A new report published by Oxfam last week calls on governments to reduce inequality by changing the rules and systems that have led to extreme inequality, and by prioritising policies that redistribute money and power. ‘Even It Up: Time to End Extreme Inequality’ firmly presents universal public services – including health and education – as part of the solution to out-of-control inequality.
Health is both a human right and a building block to tackling poverty and reducing inequality. The provision of good quality health care for all – free at the point of use – can mitigate the impact of skewed income and wealth distribution, by closing the gap in life chances between the rich and the rest. Moreover, universal free health care (UHC) with other public services, especially education, puts ‘virtual income’ into the hands of ordinary people, further helping to level the playing field. Between 2000 and 2007, the ‘virtual income’ provided by public services reduced income inequality by an average of 20 percent across OECD countries for example.
In addition, quality health care and education can transform societies, by giving people the tools and ability to challenge unfair rules that perpetuate economic inequality. For example, healthy and well-nourished children are more likely to spend more years at school and to have better cognitive skills that help learning.
But the extent to which public services are able to achieve their inequality-busting potential is heavily dependent on how these systems are designed, financed and delivered. Low levels of public spending and a continued reliance on out-of-pocket payments to fund health services are disproportionately harming poor and marginalised women and men. User fees and other forms of out of pocket payments can push struggling families further into poverty and prevent people from getting the treatment they need.
“I went for a cataract operation. They told me it costs 7,000 Egyptian pounds. All I had in my pocket was seven so I decided to go blind” – a 60-year old woman in a remote village in Egypt”
When health care is not free, poor people are excluded from service or are forced to sell assets and borrow money; leading to debt and thus further perpetuating existing economic hardships. This happens even in rich countries; in the USA, medical debt contributed to 62 percent of personal bankruptcies in 2007.
All too often the amount of money available for governments to spend on public services is limited. Taxation is critical to ensure sufficient public funds can be invested in delivering free healthcare for all. However, the exploitation of tax loopholes, unfair tax rules and tax dodging results in governments’ loss of millions of dollars each year. For example, in 2008/09 the Rwandan government authorized tax exemptions that could have been used to double the health and education spending.
Decent investments in public health services that are free at point of delivery will boost the rights and opportunities of poor people. The growing momentum for UHC – under which all people should get the healthcare they need without suffering financial hardship – has the potential to vastly improve access to healthcare, and drive down inequality.
A lot has been written about the Ebola crisis in West Africa in the last few weeks. Many excellent articles have highlighted the plight of those suffering with Ebola (Newsweek), and the people on the frontline trying to tackle the virus (Time) and the consequences on the affected countries as a whole (How we made it in Africa). However, the real tragedy is how an inherently preventable virus was able to spread like wildfire throughout West Africa and why public health facilities failed on such an enormous scale.
I first heard about Ebola in March 2013, four months after the first patient died of the virus in a small village in south-eastern Guinea, the first ever in West Africa.
With the death toll rising across the border in Guinea, discussions in Monrovia turned to the threat of it reaching the capital: “no previous outbreak has killed more than 300 people”, “it is easy to avoid just don’t go near sick people and you are safe”, and “the disease kills people so quickly it will die out before it reaches Monrovia”. The general message was “it is scary, but we can control it with basic public health.”
Despite these reassurances, everyday you check the news: how many infected? How many died? How many health clinics were beginning to shut due to healthcare workers leaving their posts? Despite the growing chaos, we in Monrovia continued to rationalize the situation. We knew things were getting worse but we didn’t act in time.
So when did it get “out of control”? Was it when MSF declared it to be so in June? Was it when the virus hit Conakry, Freetown and Monrovia, making control of the disease in crowded urban environment increasingly hard? Perhaps it was when the Liberian-American Ministry of Finance consultant died after flying to Lagos, inadvertently putting a planeload of passengers and Africa’s most populous country at risk.
Whenever it was, there is no question that we are now in the middle of an unprecedented crisis. Every day, I dread reading the news. The front page of every newspaper is full of articles discussing the bleak picture of Liberia’s largest slum quarantined like something out of a science fiction novel. I read about the almost complete collapse of the government’s health care facilities and the justifiable fear of the healthcare workers too scared to go to work. We hear terrifying stories of suspected cases being turned away from treatment centres because there is no space to treat them, and bodies left on the street for days without someone coming to pick them up. Most of all, I fear for the secondary threats should countries follow through on plans to impose economic embargoes on the country.
Already five airlines have stopped flying to Liberia through fear of the disease. Earlier reports that West African ports have refused entry to vessels which have docked in Liberia appear false, but raise an alarming prospect of the country cut off from essential imports. This is dangerous given that Liberia is completely dependent on imports with an import bill equal to 60 percent of GDP including two of the most important commodities, fuel and rice. Even without an economic blockade importers are worried.
Early reports suggest for the last four weeks the number of import certificates are down 30 percent from the previous year. Not to mention, the travel restrictions inside the country making movement of agricultural goods from farm to market next to impossible. These developments will raise the price of essential goods necessary for the Liberian economy to function and will harm the very poorest. They also raise the possibility of riots on the street and a return to the days of anarchy last seen during Liberia’s bloody civil war.
So how did this happen? The underlying causes of this outbreak are many and difficult and will be discussed for years to come. Fundamentally, they focus on the fragility of West African states and the failure of emergency planning to tackle the crisis when it was at a manageable level.
What can we do about it? Despite the fear, there are many brave West Africans and foreigners continuing to fight this disease. The Ministry of Health is working to open new treatment centres, MSF continues to fight the battle on the front line and are managing patient care alongside national governments. The World Bank has promised USD200million to fight the disease in West Africa. The African Development Bank has promised USD210million to build West African public health facilities. The World Food Program has begun the process of bringing in food to tackle the secondary crisis. NGOs on the ground, including Oxfam, have begun gearing up awareness campaigns to get the message out that Ebola is preventable. These things are vital to the immediate fight and the world needs to react, and react fast.
Once the immediate crisis is brought under control, we must consider measures to strengthen the state institutions especially the health service in order to effectively deal with health threats in the region.
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.