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IMF conditionality: still undermining healthcare?

Last year, the IMF tried to counter long-running accusations that its programmes damage health outcomes in developing countries, but the independent evidence points in the opposite direction. The question is whether the IMF will use this year’s reviews of its lending to switch approach and start helping Sustainable Development Goal (SDG) three to “ensure healthy lives and promote well-being for all at all ages.”

The IMF claims to protect health expenditure

An IMF blog from March last year claimed that: “A number of studies have found that IMF support for countries’ reforms, on average, either preserve or increase public health spending.” However, the evidence provided was weak. Of the six studies referenced, one, by Oxford and Cambridge university researchers, which we discuss below, flatly contradicts this claim.  Two were not related to health expenditure: one looked at revenue, not expenditure, and the second had a broader remit and contained no new evidence on the IMF and health. One was over a decade old and did not directly support the claim; while another was a link to an IMF page on the Ebola crisis. In fact  the only referenced study that supported the claim was written by the staff who authored the blog.

In another blog, the IMF Managing Director, Christine Lagarde stated  that “our latest research shows that health and education spending have typically been protected in low-income country programs.”

Again, it’s worth looking into the evidence cited to back up this claim, which is provided by an internal review of the IMF’s programmes in LICs.  The review covered the period since a change in the Fund’s policy in 2009 which mandated the use of conditionality to protect social spending.

Essentially, the IMF is arguing that this policy change has had two impacts. Firstly, that IMF programmes are no longer associated with austerity. Secondly, that the IMF has used conditionality to ring-fence social spending. Unfortunately, neither of these claims hold up well under scrutiny. We examine the first below, and will detail the second in a forthcoming blog.

The IMF: no longer the champion of austerity?

The internal review’s claim that “LIC programs are broadly divided between those entailing fiscal expansion and those seeking fiscal consolidation” is not supported by the evidence in the review. This graph, taken from the review, gives totals for the number of IMF programmes in LICs according to whether they mean cuts in expenditure or increases, with a small number, that are ‘fiscally neutral,’ having neither. This shows that 34 of the 68 programmes studied mandated cuts in government expenditure while fewer (29) supported fiscal expansion.

However, including all types of IMF programmes is misleading. It makes sense to compare the two main types of IMF programme alone: the Extended Credit Facility (ECF) for medium to long term lending, and the Standby Credit Facility (SCF) for shorter term lending. Here the gap is quite large, with 28 programmes associated with budget cuts versus 17 with expansion. The other two programmes excluded in this comparison are the Policy Support Instrument– which is advisory and entails no IMF lending, and the Rapid Credit Facility – an emergency programme for countries in trouble, which unsurprisingly has a majority of programmes that increase expenditure.

 

Fiscal Adj in LICs IMF programs

 

 

The second problem is that the statistical analysis in the review showing “no evidence that fiscal adjustment policies in LIC programmes come at the expense of health and education spending,” is disputed by independent experts. Researchers at Oxford and Cambridge Universities published a review of the IMF’s claims, finding that “the methodological strategy employed in the IMF analysis is unsound.” The researchers ran their own analysis, covering the same years as the IMF study and found that “an additional year of IMF programme participation decreases health spending, on average, by 1.7 percentage points as a share of GDP.”

This chimed with an earlier study by the same researchers of IMF programmes between 1995 and 2015 in 16 West African countries which found that “IMF policy reforms reduce fiscal space for investment in health, limit staff expansion of doctors and nurses, and lead to budget execution challenges in health systems.”

What next for the IMF?

The IMF’s concern not to be seen to be impacting health expenditure in the poorest countries can be viewed as an improvement. However, it is clear that IMF conditionality can constrain expenditure on health and other related services, and is at odds with the SDG commitment to achieve universal health coverage.

The next scheduled review of IMF funding to low-income countries is planned this year. Unfortunately, judging by the questions posed in a public consultation last year, the IMF review may be missing the point. The impacts on health and other social expenditure arise not primarily because of the access to IMF financing – which the questions focus on – but on the conditionality attached to that financing. More promisingly, the IMF 2018 Executive Board work programme also promises a review of conditionality, but, as yet, there is no public information on the scope of this review.

It is time for a much broader reform of IMF conditionality. Eurodad’s detailed study, in 2014, found that the IMF conditions are often highly controversial and intrusive on key economic policy issues that should be the crux of democratic debate in country, not mandated from Washington. Crucially, we also found that “almost all the countries [that had IMF lending programmes during the period studied] were repeat borrowers from the IMF, suggesting that the IMF is propping up governments with unsustainable debt levels”.

As the IMF warns that a new debt crisis may be developing, it is time to table real solutions that increase fiscal space for health and social protection, including cracking down on tax dodging, and the creation of an independent debt work-out mechanism to tackle the unsustainable and illegitimate debt that holds many countries back.

The IMF must stop its damaging conditionality practices. A simple way to do this would be by extending the approach of its little-used Flexible Credit Line to all IMF facilities – requiring no conditionality other than the repayment of the loans on the terms agreed. Only bold steps such as this will remove the conditionality that is at the heart of so much of the damage that the IMF can do in developing countries.

Gino Brunswijck, Research and Advocacy Officer and Jesse Griffiths, Director of Eurodad

 

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Half the world’s population can’t access essential healthcare by Anna Marriott, Public Services Policy Manager, Oxfam GB

Underlying the goal of Universal Health Coverage (UHC) is a very simple principle – everybody, everywhere, must be able to access decent, effective healthcare without facing financial hardship or being pushed into poverty. Underlying this principle is an equally simple truth – as long as people have to pay out of their pockets for treatment at the time of need there will be vast inequalities and injustices in access to healthcare.

The right to health is a fundamental human right. It cannot be realised if getting treatment or care is subject to the amount of money in your pocket or how much you can beg from your neighbour – who is likely to be equally poor.

A new World Health Organisation and World Bank Global UHC Monitoring report launched yesterday reveals some uncomfortable truths about the state of the world’s progress. These are a damning indictment of government action:

  • At least half of the world’s 7.3 billion people do not have full coverage of essential health services. Healthcare coverage has been increasing at an unacceptably slow rate of just over 1% a year.
  • 3 people every second are pushed into extreme poverty by paying for healthcare.
  • 800 million a year face severe financial difficulties because of health expenditure. The number facing financial ruin has been growing sharply since 2000.
  • The richest mothers and infants are four and half times more likely than the poorest to receive essential maternal and child health interventions in low and lower middle-income countries.
  • Sub-Saharan Africa and Southern Asia have the worst healthcare coverage – scoring just 42 out of 100 and 53 out of 100 respectively in the new global UHC service coverage index.
  • Latin America and the Caribbean has the highest percentage of people facing unmanageable healthcare costs (14.8 percent). Africa and Asia have seen the fastest rate of increase in people facing unmanageable out-of-pocket healthcare costs – with numbers rising by an average of 5.9 percent a year in Africa and 3.6 percent a year in Asia.

Healthcare – a basic human right – has become a luxury only the wealthy can afford. Millions of people are facing unimaginable suffering as a result: parents reduced to watching their children die; children pulled out of school so they can help pay off their families’ healthcare debts; and women working themselves into the ground caring for sick family members. There are even patients imprisoned in hospitals, held hostage until they can pay their fees. Just one of these powerful stories can be viewed in our film here.

A radical change of approach is needed. Governments must massively increase spending on public healthcare services and end all fees for healthcare and essential medicines. It is the only proven route to achieving UHC.  The additional money needed should be raised through progressive tax reform – not expensive private finance or unworkable health insurance schemes that exclude millions of ordinary people.

Governments must stop looking to poor vulnerable people, including those in the informal economy, to pay what they can’t afford. Contributory insurance schemes have become the health financing model of choice in many low and middle income countries. But with large informal economies these schemes become de facto voluntary and fail to cross-subsidise between the wealthy and healthy to the sick and the poor. They fail to reach scale and they leave the poor behind.

Instead, we as a global health community need to pay more attention to growing and extreme levels of economic inequality. The concentration of wealth and power in the hands of a minority is an obstruction to human development, and tackling this can provide the financing needed to deliver health for all. Today 8 men own as much wealth as the poorest half of humanity. Poor countries lose an estimated $170 billion a year because of tax dodging by corporations and the super-rich. Unfair tax systems cost them even more – Nigeria loses $2.9 billion a year because of unfair corporate tax incentives alone – equivalent to 13 times the countries total health budget in 2015. And if Kenya increased its tax to GDP ratio by 3 percentage points in 2014 – from 17.9 to 20.9 percent –  it could have raised enough additional funds to ensure all Kenyans had access to free, quality healthcare.

In light of the scale of the challenge described in yesterday’s UHC report, business as usual is just not acceptable. We need urgent action from governments to deliver on their duty to fulfil the right to health. The resources are there, what is missing is the political will to redistribute them!

 

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It failed in the UK so why export it?

In the town of Huddersfield in northern England, the local hospital’s Accident and Emergency Department is set to be closed. 130,000 local people have signed petitions against the closure, fearing the impact on their community.

The local health service around Huddersfield is under increasing financial pressure, and one of the reasons is the Public-Private Partnership (PPP) deal in neighbouring Calderdale Royal Hospital. The hospital was built between 1998 and 2001. Its planned initial cost of £34 million has increased three folds to £ 103 million by the time it was finished.

Under the terms of the PPP deal, the local health service is expected to pay $966 million over 30 years in order to be able to use the hospital. The Local MP Jason McCartney from the governing Conservative party has called this situation “scandalous”. These huge costs have contributed to the local health service seeking to close the Accident and Emergency Department at Huddersfield Royal Infirmary.

The UK’s PPPs Disaster

The high costs of PPPs are being felt across public service sectors throughout the UK. PPPs (or the ‘Private Finance Initiative’ as they are known in the UK) began in the early 1990s, but new schemes were at their peak from 1998 to 2007. They consist of a contract between a public body and a private company, where the latter builds and operates a public infrastructure, and the public body guarantees to pay to use it through a long-term contract, usually around 30 years.

Such PPPs have been far more expensive than the alternative of the government borrowing to build the infrastructure itself. An inquiry by the UK parliament’s Treasury Select Committee found that PPPs have “The effect of increasing the cost … to the government”. A review by the National Audit Office, the independent body responsible for investigating government accounts, found that the interest rates ultimately paid by the government through PPPs are double those paid by the government when it borrows directly. Moreover, PPPs further increase the cost to the public sector, including through the payment of high profits and inflated running costs to the private companies, as well as the financial cost of expensive lawyers and consultancy companies hired to work on the complex contracts behind PPP schemes.

Since they started in the early 1990s a capital investment of $71 billion in the UK has been through PPPs, but the government will pay more than five times that amount under the terms of the PPP contracts it has signed up to.

Despite their high cost, one of the reasons PPPs were pursued is that they keep debts hidden, off the government’s accounts. Although the actual payments made by governments for PPPs are higher than if the government had borrowed directly, these payments don’t go on the government’s books in the same way as direct government borrowing. Therefore, PPPs are an expensive way to bypass transparency and accountability and to hide public debt. Even the IMF criticise PPPs impact on debt. The IMF’s Fiscal Affairs Department state that in many countries, investment projects have been procured as PPPs not for efficiency reasons, but to circumvent budget constraints and postpone recording the fiscal costs of providing infrastructure services.

The promotion of PPPs around the world

The disaster of PPPs in the UK has been criticised by politicians from all parties. In 2015, the UK’s Health Minister, Jeremy Hunt, from the Conservative Party said: “One of my biggest concerns is that many of the hospitals now facing huge deficits are seeing their situation made infinitely worse by PFI debt.” The Mayor of London, Sadiq Khan, from the Labour party described the PPP deals as “a millstone round the necks” of London hospitals.

Professor Jean Shaoul from Manchester Business School concludes that PPPs in the UK have been “an enormous financial disaster in terms of cost” adding: “Frankly, it’s very corrupt… no rational government, looking at the interests of the citizenry as a whole, would do this.”

Yet despite the evidence from the UK and from other countries  PPPs have been heavily promoted around the world by institutions such as the World Bank. Shockingly, in an evaluation in 2014, the World Bank’s own Independent Evaluation Group found that of 442 PPPs supported by the World Bank across numerous sectors, assessments of their impact on poverty were conducted for just nine of them (2%), and of their fiscal impact for just 12 (3%).

In the UK PPPs constitute an inefficient use of public money to provide health service. Governments elsewhere should adopt evidence-based policies to finance and run health services. International institutions, such as the World Bank, should refrain from pushing countries to adopt ideology-based policies such as PPPs. Instead, countries should be helped to adopt strategies that ensure that health services are accessible to all those who need it without breaking the budget of the household or the country.

This blog is based on ‘The UK’s PPPs disaster: Lessons on private finance for the rest of the world’ by Jubilee Debt Campaign http://jubileedebt.org.uk/reports-briefings/briefing/uks-ppps-disaster-lessons-private-finance-rest-world

Tim Jones, Policy Officer, Jubilee Debt Campaign

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Will WHO candidates for the big job commit to ending user fees? By Aishah Siddiqa, Global Inequality Campaign Officer

Every year one billion people worldwide are denied medical care because they cannot afford to pay for it. At the same time, 100 million people are pushed into poverty due to having to find or borrow money to pay for health care[1].

My father’s family is one of those nameless millions. They live in rural Bangladesh where healthcare is inaccessible because of having to pay for services. My family had to delay mortgage payments so that my grandmother could get the cancer treatment she desperately needed. They also struggled to get medicines for my little cousin, Ismael, so that he could continue at school and one day hope to escape the cycle of poverty.

Ismael

For countless others, however, such options aren’t available so they are denied medical care altogether. Sometimes people are even imprisoned in hospitals until their families can pay their bills.

The World Bank president, Jim Kim, described user fees as “unjust and unnecessary” and said that “even tiny out-of-pocket charges can drastically reduce use of needed services”. In her address to the World Health Assembly last year, the current WHO Director-General Dr Chan said: “User fees punish the poor. User fees discourage people from seeking care until a condition is severe and far more difficult and costly to manage. User fees waste resources as well as human lives. Yet too little has been done since then to help those millions of people to access health services without paying user fees.

That is why, ahead of the elections for the next Director General of the World Health Organisation, more than 200 NGOs, academics, health professionals and influentials have signed an open letter to the three shortlisted candidates: Dr. Tedros Adhanom Ghebreyesus, Dr. David Nabarro and Dr. Sania Nishtar. The letter urges the candidates to publicly pledge to support countries to replace user fees with progressive, publicly financed health care that is free at the point of use. Signatories include Dr Gro Brundtland, the former DG of the WHO and former PM of Norway, Dr. Ricardo Lagos, former President of Chile, Ms. Hina Jilanni, Human Rights defender and Advocate of the Supreme Court, and organisations and networks such as Action for Global Health and Oxfam International.

Removing user fees is essential to achieve the SDG target of Universal Health Coverage.

Footnote

[1]Xu K, Evans D, Carrin G, Aguilar-Rivera AM, Musgrove P, Evans T. Protecting households from catastrophic health spending, Health Aff airs 2007; 26: 972–983.

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Why Brazil should not take a U-turn on its health system, by Pallavi Gupta, Health Programme Coordinator, Oxfam India

Brazil has been the envy of the world in terms of its successes in reducing health inequality. Yet recent developments threaten its health achievements. This blog looks at the potential impact of recently announced policies on the public health system in Brazil by exploring how similar policies have played out in the Indian health system.

Brazil: success and threats

In response to its commitment to the 1978 Alma-Ata declaration of “health for all”, the constitution of Brazil enshrined health as a right of all citizens in 1988, thereby mandating the state to provide universal and equal access to health services to its population [1]. A long political struggle and the Brazilian Health Reform Movement led to the establishment of the Unified Health System (SUS) [2]. The SUS decentralized and universalised access to health care, with municipalities providing comprehensive and free health care, financed by the states and federal government [1]. Primary health care (PHC) has been key to Brazil’s health reform strategy. PHC integrates medical care with health promotion and public health actions. Family health-care teams, comprising one doctor, one nurse, one auxiliary nurse, and four to six community health workers are assigned per 600–1000 families [2]. Despite opposition from the private health sector as well as underfunding, the SUS has managed to vastly improve access to primary and emergency care, reach universal coverage of vaccination and prenatal care, and invest in the expansion of human resources and technology, including the production of essential medicines [2]. Since 2000, the government has been investing 3 to 4 % of GDP in health [3]. Consequently, fertility rates in Brazil decreased from 5·8 per woman in 1970 to 1·9 in 2008, and infant mortality reduced from 114 per 1000 live births in 1970 to 19·3 per 1000 live births in 2007 [2].

Furthermore, in response to protests by Brazilians demanding better access to physicians, Brazil sourced doctors from the country and from Cuba as part of its “More Physicians” (Mais Médicos) programme introduced in 2013 by Dilma Rousseff’s government. This additional workforce benefited 63 million Brazilians living in remote and vulnerable areas, which previously had shortages of health professionals [4]. Today, 70 to 80% of the country’s more than 190 million people rely on SUS for their healthcare needs [2[4].

However, the austerity measures proposed by the new government after the impeachment on August 31st 2016 and approved by the senate in December 2016 include the control of public spending for 20 years, which will have an impact on public education and public health services. Another measure that has been controversial since the interim government (from May to August 2016) is the creation of a plan to encourage people to seek healthcare from private providers instead of the country’s public health system, while the government is ending the monitoring of the private health-care sector. There are also attempts to diminish the role of public health care as evident by the staff cuts in the National Unified Health System. There is also a possibility of reduction in the number of foreign professionals in the country’s “More Physicians” programme [4].

Learning from India

Will looking at the fate of people in India make the new President and Minister of Health of Brazil think again about their plan? What the Brazilian government is planning to dismantle is exactly what civil society organisations and health rights groups have been calling to be established in India for decades. 70% of the out-patient care in India is sought from the private sector and nearly 60% of healthcare expenditure in the country is paid out-of-pocket by people at time of use [5]. One of the reasons for this is the abysmal state of the public health system in the country which has forever been underfunded, at a meagre 1.28% of GDP5. Shortages of health staff is a huge challenge that India faces, especially in the rural and tribal areas. The private healthcare industry, that has been growing by leaps and bounds, is largely unregulated and enjoys tax sops in more ways than one [5]. The central government passed the Clinical Establishment (Registration and Regulation) Act 2010 to regulate private medical services across the country, so that the patients can get good quality services with some control over their cost [6]. However, the whole private health care industry, including the Indian Medical Association (a private voluntary association of doctors) has been protesting the implementation of the Act and the sector continues to operate more or less on its own terms, leaving patients at their mercy.

Oxfam India supported the collection of testimonies of 78 rationally practicing doctors who shared the inside stories of how private healthcare operates in an “industry mode” and how patients are frequently fleeced of their money and right to care [7]. For example, a pathologist in a leading Indian city hospital gave a fake report declaring a patient diabetic (when his blood sugar was normal) on the suggestion of the doctor who had referred the patient. By doing so, the doctor ensured having a long term patient under his care who would be a continuous source of income. And this is not a one-off case.

The results of the proposed measures in the Brazilian public health system can be seen in Indian healthcare.

As the saying goes, “to make, it takes one lifetime, and to break, it takes one day”. India’s one life time for progressive changes is still to come but Brazil’s “one day to break” is right here. Given the impact that we witness everyday of a weak health system on people, we can only hope that the Brazilian public health system does not take a U-turn and tread the India Path.

References

[1] Flawed but fair: Brazil’s health system reaches out to the poor, Bulletin of the World Health Organization, Volume 86, Number 4, April 2008, 241-320. http://www.who.int/bulletin/volumes/86/4/08-030408/en/ (accessed 7 December 2016)

[2] Jairnilson Paim, Claudia Travassos, Celia Almeida, Ligia Bahia, James Macinko. The Brazilian health system: history, advances, and challenges. Lancet 2011; 377: 1778–97

[3] http://apps.who.int/nha/database/ViewData/Indicators/en (accessed 30 November 2016)

[4] Katarzyna Doniec, Rafael Dall’Alba, Lawrence King. Austerity threatens universal health coverage in Brazil. Lancet 2016; 388:687

[5] Vikram Patel, Rachana Parikh, Sunil Nandraj, et al. Assuring health coverage for all in India. Lancet 2015; 386: 2422–35. http://www.thelancet.com/pdfs/journals/lancet/PIIS0140-6736(15)00955-1.pdf (accessed 30 November 2016)

[6] The Clinical Establishments (Registration and Regulation) Act, 2010, Ministry of Health and Family Welfare, Government of India. http://clinicalestablishments.nic.in/cms/Home.aspx (accessed 30 November 2016)

[7] Voices of Conscience from the Medical Profession. Support for Advocacy and Training to Health Initiatives, Oxfam India 2015.

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Global Health Check was created by Anna Marriott and is currently edited by Mohga Kamal-Yanni