Financing health in countries

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According to ILO Recommendation No. 202 on social protection floors, the minimum requirements in the area of social protection must include:

  1. Access to a nationally defined set of goods and services, constituting essential health care including maternity care; that meets the criteria of availability, accessibility, acceptability and quality. and
  2. Basic income security (especially in cases of sickness, unemployment, maternity or disability).

To achieve social protection in health, financial resources are necessary to establish health facilities, purchase drugs, vaccines and supplies, and ensure paycheck for the health workers. Many countries in the world have different ways of financing their health. The recent publication of the Lancet on “Past, present, and future of global health financing” has provided some evidence on how countries finance their health. The paper presented the scenario in 2050, and there is a slight reduction of total government health spending per total health spending estimates (from 74% in 2016 to 72.9% in 2050) and increase in the out-of-pocket spending per total health spending (from 18.6% in 2016 to 19% in 2050). The paper emphasized the requirement of sustainable and increased government spending on health; however, it has not adequately addressed how this can be achieved.

This blog’s intention is not to review the Lancet paper at all, but to further analyze, using the available data, to provide an approach towards sustaining and increasing government’s spending on health.  The Lancet paper has referred to some empirical studies on the linkages of government’s spending on maternal and child mortality. I compared the government’s spending with the maternal mortality ratio, disease burden and health-adjusted life expectancy (IHME Data – 2017), and under-five mortality rates (UNICEF data – 2017). 

Figure: Government health spending per total health spending vs health outcome measures

The above figure shows that the countries where the governments spend more on health have better outcomes in maternal mortality, under-five mortality, disability-adjusted life years (DALYs) lost, and health-adjusted life expectancy (HALE). This phenomenon is common in those countries where the governments finance more than 70% of their total health spending; with a few exceptions. Some can argue that maternal and child mortality are proportionately lower due to the government spending on the essential health services, but this is true for the health-adjusted life expectancy, which is greater, and disability-adjusted life years lost, which is lower in those countries. These outcomes are possible due to the essential services’ sustainable financing, the better health systems and other better socio-economic determinants. These phenomena are more evident in the Scandinavian countries, Japan, Belgium, Cuba, Canada, Nederland, United Kingdom, etc. 

How to increase and sustain government spending on health? WAY FORWARD (Neo Socialist Capitalism)

Health is often considered a commodity by many states with a few exceptions, and many governments rely on different financing mechanisms. Health shouldn’t be considered a commodity, and countries must ensure it as a human right. The current practices on health financing have so many players; it is challenging to ensure the health as a human right unless the State consideres it as the State’s responsibility, finance it, and strictly regulates the services, quality and cost.

Finance health the same way security/defense is financed

Every government has the responsibility to ensure the security of every citizen. In every country, the security forces are government entities, and they are financed one hundred percent by the government budget. Nowhere in the world, the security forces are managed by private sectors or insurance companies? Similarly, why can’t governments finance the health services the way the security forces are financed? The above analysis shows that those countries whose governments finance health have better health outcomes than others.

Regulate and tax industries

WHO defines, the health is a state of physical, mental and social wellbeing not merely an absence of any diseases or infirmity. Any diseases or infirmity or absence of wellbeing is due to the imbalance of the epidemiological triad (host, environment and agent) and have ecological linkages. Any aberration in the ecological linkages can impact the health of the population. For instances:

  1. Deforestation leads to ecological changes (like climate change, global warming), which directly links to an increase in the vector population and subsequently increases the risk of vector-borne diseases.
  2. Road traffic accidents or injuries are mostly due to inappropriate regulations, faulty roads and transportation, lack of traffic rules, etc.
  3. The industrialization has led to air and water pollution and global warming, and as consequences, we are facing various chronic diseases like cancers, respiratory illnesses to name a few.
  4. Cigarettes, alcohol, sugary industries have created a lot of impact on health.

The government has a responsibility to control and regulate the above phenomena to reduce the population’s health risks. When somebody breaks rules or commits crimes, they are penalized or charged. Similarly, the government should regulate, penalize and tax those who are responsible for the above phenomena. The income generated from taxes or penalties should be used to finance health services just like the security services.

Proactive approaches

Most of the health budget goes to curative care which comprises clinical care, diagnostics and therapeutics. If the state does not finance those, then the services are either covered by insurance mechanism or out of pocket (out of pocket expenditure). If some insurance mechanisms cover it, then it won’t have any catastrophic impact. But if it comes from out of the pockets of individuals, it can have a catastrophic impact. To protect from such catastrophe, the state should finance health. The following mechanisms can help countries to finance health and increase efficiency.

  1. Provide free health services (universal health coverage): The state should ensure free health care services to their citizen. If the state cannot ensure free health services, then the state can rely on private sectors. However, the state has to regulate and ensure quality care and health services’ price standards.
  2. Manufacture all essential drugs or subsidized them: The state can manufacture all essential drugs. Identify a list of key essential drugs and manufacture them, reducing the cost of drugs and medicine. If the government cannot produce those essential drugs, then ensure that drugs’ price is affordable and accessible, either subsidizing them or regulating the price. To ensure the above, the state needs to establish health forces like security forces, research institutes, pharmaceutical industry, vaccine research and developments, and service delivery systems.

When, a person goes to a police station and makes a complaint. The police investigate his/her case and try to find a solution. The police do not charge the person for their services. But, in many places, when a person goes to a hospital for treatment, they have to pay an exorbitant price for the services. Why can’t the state manage the hospital the way police services are managed? Let us come out of the box and think.

The blog will update Neo-Socialist Capitalism and Vaccine Socialism (lessons from COVID19 vaccines) VERY SOON – Tune In. 

Disclaimer: Views are my personal and don’t represent the views of organization where I work.