In its seminal World Health Report of 2010, WHO argued that all countries can make progress towards Universal Health Coverage (UHC) by expanding the number of people covered by effective health services and giving them financial protection from the costs of these services. The report also highlighted the pivotal role of equitable health financing reforms in achieving this objective. These processes ought to be easier in wealthy countries, but even in the world’s biggest economy, due to an inequitable financing system, tens of millions of people still lack effective health coverage.
In Malawi (with a GDP per capita 1/226 of the United States) the health financing situation is particularly challenging. This is especially the case following the suspension of considerable sums of aid financing after the “Cashgate” corruption scandal that brought down the former government. So, faced with a high burden of unmet health needs, a heavily constrained government budget and uncertain levels of external funding, how should Malawi take its next steps towards UHC?
With the public financing situation looking bleak, a knee-jerk reaction might be to look for alternative financing sources and in particular to raise health funds directly from the population – in the form of user fees. But evidence from across the continent over the last thirty years shows that this would be a mistake. Charging patient fees would raise very little revenue, would incur high administration costs and most worryingly would exclude millions of poor Malawians from receiving healthcare. Also with the world looking to build resilient health systems in the aftermath of the Ebola epidemic it would be extremely unwise to suddenly create new access barriers to essential health services.
While concerns around fee-paying wards and bypass fees remain, fortunately, the government recently made clear statements to the effect that the majority of services will remain free at the point of delivery.. Not only is this good news for the health and welfare of the population, it is a smart political move by the Government, who may have remembered the last time they introduced health fees following advice from ex-pat advisers. This was soon after independence when new health charges were met with extensive hostility from the population. This triggered a political crisis and resulted in some ministers losing their jobs. Following this lesson of people power, Malawi was one of the few African countries not to bow to donor pressure to introduce fees in the 1980s, when it continued to provide universal free health care. This undoubtedly contributed to Malawi outperforming some of its neighbours in making progress towards the health-related MDGs. With many other African countries now learning that they too should remove user fees, it would be a tragedy for Malawi to move in the opposite direction.
But if user fees aren’t the answer and with private voluntary insurance also proving an ineffective route to UHC, what steps could the Government of Malawi (GoM) take towards reforming its health financing system? As the 2010 World Health Report and subsequent influential reports have shown, the key to achieving UHC lies in public financing reforms. In particular, it requires increasing levels of pooled public financing and in maximizing the efficiency and equitable allocation of these funds. In terms of raising higher amounts of domestic funding, broader public financing reforms could increase the size of the overall government’ budget and a political choice could be made to increase the health share from 8.6 % towards the Abuja target of 15%. Also, it is to be hoped that aid financing will increase again in the near future because external assistance will be essential for Malawi for at least the medium term if it is to reach adequate levels of public health financing.
But to secure this additional funding, perhaps the best strategy for the health sector will to demonstrate to its domestic and external financing sources that it can deliver rapid results with incremental allocations in funding. This will involve investing additional funds in cost-effective interventions that extend health coverage to more people in Malawi – and especially to the poor and vulnerable.
One immediate “quick-win” along these lines, could be to ensure that people relying on NGO facilities in remote areas also receive free services. This would require increasing government grants to these facilities. In fact this is already a policy priority for the new Government. Fast-tracking this reform would bring health and economic benefits to the communities concerned and political benefits to the government. Looking at UHC success stories in other countries, the government of Malawi and donor partners could also achieve rapid progress by implementing extensive supply-side reforms. For example Rwanda and Ethiopia have made spectacular progress in extending coverage through scaling up services provided through publicly-funded community health workers. Also implementing extensive reforms of medicines supply systems to ensure the provision of free generic medicines and health commodities has proved a very effective way to increase coverage of essential services. Furthermore these types of pro-poor initiatives could prove an attractive proposition for donors wanting to re-engage in Malawi’s health system.
Therefore even though the health financing situation may appear daunting in Malawi, this doesn’t mean that a completely new strategy based on private financing will be the solution. International evidence shows that this would probably result in a deterioration in health coverage – particularly for the poor. Instead Malawi would be better advised to learn from its own history and re-invigorate its publicly financed health system, which as the world has learnt is the proven route to achieve universal health coverage.
Levy J 2015 In U.S., Uninsured Rate Dips to 11.9% in First Quarter Gallup 13 April 2015 Available at http://www.gallup.com/poll/182348/uninsured-rate-dips-first-quarter.aspx Accessed 23 June 2015
List of countries by GDP (nominal) per capita Wikipedia Available at: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita Accessed 23 June 2015
Tran M 2014 Malawi aid freeze could hit health and education sectors The Guardian 14 January 2014 Available at http://www.theguardian.com/global-development/2014/jan/14/malawi-aid-freeze-health-education Accessed 23 June 2015
Yates R 2009 Universal health care and the removal of user fees The Lancet Volume 373, No 9680 pages 2078 to 2081 available at http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(09)60258-0/abstract Accessed 23 June 2015
Heymann D L et al 2015 Global health security: the wider lessons from the west African Ebola virus disease epidemic The Lancet, Volume 385 , Issue 9980 , 1884 – 1901 available at http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(15)60858-3/fulltext Accessed 23 June 2015
Chauwa A 2015 Malawi govt backtracks on hospital user fees Nyasa Times April 5 2015 Available at http://www.nyasatimes.com/2015/04/06/malawi-govt-backtracks-on-hospital-user-fees/ Accessed 23 June 2015
Messac L 2014 Moral hazards and Moral Economies: The Combustible Politics of Healthcare User Fees in Malawian History South African Historical Journal Volume 66 Issue 2 Available at http://www.tandfonline.com/doi/abs/10.1080/02582473.2014.903292?journalCode=rshj20#.VYmGt1xa_ww Accessed 23 June 2015
Cortez R et al 2014 Achieving MDGs 4 & 5: Malawi’s progress on maternal and child health The World Bank Knowledge Brief 92548 Available at http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/11/11/000406484_20141111141118/Rendered/PDF/925480BRI0Box30August0201400PUBLIC0.pdf Accessed 23 June 2015
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Mogombo K 2015 Gondwe unveils MK901.6 billion 2015/2016 Budget Mana online 25 May 2015 Available at http://www.manaonline.gov.mw/index.php/business/item/3011-gondwe-unveils-mk9016-billion-20152016-budget Accessed 23 June 2015
Crowe S 2013 In Ethiopia, a far-reaching health worker programme has helped reduce child mortality across the country UNICEF Available at http://www.unicef.org/infobycountry/ethiopia_70372.html Accessed 23 June 2015
Joychen P J 2013 Free medicine scheme makes a big splash in Rajasthan Deccan Herald 8 February 2013 Available at http://www.deccanherald.com/content/310818/free-medicine-scheme-makes-big.html Accessed 23 June 2015
The Ebola crisis exposed the weaknesses of healthcare systems in low- and middle-income countries created mainly by insufficient funding. Given the global community’s commitment to universal health coverage (UHC), the Ebola outbreak has prompted serious reflection among health policy decision-makers. One of the central features of this debate is financing: how can relatively poor countries find the money to pay for universal health coverage? To date, low- and middle-income countries have been growing toward UHC through social health insurance systems funded through employment. Yet, progress has been slow and uneven leaving people in the informal sector, who are the majority of the population, out was insurance schemes. Rather than seeking innovative solutions to this old problem, what is needed is a renewed commitment to an old solution: tax-based financing.
Taxation has sometimes been overlooked in debates around financing UHC. The Lancet’s recent Global Health 2035 commission only discussed taxation in the context of specific consumption taxes on risky behaviours, such as tobacco and alcohol. These so-called “sin taxes” are important public health measures but they are unlikely to generate sufficient revenue to finance UHC. Instead, low- and middle-income countries should look to translate economic growth into healthcare spending through general taxation.
Using data from low- and middle-income countries my colleagues and I examined the association between tax revenues and health spending. We found that tax revenue was a major statistical determinant of progress towards UHC. Each $10 per-capita increase in tax revenue was associated with an additional $1 of public health spending per capita. Whereas each $10 increase in GDP per capita was associated with an increase of $0.10. Crucially, tax revenues sit on the pathway between economic growth and health spending. In short, tax financing is an efficient way of translating economic growth into health spending.
Countries with more tax revenues have also made more progress on other indicators of UHC, even after adjusting for economic activity in the country. Among tax poor countries, greater tax revenues are associated with more women being attended by a skilled healthcare worker during pregnancy and greater access to healthcare for all people.
How taxes are collected is also important. Governments can choose how they collect tax revenues. The IMF and World Bank traditionally split these modes of taxation into three types: 1) Taxes on income, profits, and capital gains, which tend to be progressive because the poor pay a smaller proportion of their income; 2) Taxes on goods and services, which tend to be regressive because the poor pay a larger share of their income; and 3) Other taxes, such as property taxes. In recent years, low- and middle-income countries have tended to rely more heavily on taxes on goods and services because they are easier to collect. However, they can also increase the cost of staple foods and healthcare, unless these specific goods and services are exempt from such taxation. Because taxes on goods and services can increase the cost of food and healthcare they may also reduce access to these necessities among economically deprived households and communities.
With the same tax data described above, we examined whether changes in taxation within a country over time was associated with changes in infant mortality. The results were clear. Where taxes on goods and services increase (thereby increasing the cost of food and healthcare) infant mortality also increased. However, where taxes on income, profits, and capital gains increase (progressive taxation) we do not find this same relationship.
Expanding the tax base in low- and middle-income countries can be difficult, especially if governments are going to rely on income, profits, and capital gains. This is because there is a very large informal economy in many of these countries, tax revenues from income can be unstable. Yet, the UK government has shown how some countries can increase revenues through reducing corporate tax evasion. Under the direction of DFID, tax accountants worked with two developing countries (Ethiopia and Tanzania) to reduce tax evasion, increasing tax revenues by 40% in 3 years. This type of intervention is especially important because before the Ebola outbreak in Sierra Leone, only one in five leading mining companies had paid any corporate income tax. If they had been adopted sooner, such interventions could have strengthened the health systems in Sierra Leona and other Ebola-hit countries.
Tax is not sexy. Tax is not necessarily innovative. But, tax is the cornerstone on which we can achieve UHC.
This post is based on: Reeves A., Gourtsoyannis Y., Basu S., McCoy D., McKee M., Stuckler D., 2015, Financing universal health coverage: effects of alternative tax structures on public health systems in 89 low- and middle-income countries. The Lancet, http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(15)60574-8/abstract
Even before the devastating Ebola epidemic in West Africa, development agencies were highlighting that health indicators in this region were lagging the rest of the continent. In a 2013 report UNICEF noted:
“West and Central Africa in particular requires a special focus for child survival, as it is lagging behind all other regions, including Eastern and Southern Africa, and has seen virtually no reduction in its annual number of child deaths since 1990.”
But as Ebola has overwhelmed some countries and threatened many others, questions are being asked about the role of international agencies in undermining health systems in West Africa. Specifically, fingers have been pointed at the 1980s structural adjustment policies of the World Bank and IMF for forcing poor African countries to cut public spending on health. These policies also shifted the financing burden of health services onto poor populations by charging them user fees. Interestingly at the time one of the leading critics of this policy was none other than the current President of the World Bank.
Other health policies promoted at the same time were also damaging to poor people’s access to health care. The Bamako Initiative (BI) launched in 1987, was prompted by UNICEF and WHO as community management of “revolving drug funds”. However, BI institutionalized user fees for essential medicines in some of the poorest countries in the world. Not surprisingly, with most households unable to pay these fees, utilization of health services in the countries concerned slumped, with the poor most likely not to seek care. In West Africa where the BI became established, typical utilization of curative services at the start of the millennium was around one visit per person every three years!
Thankfully a huge volume of research evidence over the last 20 years has conclusively proved the folly of this approach. User fees have been shown to be ineffective in raising health revenues, inefficient in incurring high administration costs and inequitable in excluding the poor. They have also resulted in outrageous human rights abuses where poor people (often women and babies) have been detained in hospitals because they can’t pay their bills. Sadly this practice continues to this day.
As a result of these findings many prominent aid agencies have radically changed their health financing policies, including the World Bank whose President has referred to user fees as “unnecessary and unjust”. Even one of the architects of the World Bank’s previous pro-user fees policy has publicly stated his change of position on user fees although he did not admit that it was a mistake then.
However, not all agencies have been so clear in making a break with the past. As recently as 2008 in its State of the World’s Children Report, UNICEF was still championing the Bamako Initiative and openly criticizing NGOs that were advocating the removal of user fees Indeed one of the countries singled out for praise in implementing the BI was Guinea, from where the current Ebola epidemic has spread
It is true that the international agencies involved in promoting the BI have gradually shifted their positions on health financing and are now rallying behind the goal of universal health coverage. However, the agencies that promoted the BI need to acknowledge their past mistakes rather than assuming that the Bamako Initiative never happened.
This is problematic because whereas other development agencies are aware of the changing consensus on health financing, this may not be the case in many countries. Some governments are still laboring under the illusion that the BI is working and thus user fees policies are still implemented. Thankfully, some countries in the region are now replacing user fees with public financing, for at least some of the population, most notably in Liberia, Ghana, Senegal, Niger and Sierra Leone. The latter’s free health services initiative for pregnant women and children under 5 has been a particularly good example of the impact of removing user fees.
However in West and Central Africa, out-of-pocket payments including user fees remain by far the biggest health financing mechanism. With the Ebola virus not beaten yet in the region, the lack of effective healthcare coverage doesn’t only threaten the health of the population in the region but also poses a threat to global health too.
Therefore, as the international community begins to support countries in West Africa to develop more resilient health systems, there is one immediate action they should take as a top priority. This action would cost practically nothing but its impact could be profound in helping put countries on a path towards equitable universal health coverage. After a twenty-eight year failed experiment, it’s time that agencies including UNICEF and WHO formally and publicly end the Bamako Initiative.
 UNICEF 2013 Committing to Child Survival, a Promise Renewed, Progress Report 2013 Available at: http://www.unicef.org/publications/files/APR_Progress_Report_2013_9_Sept_2013.pdf
 IDS Practice Paper in Brief 2015 Ebola and Lessons for Development Available at: http://opendocs.ids.ac.uk/opendocs/bitstream/handle/123456789/5849/ID557%20Online.pdf
 Kim JY et al editors 2000 Dying for Growth Global Inequality and the Health of the Poor. Common Courage Pres
 UNICEF 2009 Maternal and Child Health the Social Protection Dividend: West and Central Africa
 Yates R 2009 Universal Health Care and the Removal of User Fees The Lancet 373: 2078–81 Available at http://www.thelancet.com/pdfs/journals/lancet/PIIS0140-6736(09)60258-0.pdf
 Kippenberg J Burundi A High Price to Pay Detention of Poor Patients in Hospitals 2006 Human Rights Watch Volume 18 No 8(A) New York, USA
 See https://www.youtube.com/watch?v=RNfzXh4I-Pw
 Kim JK Poverty Health and the Human Future [Speech] World Health Assembly, Geneva, Switzerland 21 May 2013 Available from: http://www.worldbank.org/en/news/speech/2013/05/21/world-bank-group-president-jim-yong-kim-speech-at-world-health-assembly
 Boseley S (2012) From user fees to universal healthcare – a 30-year journey. The Guardian
 UNICEF 2008 State of the World’s Children: Child Survival available at: http://www.unicef.org/sowc08/docs/sowc08.pdf
During 2014, we both had a chance to work on an exciting project of analysing inequality trends in Russia as part of Oxfam’s programme on Empowering Civil Societies in an Unequal Multipolar World (ECSM BRICSAM). Through the project, we’ve got to work on the issues of both economic inequality and inequality in access to healthcare in Russia, which are central to Oxfam’s inequality campaign. This blog reflects some of our findings and learning from the project.
According to the 2013 representative population survey, Russians think that the two forms of inequality most strongly affecting the well-being of the country’s population are:
• Income inequality (72 per cent of respondents)
• Inequality in access to healthcare (47 per cent)
The income inequality percentage may not surprise outside observers, as Russia has witnessed one of the most radical increases in economic inequality in the last two decades following the collapse of the Soviet Union, and is now on par with other high inequality G20 peers like Turkey and Mexico. Inequality in access to healthcare may come as a bit more of a surprise, taking into account that Russia formally has universal health coverage and the right to free healthcare is enshrined in its constitution. Moreover, BRICS are now being looked at as important players in the global health arena.
So, what does inequality in access to healthcare actually look like in Russia? What are the main causes of inequality in access to healthcare? And how does economic inequality, ravaging the country is related to the inequality in access to healthcare?
Inequality in access to healthcare Russia has three key dimensions:
Key drivers of inequality in access to healthcare:
Clearly the lack of publicly funded health service makes people’ income the decisive factor in a person’s chances of getting healthcare in Russia. Private expenditure on healthcare of the richest 10 per cent of the Russian population is now eleven times greater than that of the poorest 10 per cent. The combination of lack of investment in health service and rising economic inequality will continue to exacerbate inequality in access to healthcare, which, in turn, will lead to further perpetuation of income inequality at the country enters into this vicious circle.
This is the first of two posts on access to health service in BRICS countries
Jim O’Neill of Goldman Sachs turned the spotlight on the four emerging economies when he dubbed them the“BRIC” countries in 2001. The acronym was extended later — to BRICS — to include South Africa. Although such a grouping may be useful from economic point of view, it sounds awkward and artificial when it comes to global health policy.
While health economists see strong potential roles for the BRICS in the development of universal health coverage, these countries vary greatly in terms of their patterns of disease, healthcare systems, financial interest in the pharmaceutical trade, and engagement in the global arena for healthcare. Although many might be looking to the BRICS for leadership, it is still not clear if these countries have sufficient shared interests or the coordinating mechanisms and processes needed to collectively and cohesively influence or promote global health policy.
The BRICS are also nowhere near economic parity. Russia and Brazil are far ahead in per capita income, outdistancing both India and China by significant margins – nearly $14,000 compared with China’s $6,629 and India’s $1,592; data and figures which were released in 2013 by the IMF. Notwithstanding, the countries in question have for the most part fallen short of successfully addressing inequalities in healthcare. Inequality in the BRICS has come under scrutiny of late, particularly due to their falling behind on Millennium Development Goals.
Despite diversity, the BRICS countries face a number of similar public health challenges, including inequitable access to healthcare and affordable medicines, soaring health costs, rising non communicable and infectious diseases such as AIDS and tuberculosis.
These factors were illustrated by recent findings of a study conducted by Oleg Kucheryavenko, which noted that limited access to healthcare for a significant number of people in Russia is an issue of concern to all social groups, non-governmental organizations and political parties. Inequality has not been given much attention by policy makers.
The Russian healthcare system is characterized by significant differences in demand from the various socioeconomic classes. Social groups with a higher incomes request healthcare more frequently than those with lower incomes. This inequality is reflected by a widespread health service based on cash payments: high-income persons pay 2.5 times more for a visit to a healthcare institution than those with a low income. However, poor people spend 1.5 times more of their household budget on medical care than well-off people.
Since 1990, the material and human resources of the health sector have been reduced. Beds have decreased by 12%, the number of doctors has dropped by 46%, and nursing staff by 10%. Yet, Russia is still among the top countries of the world in terms of the number of doctors and hospital beds per 1000 persons.
While global growth in expenditures for health care is rising, Russian spending continues to decline, which hinders government’ ability to subsidize the most in need. Russian state healthcare expenditures are several-fold lower than the ones in the countries of the European Union; in Hungary, the Czech Republic, and Poland – 6% of GDP, in Germany – 11%.
Russian spending on the health and social sector has slipped as EU and US economic sanctions have taken hold. Cutting public expenditures meant less spending for social services. Moreover, the Russian parliament approved a fragile budget that includes a reduction in healthcare spending by 25% in 2015. These decisions have put the country’s relative position of strength among the BRICS in serious jeopardy.
Between 1995 and 2011, private spending by Russians on health surpassed state spending by 2.1 times. Over half of this private spending is for retail purchases of medicines and healthcare products. Expenditures for paid health care services and unofficial payments amount in total to 87.9% of personal expenditures.
Given the current trends in healthcare financing and the structure of informal payments for health care services, expenditures for prescription drugs are likely to increase. Our study, estimated that the private expenditures will rise from 331.9 billion RUB in 2013 to 1305.5 billion RUB in 2020, considerably outperforming state expenditures on health.
Increasing funding alone will not solve all the problems in the health care system. Current spending is both insufficient and ineffective. Without effective policy changes, additional funding is likely to have a negligible effect. A key change is to adopt a social policy based on recognizing health as a human right and not a commercial product. Adopting universal health coverage as a basis for health policy means that quality health services are publicly financed and publicly delivered to all who need it.
It is evident that the prospects for health care in Russia are directly interwoven with the nation’s future socioeconomic development. What happens in the future depends on the extent to which the government recognizes the inequality that is skyrocketing in society.