The Economist comes out in support of Universal Health Care – here are the best bits

May 3, 2018

     By Duncan Green     

This week’s Economist magazine leads on the case for Universal Health Care, worldwide. That’s a big deal – the Economist is very influential, can’t possibly be accused of being a leftie spendthrift, and the case it makes is powerful. A couple of non Economist readers asked me for a crib sheet of the 10 page report, so here are some of the excerpts that caught my eye:

The Basic Case: ‘800m people spend more than 10% of their household budget on health care, and nearly 100m are pushed into extreme poverty (defined as having less than $1.90 a day to live on) every year by out-of-pocket health expenses.

Universal health care is both desirable and possible, even in low-income countries. Some countries achieved near-universal coverage when they were still relatively poor. Japan reached 80% when its GDP per person was about $5,500 a year. More recently, several developing countries have shown that low income and comprehensive health care are not mutually exclusive. Thailand, for example, has a universal health-insurance programme and a life expectancy close to that in the OECD club of mostly rich countries. In both Chile and Costa Rica income per person is roughly 25% of that in the United States and health spending per person just 12%, but life expectancy in all three countries is about the same. Rwanda’s GDP per person is only $750, but its health scheme covers more than 90% of its population and infant mortality has halved in a decade.

It is becoming increasingly clear that better health can lead to higher incomes, as well as the other way around. Economists at the World Bank used to call spending on health a “social overhead”, but now they believe that it speeds up growth.

Aid: Shifts in the burden of disease present dilemmas for international organisations. Though most spending on health in poor countries comes from government budgets and out of consumers’ pockets, an average of just over a third in 2016 was paid for by aid. Health aid in that year added up to $37.6bn. A little over half of that came from three sources: the American government (34.0% of the total), the British government (10.9%) and the Gates Foundation (7.8%). The vast majority of this aid goes on child and maternal health and on infectious diseases, especially HIV, which makes up fully 25% of the total. Non-communicable diseases account for just 1.7%.

“Improving global health is no longer primarily about combating infectious diseases,” says Lawrence Summers, who as the World Bank’s chief economist in the 1990s did much to advance its work on health. That view may strike many health experts as premature when malaria, tuberculosis and HIV are still killing millions every year, but the epidemiological shift will ensure that ever more resources will be consumed by chronic conditions. Policymakers will have to think carefully about which health services to prioritise, and how best to supply them.

In many developing countries people get their health care mostly from informal private providers such as drug shops or unqualified practitioners. In India, informal providers account for three-quarters of all visits. The figures in other countries are similar, if mostly less extreme: 65-77% in Bangladesh, 36-49% in Nigeria and 33% in Kenya. Often these markets exist side by side with public-sector providers who rely on patients paying for drugs and tests, as in China, despite a spate of recent regulations.

Other developing countries provide much better care at low cost. An exemplar is Costa Rica, whose model shows the benefit of high-quality primary health care. This is often ignored as countries splurge on big hospitals. “Primary care is not heroic,” explains Asaf Bitton of Ariadne Labs, “but it works well.” Between 1995 and 2002 Costa Rica established more than 800 “Equipos Básicos de Atención Integral de Salud”, or integrated primary-health-care teams, each looking after 4,000-5,000 people.

Before the programme was in place, just 25% of Costa Ricans had access to primary health care; by 2006 the share had risen to 93%. It was introduced in stages, which enabled researchers to assess its impact. A study in 2004 found that for every five years it was in place, child mortality declined by 13% and adult mortality by 4%, compared with areas not yet covered. Another study estimated that 75% of the gains in health outcomes resulted from the reforms.

Mental Health: According to the world mental-health survey conducted by the WHO, between 76% and 85% of people with serious mental disorders had received no treatment in the previous year. Low-income countries spend an average of just 0.5% of their health budgets on mental health, with the vast majority of the money going on hospitals that are more like asylums. And mental-health spending made up just 0.4% of global aid spending on health between 2000 and 2014.’

Share of population with access to surgery, by country

Surgery: Nine in ten people living in developing countries do not have access to “safe and affordable” surgical care, according to a report in 2015 by the Lancet (see map). Surgery may seem something of a luxury if funds are tight, but the consequences of not having access to it are profound. In 2010, 17m lives were lost from conditions needing surgical care, dwarfing those from HIV/AIDS (1.5m), TB (1.2m) and malaria (also 1.2m). Roughly one-third of the global disease burden measured by DALYs is from conditions requiring surgery.’

User Fees: In the 1980s and 1990s many health economists were relaxed about out-of-pocket payments, also known as user fees. The World Bank saw them as a way of making sure money was not wasted, and of helping health-care consumers hold providers to account. There is merit to this argument. Research by Jishnu Das of the World Bank found that when Indian health workers saw patients in their private clinics, they spent more time with them and asked more questions than when the same health workers saw patients in public clinics.

Yet that does not make it a good idea to rely mostly on user fees to fund a health system. They stop those who need care from seeking it. Concerns that users will consume too much health care unless they have to pay are overblown. And when people are not getting vaccinated to save a few cents, others suffer, too.

Out-of-pocket payments are also “cannonballs of inefficiency”, says Timothy Evans of the World Bank, which is now sceptical about user fees. If spending is pooled, it can insure more people against the risk of ill health and put pressure on providers to cut prices. Of the $500bn generated globally by user fees every year, the World Bank estimates that 40% is wasted.

How to Get There

Countries that want to expand their coverage have taken two distinct approaches. The first is to start by covering a small group of workers in depth and work outward from there, adding workers from other industries as you go along. Inevitably, though, this leaves groups of people without insurance, and those with coverage have little incentive to help them get it.

The second, better approach is to cover more people but start with a limited range of benefits. In 2004 Mexico introduced Seguro Popular, a scheme that covered 50m people in the informal sector. Studies suggest that Seguro Popular has drastically reduced the number of Mexicans facing catastrophic health costs and reduced infant mortality.

Rwanda is another example. More than 90% of its people have health insurance, mostly under its Mutuelles de Santé policy that gives access to community health services as well as various treatments partly paid for by the Global Fund. Most visits involve a small co-payment and there is a tiered system of premiums, with exemptions for the poorest people. The scheme has helped cut out-of-pocket expenditure and improved health outcomes. Between 2000 and 2011, for example, the mortality rate for tuberculosis fell from 50 to 14 per 100,000 people.

In Thailand the Universal Coverage Scheme replaced two existing schemes for the rural poor and for informal workers. Today 98% of Thais have health insurance. The scheme was accompanied by reforms such as incentives for doctors to work in rural areas and extra payments to hospitals to take on patients. Crucially, Thailand’s Health Intervention and Technology Assessment Programme, a quasi-governmental body, analyses the cost-effectiveness of treatments, as well as ensuring that cancer cases such as Ms Waree’s are dealt with sympathetically. Despite the increased coverage, Thailand still spends only 4% of its GDP on health, about the same as it did 20 years ago. That works out at roughly $220 per person per year.

Another option is to expand the tax base in poorer countries. Possible candidates are taxes on extractive industries and on goods harmful to health such as tobacco, alcohol and air pollution. That would not only raise money but have great public-health benefits. Energy subsidies could also be curtailed; some poor countries, including Bangladesh, Indonesia and Pakistan, spend more on these than they do on health and education.’

Perhaps because I’m not a health policy wonk, this all looks great to me, and massively important that it is The Economist saying it. But I assume I’m missing the counterarguments and critiques – over to you for those.

May 3, 2018
Duncan Green