Civil society groups at the recent World Health Assembly criticized the continued focus on insurance schemes in the push for Universal Health Coverage (UHC), which all too often includes significant private sector participation. Evidence to support the claim for private sector involvement of this kind remains extremely thin and a new study by the Municipal Services Project shows it could jeopardize public health in the South.
The study compares health outcomes in Chile and Costa Rica, two countries that have come to epitomize contrasting approaches to ‘Universal Health Coverage’ in Latin America. Chile’s focus has been on insurance-based UHC while Costa Rica has built a single public health system. The research provides strong evidence to show that there are widespread and consistent advantages to promoting UHC through a strong public system that funds and provides all medical and preventive services to citizens rather than through a fragmented public-private mix.
It is important to note that both countries have achieved the lowest infant mortality rates and the highest life expectancies in the region thanks to major advances in primary care. But Chile’s health ‘market’ has led to inefficient use of resources, with higher administrative costs and more irrational medical procedures (e.g. caesareans) resulting from oligopolies and collusion among private providers.
One of the major goals of UHC is financial protection for poor households when they face illness. Yet Chileans systematically need to make higher out-of-pocket payments to get medical care in comparison with Costa Ricans. This situation is produced in part by the fact that Chileans pay for health conditions, services or products that are not covered by their insurance (e.g. prescription drugs).
In contrast, Costa Rica’s public health care system remains relatively affordable and more efficient, with total per capita health expenditure standing at US$811 compared to US$947 in Chile. Importantly, Costa Rica has also consistently prioritized preventive health care. Expenditure on prevention and public health services from 2002-2006 in Costa Rica is more than double that of Chile (6-7% vs 2-3%). This focus on prevention is more cost-effective and can yield greater public health impacts in the long term.
Using comparable data (Latinobarómetro), the Municipal Services Project study shows that twice as many people reported facing access barriers to health care in Chile compared to Costa Rica, citing distance to hospital, time to obtain an appointment, and cost of seeing a doctor as the major reasons. In addition, lack of access to health services as a result of financial barriers in Chile still stands at 4.2% compared to 0.8% in Costa Rica.
Costa Ricans continue to be largely satisfied with the quality of their healthcare services, more so than Chileans. Interestingly, LAPOP 2012 results show that most people in both countries think that government, rather than the private sector, should be responsible for health care (71.1% in Chile and 67.5% in Costa Rica).
According to the notions of “active purchasing” and “managed competition” – frequently used to promote insurance schemes – the existence of different providers competing for resources should have produced higher levels of quality at lower costs in Chile. The evidence presented in this report shows that such assumptions are not always true.
The Chilean health system is an example of how segmentation produced by the coexistence of private and public insurances is detrimental to efficiency and equity. Collusion among private providers and oligopolies are realities that are ignored in the competition argument.
Debates over the best institutional arrangements to organize universal health care are far from over, but this case study demonstrates that insurance schemes as promoted by some proponents of the UHC agenda are neither the only nor the best option.
Luis Ortiz Hernández is Professor in the Health Care Department, Universidad Autónoma Metropolitana Xochimilco, Mexico and visiting professor at Queen’s University, Canada. His most recent publication, “Chile and Costa Rica: Different roads to universal health in Latin America,” is available here.
A growing consensus for Universal Health Coverage (UHC)
The patchy progress towards meeting the health-related MDGs underlines the urgent need for countries to build free, universal health care systems. Cost is a major barrier for people to access healthcare. 150 million people facing catastrophic healthcare costs every year, while 100 million are pushed into poverty because of direct payments.
There is a growing consensus that UHC should be included in the post 2015 framework. During the 67th World Health Assembly in May 2014, UHC was one of the most discussed topics, from side events to technical briefings, including in the official meeting agenda. UN member States adopted a resolution on Health in the post 2015 agenda that states clearly that UHC is one of the core components of the post-MDGs.
But do we agree on the definition of Universal Health Coverage?
During the World Health Assembly, another important thing happened: the World Bank and WHO launched the final version of a monitoring framework for measuring progress towards UHC at country and global levels. The monitoring framework is a technical instrument, aimed at providing tools for countries to monitor their own progress towards UHC. But in the context of the intense initial negotiations on defining the health goal in the post 2015, it gives a clear political indication on what is understood by UHC and how we can measure it. The monitoring framework sets out clear commitments to reduce out-of-pocket payments and improve access to health care for the poor with two new targets:
Having clear targets and deadlines is welcome, so is the fact that the framework recognises the need to disaggregate data by gender, wealth and place of residence. This will make it possible to measure equity although a more comprehensive disaggregated data should also include age.
Abolition of user fees
We welcome that the financial protection indicator is no longer just focusing on preventing people being pushed into poverty, but on protection from out of pocket payments. Indeed, out of pocket payments are not just a problem because they push people into poverty but because they prevent people from accessing services altogether. But reducing direct payments does not automatically make health care affordable – especially if these are replaced with prohibitive health insurance premiums where membership is linked to contributions or if medicine prices remain high.
UHC should be based on the principle of social solidarity in the form of income cross-subsidies – from rich to poor – and risk cross-subsidies – from the healthy to the ill – so that access to services is based on need and not ability to pay. This means that health services must be provided free at the point-of-use. Health user fees are the most inequitable way of paying for health care – they prevent poor people from accessing lifesaving treatment and push millions of them into poverty each year. In the words of Jim Yong Kim, President of the World Bank Group “Even tiny out-of-pocket charges can drastically reduce [poor people’s] use of needed services. This is both unjust and unnecessary”
Universal health coverage must mean health coverage for all
Oxfam cannot possibly support the coverage target proposed by the World Bank and WHO. Let’s take a step back. For Oxfam, UHC is anchored in the right to health and an answer to people’s asks for Health For All. For Oxfam, UHC means Health Coverage For All. Therefore, we need a strong commitment of the international community in the post 2015 agenda on this goal.
By stating the coverage target at 80%, the monitoring framework gives to the international community the signal that UHC cannot, in fact, be universal, because it is unrealistic. We disagree.
UHC means that ALL people are able to access ALL the health services they need, without fear of falling into poverty. It doesn’t mean that all people will use the services, but that people are able to access good quality services when they need them.
Strong public services and public financing
Scaling up health care services to achieve UHC requires a strong public health sector providing the majority of services. Governments should therefore ensure that adequate proportions of national budgets are allocated to health, in line with the 15 per cent target agreed in the Abuja Declaration. It is essential that steps are taken to ensure that domestic tax collection becomes progressive, and robust, and that both individuals and companies pay according to their means. Tackling tax evasion and tax avoidance must also be a crucial priority within the new framework.
A focus on UHC in the framework provides an opportunity to accelerate progress on the health related MDGs, and address the burden of non-communicable diseases. Most critically, it is an opportunity to move towards a more comprehensive approach to deliver on the right to quality, affordable, and equitable health care coverage for all. The new framework must include a standalone goal on achieving Universal Health Coverage for all by 2030.
Charlotte Soulary works for Oxfam International as a Health and Education Policy Adviser
Lesotho has a new hospital – built and operated under the first public-private partnership (PPP) of its kind in any low-income country. The IFC advice and promise was that it would cost the same as the public hospital it replaced. Instead the PPP hospital is costing the government 51% of their total health budget while providing 25% returns to the private partner and a success fee of $723,000 for the IFC.
In a report released today, ‘A Dangerous Diversion’, Oxfam and the Consumer Protection Association (Lesotho) explain how the Lesotho health PPP was developed under the advice of the International Finance Corporation (IFC – the private sector investment arm of the World Bank) and now costs the government $67 million per year, or at least three times the cost of the old public hospital. The hospital is reported by the IFC to be delivering better outcomes in some areas. But the biggest concern is that as costs escalate for the PPP hospital in the capital, fewer and fewer resources will be available to tackle serious and increasing health problems in rural areas where three quarters of the population live.
A consortium called Tsepong Ltd – among whose shareholders are South African healthcare giant Netcare – won an 18-year contract to build and run the new 425-bed hospital. Its return on investment is 25%. The PPP is the first of its kind in a low-income country and more ambitious and complex than the majority of PPPs attempted in high-income contexts. Not only is the private consortium responsible for designing, building, maintaining and partly financing the hospital, it also provides all clinical services for the contract period.
Since well before the PPP contract was even signed (in 2009) the IFC was busy marketing it a major success, proposing it as a model for other countries to replicate. In 2007, Bernard Sheahan, the IFC‘s Director of Advisory Services, said:
‘This project provides a new model for governments and the private sector in providing health services for sub-Saharan Africa and other regions. The PPP structure enables the government to offer high-quality services more efficiently and within budget, while the private sector is presented with a new and robust market opportunity in health services.’
And despite a significant body of evidence highlighting the high risks and costs associated with health PPPs in rich and poor countries alike, similar IFC-supported health PPPs are now well advanced in Nigeria, and in the pipeline in Benin. The IFC’s health PPP advisory facility has financial backing from the governments of the UK, the Netherlands, South Africa and Japan.
So why is the PPP so expensive? There are multiple and wide-ranging reasons outlined in the new report and in a previous blog authored by Dr John Lister on this site. Some of these seem inherent to health PPPs and raise serious questions about why the model was pursued in a low-income, low-capacity context. Other cost increases appear to be a result of bad advice given by the IFC.
It is accepted that borrowing capital via the private sector will always be more expensive than governments borrowing on their own account. The theoretical cost saving and value for money potential of PPP financing and delivery therefore lies in effective risk transfer to the private sector and, in turn, the effective management of that risk by the private sector in the form of improved performance and greater cost efficiency in its operations. In the case of Lesotho, this potential benefit has not been realised, and the costs are already escalating to unsustainable levels. As savings on clinical services have not been delivered, it is even more important to raise serious questions about why cheaper public financing options were not pursued.
The biggest losers of the Lesotho health PPP are the majority of Basotho people who live below the poverty line in poor rural areas, who have little or no access to decent healthcare and where mortality rates are high and rising. Amongst the most severe challenges facing the health system is the shortage of health workers. Yet while the budget line covering the health PPP will see a 116% rise in the next 3 years, the health worker budget will see below inflation annual increases of just 4.7%.
As the country‘s health financing crisis escalates, the option of reintroducing and increasing user fees at primary and secondary level facilities has already been tabled for debate. Such a devastating and retrograde move in Lesotho would further exacerbate inequality and increase rather than reduce access to healthcare for the majority of the population. World Bank President, Jim Yong Kim, recently stated that user fees for healthcare are both unjust and unnecessary. In an interview just last week in the UK’s Guardian newspaper Kim said:
“There’s now just overwhelming evidence that those user fees actually worsened health outcomes. There’s no question about it. So did the bank get it wrong before? Yeah. I think the bank was ideological.”
To ensure ideology rather than evidence is not driving the IFC’s continuing promotion of health PPPs in poor countries, our report calls for a fully independent review using peer reviewed evidence to question the appropriateness, cost-effectiveness and equity impact of this model. Oxfam and the Consumer Protection Association (Lesotho) also say that the IFC’s role in exposing Lesotho to such a high-risk, high-cost long-term contract should be investigated and, until then, the World Bank should stop all IFC advisory work in support of health PPPs.
Anna Marriott is the author of ‘A Dangerous Diversion’ and editor of Global Health Check.
The extreme gap between the rich and the poor has become headline news in countries around the world, with consensus from actors as diverse as the Pope, Christine Lagarde and President Obama that we need solutions to reverse the growing divide between the haves and the have nots.
In February 2014, backing a new IMF discussion paper, Christine Lagarde Director of the IMF underlined that ‘making taxation more progressive’ and ‘improving access to health and education’ have a key role to play in tacking inequality. Oxfam has worked for decades to promote universal access to quality health services, and in our new report ‘Working for the Many’ we consider evidence of how public services – especially health and education – impact on economic inequality.
First we consider a 2012 OECD study which quantifies the value of public services – the vast majority of which is health and education – to each quintile of the population, by converting that value into ‘virtual income’. The data shows that in OECD countries public services are worth the equivalent of a huge 76 per cent of the post-tax income of the poorest group, and just 14 per cent of the richest. So whilst public services benefit rich and poor equally in absolute terms, so that everyone is a winner, these services are strongly redistributive and help to mitigate the impact of today’s skewed income distribution by benefiting the poorest far more.
In fact, across OECD countries the virtual income gained from public services reduces income inequality by an average of 20 per cent. Similar calculations across six Latin American countries show the same impact – virtual income from health and education reduce income inequality by between 10 and 20 per cent.
Evidence from studies done across Asia, and more than 70 developing and transition countries shows the same underlying patterns in the world’s poorest countries. A 2007 study of healthcare systems in eight Asian countries and three Chinese provinces and regions shows that in all but one, healthcare had the same equalizing effect through progressive distribution of benefit. The more these governments spent on healthcare, the more progressive the distribution of income was and the more the healthcare system addressed economic inequality. This mirrors findings in the OECD study, that countries that increased public spending on services throughout the 2000s had an increasing rate of success in reducing income inequality. But those countries that cut spending during that time showed a marked decline in the rate of inequality reduction.
Whilst public services provide everyone with ‘virtual income’ and fight inequality by putting more in the pockets of the poorest; user fees and private services have the opposite effect.
User fees take money out of the pockets of the poorest and undermine the inequality-reducing potential of services. Health user fees cause 150 million people around the world to suffer financial catastrophe each year. That is approximately two per cent of the global population. And since Malaysia privatized portions of its health services and introduced user fees in the 1980s, out-of-pocket spending has risen, representing one-third of total healthcare spending in the country in 2009. A recent study in the USA showed that the poorest 20 per cent spend 15 per cent of their income on healthcare, compared to the richest 20 per cent for whom healthcare amounts to just 3 per cent of income. But despite this significant cost to the poorest, they still don’t get all the cover they need.
Private provision of healthcare further skews the benefit towards the richest. In three of the best performing Asian countries that have met or are close to meeting Universal Health Coverage – Sri Lanka, Malaysia and Hong Kong – the private sector is of negligible value to the poorest quintile of the population, and the benefits of private healthcare services are strongly regressive. They serve the richest far more than the poorest. Fortunately in these cases the public sector has compensated and allowed universal and equitable access to be achieved.
More recent and detailed evidence from a 2013 study of the Indian healthcare system finds that amongst the poorest 60 per cent of Indian women, the majority turn to public sector facilities to give birth, whilst the majority of those in the top two quintiles give birth in a private facility. Finally, comparable data from across 15 countries in sub-Saharan Africa reveals that just three per cent of people from families living in the poorest quintile sought care from a private doctor when sick.
Fees take more away from the actual income of the poorest people, and private services benefit the richest first and foremost. If governments are serious about closing the gap between rich and poor, and achieving Universal Health Coverage, the evidence points them towards free public services.
Read the full paper, ‘Working for the Few: Public Services Fight Inequality’
Emma Seery is Head of Inequality Policy and Campaigns for Oxfam GB
At a high-level meeting in Tokyo a couple of weeks ago World Bank Group President Jim Yong Kim was unequivocal – “achieving universal health coverage and equity in health are central to reaching the [World Bank] global goals to end extreme poverty by 2030 and boost shared prosperity.”
Kim’s emphasis on equity and the need to prioritize policies that actively redistribute resources and reduce disparities in health coverage marks a crucial and welcome turning point for the World Bank. As Oxfam argued in a recent paper, UHC reforms must be explicit about reducing inequality in access to health services, so that everyone has the same financial protection and access to the same range of high quality health services – according to need and not their ability to pay. Equity must be designed into the system from the beginning with governments and donors ensuring that the poor benefit at least as much as the better off at every step of the way towards universal coverage.
But by far the most significant outcome of the conference was the release of a joint World Bank and World Health Organization proposed framework for monitoring progress towards UHC. The framework sets out clear commitments to reduce out-of-pocket payments and improve access to health care for the poor with two new targets:
These clear targets and deadlines give something progressive to hold the World Bank Group accountable to but why set an 80% rather than 100% target? And if the Bank is serious about them the targets they should be monitored annually and included in the Bank’s new corporate scorecard currently under negotiation. And most importantly, what action will the Bank take to deliver against them?
User fees are the most inequitable method of financing health care services, yet they continue to exist in most poor countries. Three people every second are pushed into poverty because of them but donor support for fee removal has remained unacceptably low. The World Bank should break from history and play a clear pro-active role in helping governments to remove fees and to raise and distribute revenue for health equitably across populations.
At the same time the Bank needs to be much clearer that user fees should not be replaced by health insurance schemes that have been proven to prioritize already advantaged ‘easy to reach’ groups in the formal sector or rely on collecting premiums from people who are too poor to pay. As Oxfam’s recent paper showed, the countries making most progress towards UHC have prioritized spending on health from general taxation – either on its own or pooled with formal sector payroll taxes and international aid. Governments and donors, including the World Bank, should use the recent lessons from these countries and build on them.
At the Tokyo event we once again heard calls from Jim Kim for investment in ‘affordable’ ‘quality’ ‘health coverage’ for all, with an emphasis on ‘primary health care’. This is positive but we need greater reassurance that the Bank has shifted to a genuine focus on comprehensive primary health care for all as part of its UHC agenda. This would stand in stark contrast to its historic emphasis on ‘basic’, ‘selective’ or ‘minimum’ interventions or packages of care.
We hope world leaders listen to the clear call from the World Bank and WHO for UHC to be included in the post-2015 development framework. Universal health coverage provides the opportunity to accelerate progress on the health-related Millennium Development Goals, address the growing burden of non-communicable diseases, and most critically to move towards a more comprehensive approach to deliver on the right to equitable and affordable health care for all. This is something all world leaders should embrace as negotiations on the post-2015 development framework commence.
Ceri Averill is a Health Policy Advisor for Oxfam GB and author of Universal Health Coverage: Why Health Insurance Schemes are Leaving the Poor Behind