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Financing Local Government Responsibilities in Social Protection and Healthcare in Albania

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Financing Local Government Responsibilities in Social Protection and Healthcare in Albania PLANNING AND LOCAL GOVERNANCE PROJECT IN ALBANIA Women, Peace & Security (WPS) Financing Local Government Responsibilities in Social Protection and Healthcare in Albania AUGUST 2020 PLANNING AND LOCAL GOVERNANCE PROJECT IN ALBANIA Women, Peace & Security (WPS): Financing Local Government Responsibilities in Social Protection and Healthcare in Albania AUGUST 2020 3 PREPARED FOR THE UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT, USAID CONTRACT NUMBER AID-182-C-12-00001, ALBANIA PLANNING AND LOCAL GOVERNANCE PROJECT (PLGP). AUTHORED BY: SABINA YMERI, TONY LEVITAS, ELTON STAFA COVER PHOTO: FREEPIK.COM COPYRIGHT @TETRA TECH. ALL RIGHTS RESERVED BY TETRA TECH. TETRA TECH ARD CONTACT: SARAH LEDDY SENIOR TECHNICAL ADVISER/MANAGER [email protected] TETRA TECH ARD HOME OFFICE ADDRESS: TETRA TECH ARD 159 BANK STREET, SUITE 300 BURLINGTON, VT 05401 TEL: 802 495-0282, FAX 802 658-4247 WWW.TETRATECH.COM/INTDEV DISCLAIMER This report is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this report are the sole responsibility of Tetra Tech and do not necessarily reflect the views of USAID or the United States Government. 4 TABLE OF CONTENTS TABLE OF CONTENTS ....................................................................................................................... 5 EXECUTIVE SUMMARY ...................................................................................................................... 6 1. INTRODUCTION....................................................................................................................... 10 2. ASSIGNMENT OF RESPONSIBILITIES .................................................................................. 11 2.1 Social protection ....................................................................................................................................................... 11 2.2 Healthcare .................................................................................................................................................................. 14 3. FINANCING MECHANISM ....................................................................................................... 16 3.1 Social Care Services ................................................................................................................................................. 16 3.2 The Social Fund: A competitive grant mechanism ........................................................................................... 21 3.3 Primary Healthcare .................................................................................................................................................. 22 4. CONCLUSIONS AND RECOMMENDATIONS ...................................................................... 23 4.1 Financing Social Services Through the Unconditional Grant ........................................................................ 24 4.2 Financing Social Responsibilities Through An Integrated Specific Block Transfer ................................... 24 4.3 The Social Fund ......................................................................................................................................................... 25 4.4 Financing Municipal Functions in Primary Healthcare ..................................................................................... 25 5 EXECUTIVE SUMMARY Decentralisation is generally seen as an effective means to increase the quality and availability of services, to allocate resources to where the needs are, and to increase local participation in decision- making. These considerations have been at the heart of the decentralisation policy in Albania, where local governments are considered to be able to provide services in a more efficient way due to their proximity with the beneficiaries. However, there has been a lack of clearly designed decentralization strategy and the assignment of responsibilities has not always been followed by the assignment of financial means needed to meet those responsibilities. In the case of social services, benefits of decentralisation are not always clear – cut. Income redistribution policies such as social welfare are often thought to be the domain of the central government. Local governments may not sustain heavy welfare programs on their own without risking attracting clients from other jurisdictions, which would in turn increase the costs of these programs. However, implementation of social welfare programs is often left to local governments, while the ultimate responsibility for financing these programmes rests with the central government. Cash benefit programmes are financed by the central government in almost all European countries; while the models for the delivery of social care services vary considerably from fully centralised to fully decentralised in different European countries. There is no single best assignment of responsibilities, and different models work in different contexts. Considerations of welfare distribution and public benefit are also relevant in the primary education and healthcare sectors. In these sectors, spillovers are significant, therefore some components of the policies will always remain national responsibilities. When such services are local, the central government may help (or require) local governments provide services to a certain standard, for example, through grants conditional on the provision of the requisite levels of service.1 This policy note aims at reviewing the current systems for financing local government responsibilities in social protection and healthcare in Albania. It provides an overview of the legal, organizational and financial framework for local governments’ responsibilities in social protection and healthcare in Albania, including concrete recommendations for improving the systems which finance these responsibilities. Social Care Services The 2015 Law on Local Self-Government and the Law on Social Care Services assigned a set of social protection responsibilities to municipalities. Municipalities have a primary role in the establishment and management of social care services providing for vulnerable people2, including the responsibility to plan, finance and deliver at least a minimum set of services. The central government, through the Ministry of Health and Social Protection retains the prerogatives of policy design and overall oversight in the social protection domain, including social welfare services. Central government institutions are also in charge of the management of a set of “specialised” social services as well as monitoring and inspection authorities. Social care services are non-cash interventions supplied to individuals, families and communities to help reduce poverty, mitigate risks, improve inclusion and integration, and to help people live full and satisfying lives. The Albanian social care system provides public and non-public services for persons in need of residential and day care services. Public social services are provided mainly through residential and day care centres and financed by the state or local government budgets. Overall, in terms of 1 Bird, Ebel, Wallich, (1995) Fiscal Decentralization: From Command to market in Decentralization of the Socialist State World Bank 2 Law 139/2015 “On local self-government in Albania”, Article 24. 6 mandates, the legal framework appears to assign clear responsibilities to municipalities in planning, budgeting and managing social services. Nevertheless, the instruments for delivery remain vague and the national government has never defined how these mandatory services should be financed. The lack of experience in social care services leads to incomplete regulatory frameworks and standards in social service delivery; as well as services that are both few in number and varying in quality. As of 2019, at least 24 municipalities - do not provide any social care services, despite their legal obligation to do so. Meanwhile the 39 municipalities that do provide some service face challenges with regard to service outreach, human and financial resources, quality and sustainability.3 Currently, municipalities have a limited role in the management of social protection cash based programs (social assistance and disability). A reformed social assistance program entered into force since 20184, overhauled the roles and responsibilities of local governments, which now act purely as agents of the central government in performing a delegated function. Nevertheless, municipal social service staff carry out a set of crucial processes for the identification, monitoring and case management for households and individuals benefitting from these two centrally administered cash benefit programmes. Overall, social protection spending in Albania amounts to 9,3% of GDP, significantly lower than the EU average of 28%5. The social protection budget programme, under the Ministry of Health and Social Protection, is the main state budget programme that supports social welfare policies outside of contributory programs. This budget programme covers the two main cash benefits programmes -- social assistance and disability benefits -- financed by the central government and delivered through municipalities as paying agents, as well as social care services. The cash benefit programmes for poverty alleviation and disability, account for over 95% of the total budget programme for the last three years.6 The remainder 4 - 5% of total budget allocations
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