key public health concern:

Asia Pacific is an epicenter for health security
risk, and breeding ground for zoonotic outbreaks

Unplanned Urbanization

Climate change

Natural disasters

Unregulated
private sector
Epicenter for
antimicrobial
resistance
Mobile population

Human-Animal
Interface

Weak
health
systems
Remerging
diseases like TB

Mosquitos

Low quality
drugs and
vaccines

Outline
1.

The Health Financing Landscape

2.

Innovative Finance & the right tool

3.

Health Security as a key public health issue

4.

The regions burgeoning Epidemic costs

5.

The ADB Epidemic Financing Proposal

8

The economic cost of epidemics in Asia

Pacific is enormous, and growing.
Tuberculosis
Zika
Corona
MERS

Ebola

Malaria

Dengue

Outline
1.

The Health Financing Landscape

2.

Innovative Finance & the right tool

3.

Health Security as a key public health issue

4.

The regions burgeoning Epidemic costs

5.

The ADB Epidemic Financing Proposal

10

Why should ADB be involved in Epidemic

financing?
ADB has experience in Health Security & Regional Cooperation
RCI
HIV/AIDS &
Communicable
Diseases

ADF IX
2% for health
and eligibility
for all ADF
DMCs

SARS

GMS Communicable
Diseases Project
Avian Influenza Project

Malaria and
other Communicable
Diseases Threats
Trust Fund

11

Epidemic Financing Structure: structuring

health financing for targeted impact
Up to

2015

Fragmented approaches
to health financing
Loans
demand driven

ADF 9

Trust
Funds

TA
wide scope

2016
Epidemic Financing: support the
design and implementation of
Government programs
Technical
Assistance

ADF Grant
Financing

Health
Bond > OCR

Strategic health financing structure

12

Epidemic Financing Structure: Use of Funds

Product
Epidemic
Preparedness: TA

Regional
Preparedness: TA
Epidemic
Preparedness: Loan

Epidemic
Emergency:
Emergency
response financing

Use of Funds
TA or ADF Grant
Fund national epidemic preparedness
Support cross border initiatives
Health Bond
Earmark ADB OCR
Signal to the market that ADB is
stepping up epidemic risk mitigation
Earmark OCR for loans
Response Financing
Include Epidemic and Health
Emergencies within ADBs Disaster Risk
Management Fund and Framework

13

Epidemic Financing Structure: Why Bonds?

Thematic Bond
Investors

Considerations
Investor appetite
Building pipeline
supporting resident

The ADB Health Bond

missions and regional

department

Capital raised &

earmarked

Loan
Guarantee
Project/SIB Bonds

Structure similar to ADB

Green or H20 Bonds

14

Epidemic Financing Structure: role of Private

Sector and opportunities for collaboration
Incentives

Collaboration

Profitability
Business continuity
uncertain

Epidemics threaten
major investments in
multinationals and small
businesses
Business opportunity
Protect corporate
business continuity &
disaster risk
Leverage CSR

Profitability
protected
Govt
relations

E.g. Private health providers

in rural areas, better cross
border access
E.g. Mobile phone provider
rapidly deploying
emergency financing

E.g. leveraging private

sector supply chains,
logistics and data
management
15

Thank you
..
Q&A

16