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Budget Process and Execution. Low performance of the Peruvian health system 2000-2021 - P4H Network

Budget Process and Execution. Low performance of the Peruvian health system 2000-2021

Although economic growth has contributed to improving health indicators in Peru, the health system is still fragmented and underfunded. Out-of-pocket expenses are high and the population still lacks health insurance coverage.

The Peruvian health system is made up of the following sub-systems for financing and service delivery: i) the tax-financed public sector (Seguro Integral de Salud – SIS), ii) the contributory sector (Social Health Insurance – ESSALUD), (iii) the armed forces and police sub-system, and iv) the private sector with its health insurance companies and private clinics.

The authors present four reasons for the poor performance of the health system in Peru: (1) Political instability and changes in health leadership, which generated inefficiencies and restrictive budget laws. (2) Low investment in health and limited fiscal space. (3) Low quality health spending and low budget execution. (4) Lack of human resources, data and technology that hinder access to medical care and generate high out-of-pocket expenses.

They conclude that in order to offer real universal health coverage to the population, it is necessary to improve the financing of the health system and the strategic planning of the population’s health needs. Any intervention aimed at improving health system performance requires an understanding of how a health system is financed, how priorities are set and how budgets are developed. They emphasize that the budget process is a key determinant of health system performance and should be investigated in any work on a country’s health system.

Rolf Erik Hönger, Doreen Montag , Process and Budget Execution: A Case Study on the underperformance of the Peruvian Health System, Global Health: Science and Practice. March 2024