Political Economy Analysis for Health Financing Reform

Abstract Health financing reform is an inherently political process that alters the distribution of entitlements, responsibilities and resources across the health sector and beyond. As a result, changes in health financing policy affect a range of stakeholders and institutions in ways that can create political obstacles and tensions. As countries pursue health financing policies that support progress towards Universal Health Coverage, the analysis and management of these political concerns must be incorporated in reform processes. This article proposes an approach to political economy analysis to help policy makers develop more effective strategies for managing political challenges that arise in reform. Political economy analysis is used to assess the power and position of key political actors, as a way to develop strategies to change the political feasibility of desired reforms. Applying this approach to recent health financing reforms in Turkey and Mexico shows the importance of political economy factors in determining policy trajectories. In both cases, reform policies are analyzed according to the roles and positions of major categories of influential stakeholders: interest group politics, bureaucratic politics, budget politics, leadership politics, beneficiary politics, and external actor politics. The strategic responses to each political economy factor stress the connectedness of technical and political processes. Applying the approach to the two cases of Turkey and Mexico retrospectively shows its relevance for understanding reform experiences and its potential for helping decision makers manage reform processes prospectively. Moving forward, explicit political economy analysis can become an integral component of health financing reform processes to inform strategic responses and policy sequencing.