Why is Peru an Exemplar?

PHC reform in Peru: spending enough and spending better

In a health system context, efficiency means getting the most care out of limited resources by ensuring those limited resources are directed to the right things.⁵ Equity means minimizing differences in health access and outcomes among different population groups and ensuring everyone has access to the care they need.^1,6,7

Over the course of the Exemplar study period, Peru increased its health spending considerably. However, indiscriminately spending more does not guarantee better health outcomes. Peru’s experience demonstrates that spending better—more efficiently and more equitably—is as important as spending more. As the country grew more prosperous, it acted to improve economic and social security—especially through national health insurance schemes—nationwide, reducing the inequalities that can lead to adverse health outcomes. At the same time, by ensuring sufficient funding for PHC, policymakers in Peru aimed to meet the country’s health needs and improve outcomes nationwide.

Budget execution for PHC in Peru

To ensure the delivery of key PHC services, countries need to budget adequately and to implement, or execute, that budget.⁸ (In other words, health budgeting and health spending should align as closely as possible). In Peru, execution rates for the health budget in general averaged about 87% across the Exemplar study period.⁹ However, some regions selected for deeper study reported even higher rates of PHC budget execution, as Figure 1 below shows.

Predictably high budget execution rates are a key component of health system efficiency. They enable service delivery (by, for instance, reliably covering the cost of salaries, supplies, and operational expenses) as well as long-term planning and health system administration.

In Peru, study regions allocated 25%–40% of total health expenditures to PHC services. This is proportionately less than other Exemplar countries spend—but because Peru spent more on health overall, targeted pro-poor programming, and demonstrated good financial management, this spending can meet the country's PHC needs.

Improving health system efficiency in Peru

Charting a country’s performance on the universal health coverage (UHC) effective coverage index against the amount it spends on health care (measured by total health expenditure) over time is one way to measure health system efficiency. The effective coverage index is a composite measurement of primary health system performance reflecting service coverage relative to system capacity across a range of health services—including prevention, promotion, treatment, rehabilitation, and palliative care—and across the life course; it also reflects the need for health services, the use of health services, and the quality of health services.^22,23

We selected Exemplar countries by benchmarking country performance against an optimal possible output—the “frontier”—which is the modeled, maximum effective coverage a country could attain at a given level of spending, in addition to other factors. This method of econometric analysis demonstrates how close a country is getting to the maximum possible output it could be achieving with its money, charting its health system’s improvement over time. This optimal production framing implies an underlying assumption about the relationship between investment and output – there is only so much health a country can achieve at a given level of spend. Once a country has hit the frontier, it must invest more resources if it seeks to achieve greater gains in health system performance.

When the Exemplar study period began, Peru’s health system was already performing relatively well. In 2000, its effective coverage index was 58.4/100, higher than the effective coverage index of every other PHC Exemplar country except Rwanda at the end of the study period nearly 20 years later. Between 2000 and 2018, as the sharply upward trajectory in Figure 2 below shows, Peru’s effective coverage index increased considerably, to 77.7. Because the Exemplar econometric analysis estimates that the ideal effective coverage a country can attain at Peru’s level of health spending is 70.6, Peru's higher coverage rate likely places Peru above the modeled estimate and within the higher than optimal range of the estimate’s confidence interval, reflecting significantly high overall performance.

In Peru, these efficiency improvements reflected an expansion of PHC delivery nationwide. At the start of the Exemplar study period, the country’s Encuesta Nacional de Hogares national household survey showed coverage levels above 60% for most interventions for reproductive, maternal, neonatal, and child health. Since then, family planning, antenatal care, skilled birth attendance, and childhood vaccination coverage have steadily increased.² (See Figure 3 below.) Peru’s total fertility fell between the mid-1980s to 2015, and the modern contraceptive prevalence rate has increased but remains below other countries in the region—probably caused by contraception use being lower in the highland and jungle regions and lower among non-Spanish-speaking Indigenous women.²⁴ Also, these services are typically not provided in private insurance schemes, so patients will typically go to facilities that are part of the national health insurance network (Seguro Integral de Salud - SIS) for these services. In turn, because of high demand, facilities are overburdened and experience frequent stockouts.²⁴

At the same time, Peru’s health outcomes have improved—especially those related to neonatal and childhood disorders. Between 2000 and 2018, the rates of under-five, neonatal, and maternal mortality all declined. (Figure 4). Progress has been driven by dramatic changes in neonatal, child and to a lesser extent, maternal health. This was driven by antipoverty initiatives, where RMNCH programs were strengthened at national and local levels with an equity lens. A clear example was that vaccination against rotavirus and pneumococcus were introduced in the poorest areas and were only scaled up in the wealthier areas after high coverage had been reached in the early implementation districts.²⁵

Since 1990, Peru has additionally experienced an overall reduction in the country's disease burden, as measured by disability-adjusted life years (DALYs). As Figure 5 shows, DALYs have declined across many disease areas, including conditions like neonatal sepsis and neonatal preterm birth, as demonstrated by the 72% decline between 1990 and 2019.

However, the burden caused by some noncommunicable diseases (NCDs), such as diabetes (+105%) and chronic kidney disease (+27%), went up during this period. This shifting burden of disease is in line with what many countries experience as their economies develop. The high cost of treatment for NCDs can be a substantial drain on health budgets, and Peru’s increased NCD burden can help explain why its overall health expenditure remains relatively high.

Improving health system equity in Peru

Some of the health system reforms Peru adopted during the Exemplar study period, such as conditional cash transfer programming targeting increased service use in rural areas and the expansion of prepayment insurance schemes like the SIS, were specifically aimed at reducing health inequalities.

Peru’s interventions thus worked through different pathways to improve equitable access to PHC services.

At the same time, multisectoral social security initiatives such as conditional cash transfers—many of which targeted the country’s poorest people—tied social benefits to health objectives and accompanied Peru’s improved PHC outputs and outcomes.

Data show(s) that these efforts to improve health system equity have made a major difference in health outcomes nationwide. In 1996, the difference in under-five mortality rates between the country’s poorest and richest quintiles was about 110 deaths per 1,000 live births. By 2020, as Figure 6 below shows, that difference had shrunk to 22.