Private for profit and UHC: a panel discussion at the International Conference on Public Policy, Milan 1-3 July 2015
In 2012, the UN General Assembly unanimously adopted a resolution to encourage governments to transition towards universal access to affordable and quality health-care services. In 2013, the WHO Director-General described UHC as “the single most powerful concept that public health has to offer”.
A range of financing and delivery mechanisms have since been implemented in diverse international contexts, with limited empirical evaluation of their potential to achieve equitable access to universal health coverage. Financing health care will be negotiated as part of the Financing for Development conference in Addis Ababa in July 2015.
There is strong evidence that no country has achieved or made big strides towards achieving UHC without a strong public health system, yet the position of the private-for-profit sector in UHC reforms remains a subject of wide debate.
At the International Conference on Public Policy in Milan (1-4 July 2015), Oxfam and the University of Edinburgh are co-hosting panel discussion that seeks to examine new and existing evidence on the role of the private sector in health – and the paradigm of public- private partnerships. The session aims to enhance understanding and knowledge of the nature and scope of public-private interactions in health, and to critically evaluate the role of the private for-profit sector in health in the context of achieving UHC in low- and middle-income countries. The session will do this by:
The session will have a strong focus on low- and middle-income country experiences, perspectives and debates, but will also welcome relevant evidence and experience from high-income countries.
Five papers will be presented covering the following:
The papers will be discussed by Dr. Mark Hellowell, University of Edinburgh and Professor Rama Baru from Jawaharlal Nehru University.
The session will be co-chaired by Anuj Kapilashrami from the University of Edinburgh and Mohga Kamal-Yanni from Oxfam. Chairs and discussants will also engage the audience through ‘question and answer sessions where panellists will reflect on substantive issues raised by the presentations, panellists’ own research and interjection from the audience.
Readers are invited to participate in the session via sending comments and questions via twitter. Please follow @MohgaKamalYanni @Akapilashrami
Look out for a follow up blog on the conclusions of the session and links to the presentations.
The research papers are available here.
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.
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In recent weeks, two separate reports have been released which critique the trend by DFID to increasingly involve the private sector in development, including the provision of health and education.
The first report by Global Justice Now maps a variety of initiatives supported by DFID to open up health and education markets to private firms – from a £25 million project with Adam Smith International aiming to enrol 50,000 more children in private schools in Kenya, to a £7million partnership with Coca-Cola on girls’ education and training in Nigeria. This latter scheme is part of a broader DFID-Coca-Cola collaboration which openly benefits the company’s sales plans, the report reveals. DFID’s support of HANSHEP – or ‘Harnessing Non State Actors for Better Health for the Poor’ – gets a particular profile too, including through their £35 million contribution to a Public-Private Partnerships advisory facility. DFID’s influence is shown to extend beyond the financial commitments it makes, through its advice to governments as they develop private sector-friendly policies for the delivery of services.
The second report by the UK Government’s aid watchdog, Independent Commission for Aid Impact (ICAI), reviews how DFID is working with the private sector to achieve its mandate to tackle poverty around the world. Worryingly it states that ‘DFID should reassess how it appraises, monitors and evaluates its engagements with business to ensure fitness for purpose and a sharper focus on the poor’ and that ‘In some cases… we are not confident that DFID’s support is additional to what businesses would have done anyway’.
For Oxfam, the dangers of the promotion of privatisation of health and education services, especially in relation to the rising tide of global inequality, are clear. Private services benefit the richest first and foremost, leaving people in poverty behind[i]. When health care is sold through the private sector for example, quality care and medicines are often available only to those who can afford it, while poor people may be forced to rely on low-quality or unqualified care like drug hawkers and grocery shops selling medicines[ii].
Indeed ICAI’s report notes that a survey undertaken of a HANSHEP programme operating in Ghana, Kenya and Nigeria – the African Health Markets for Equity – found ‘that less than 1% of people using facilities supported by AHME were from the bottom income quintile in Ghana and other participating countries’.
Prioritising the private sector can see public services eroded as scarce financial and human resources are diverted from the public to the private system, through an internal ‘brain drain’ and expensive public-private contracts. Oxfam’s exposé of a Public-Private Partnership (PPP) hospital in Lesotho, found that the hospital was costing at least three times the amount of the old public hospital it was built to replace for example, amounting to 51% of the total health budget for the entire country[iii]. The International Finance Corporation (IFC) – manager of the DFID-supported PPP advisory facility mentioned above – advised on this PPP arrangement, reaping a $720,000 ‘success fee’ for its work[iv].
When richer people opt out of public systems for health care and education, they also have minimal interest in promoting spending on public services or demanding better quality, as well as less incentive to pay taxes. Thus a downward spiral of deteriorating quality can be set in motion[v]. The result is a 3 tiered system of five star services for the richest people, and a mixture of deteriorated public and unqualified private providers for the poorest. Inequality and poverty thrive.
The same tiered system also develops in education, where children of rich families often attend elite private schools and universities, while poor and lower-middle class children may have a choice between poor quality private education or deteriorating public schools. DFID, as well as other donors such as the World Bank, has been heavily promoting for-profit “low-cost private schools” for delivering better learning outcomes. However, the evidence on quality in these schools is weak. They rely on untrained teachers, standardization and scripted lessons to keep costs down. Moreover, we know that any kind of school fees – as well as other related costs like uniforms and transportation – will block access to schooling for children from the poorest families. Relying on fee-charging schools to deliver education will mean that too many of the world’s future Einsteins and Beethovens will be lost – shut out from accessing a quality education because of their poverty.
Profit-making companies also have clear interests in pushing for their own increased role in social sectors. In South Africa, private health insurance firms have been accused of lobbying against a new National Health Insurance Scheme that promises to provide essential health care for all.[vi] In the USA alone, the pharmaceutical and healthcare sectors spent more than $487m on lobbying in 2013, more than was spent by any other sector[vii].
Debates on the role of public and private actors in health and education are increasingly relevant as the development community prepares for this summer’s Financing for Development (FFD) summit, where mechanisms for financing the new post-2015 development goals will be discussed. A submission led by the International Chamber of Commerce (ICC) responding to the draft negotiating text for the Summit, pushes the insertion of new language to promote ‘blended finance’ (public and private) and a bigger role for private finance, including ‘using limited public finance to mobilize private’. In one shocking suggestion, the submission also advocates for the commitment to ‘move away from harmful, unsustainable [private sector investments]’ to be deleted too.
It is critical that any public funds used to leverage private investment, and private finance generally, comply with development effectiveness principles and be subject to robust environmental and social safeguards, be fully transparent and accountable, and be equitable in risk and benefit sharing between governments, donors and private investors. Public Private Partnerships (PPPs) should be considered only where evidence of effectiveness is abundant and where alternative delivery options are not. Sustainable development criteria for PPPs should be adopted and endorsed by the private sector and by governments. Such criteria should also include the PPP design and implementation process being fully owned by the ostensible beneficiaries, full transparency of contracts and terms, and assessment in terms of equitable and affordable access to infrastructure and services. Oxfam, together with other agencies, have developed a series of sustainable development principles to guide how public-backed private finance is used.
DFID should learn from past experiences and revise its support for private sector financing and delivery of these critical services, prioritising instead investments in strong public services that can deliver universal health coverage and education for all.
[i] Basu et al found that the private sector in health care tends to serve higher socio-economic groups for example. Basu et al (2012) ‘Comparative Performance of Private and Public Healthcare Systems in Low- and Middle-Income Countries: A Systematic Review’, PLoS Medicine, Vol. 9., Issue 6. http://www.plosmedicine.org/article/fetchObject.action?uri=info:doi/10.1371/journal.pmed.1001244&representation=PDF
[ii] Oxfam (2009) ‘Blind Optimism. Challenging the myths about private health care in poor countries’, pp.10-12, http://policy-practice.oxfam.org.uk/publications/blind-optimism-challenging-the-myths-about-private-health-care-in-poor-countries-114093
[iii] Oxfam (2014) ‘A Dangerous Diversion. Will the IFC’s flagship health PPP bankrupt Lesotho’s Ministry of Health?’ http://policy-practice.oxfam.org.uk/publications/a-dangerous-diversion-will-the-ifcs-flagship-health-ppp-bankrupt-lesothos-minis-315183
[v] T. Smeeding (2005) ‘Public Policy, Economic Inequality, and Poverty: The United States in Comparative Perspective’, Social Science Quarterly, Vol. 86 (suppl): 955-83.
[vii] Oxfam (2015) ‘Wealth: Having It All and Wanting More’. https://www.oxfam.org/en/research/wealth-having-it-all-and-wanting-more