March 25, 2023

The Inevitable Evolution of Healthcare Financing in Uganda

Healthcare Financing

Uganda is a low-income country located in East Africa with a population of approximately 44 million people. Like many other countries in the region, Uganda has faced significant challenges in providing adequate healthcare services to its citizens. One of the major obstacles to improving healthcare in Uganda is inadequate healthcare financing. In this article, we will explore the current state of healthcare financing in Uganda, alternative payment models, and approaches to achieving universal health coverage.

Status Quo

Uganda’s health financing system is dominated by out-of-pocket payments, which account for 40% of all healthcare expenditures. This system has been shown to be regressive and ineffective in providing healthcare services, particularly to vulnerable populations such as women, children, and the elderly. Public financing, which is largely funded by external aid, accounts for 24% of total healthcare spending, while private insurance contributes only 5%. Furthermore, the government’s allocation to the health sector is lower than the recommended 15% of the national budget, which limits the capacity to improve the quality of health services.

Alternative Payment Models

Uganda performance-based financingTo address the limitations of the current financing system, Uganda has implemented alternative payment models, such as performance-based financing (PBF). PBF is a system that rewards health facilities for meeting predetermined performance indicators. In Uganda, PBF has been shown to improve the quality of healthcare services and increase the utilization of services, particularly in rural areas.

Another alternative payment model is social health insurance (SHI), which has been successfully implemented in other countries such as Ghana and Rwanda. SHI involves the pooling of resources from the population, and these funds are used to finance healthcare services. SHI has the potential to improve healthcare access and reduce the financial burden on households.

Approaches to achieve Universal Health Coverage

Achieving universal health coverage in Uganda requires a combination of approaches, including increasing public financing, implementing alternative payment models, and improving healthcare efficiency. One approach is to increase public financing by increasing the government’s budget allocation to the health sector. This would enable the government to invest in healthcare infrastructure, recruit and retain healthcare workers, and improve the quality of healthcare services.

Another approach is to improve healthcare efficiency by reducing wastage, improving procurement and supply chain management, and implementing health information systems. This approach would improve resource allocation and reduce households’ financial burden.


Uganda’s healthcare financing system is inadequate and requires urgent attention to achieve universal health coverage. Alternative payment models such as PBF and SHI have shown potential in improving healthcare access and quality while increasing public financing and improving healthcare efficiency are critical in achieving universal health coverage. By implementing these approaches, Uganda can improve the health outcomes of its citizens and contribute to the sustainable development of the country.