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Links Between MacroEconomics and Health inthe Southeast Asian (SEA)

Region - A Framework

Abusaleh ShariffNational Council of Applied Economic Research

11, I.P. Estate, New Delhi-110 002

August 18, 2003

© World Health Organization, 2003. All rights reserved.

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Scheme of Presentation

� Introduction and Objectives� SEAR - Country Profile� Linkage Between Health and Economic

Development� Investment in Health �Public investments Own resources �Public-Private Partnership �Rich & Poor Country Compact� Health Accessibility and Growth

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SEAR - Study Area

� WHO Southeast Asian Region -10 Countries� Less Developed

– Bangladesh, Bhutan, Maldives, Myanmar andNepal

� Relatively Developed– Thailand, Indonesia, DPR Korea, India and Sri

Lanka

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Objectives� Monetary and Physical Investment in primary care

essential to achieve HEALTH FOR ALL� High incidence of preventable diseases � disease

profile and assess health deficits in SEAR� Profile of Health Spending and linkages with state of

health� Identify mechanism to enhance the health coverage of

the poor� WTO linked globalization � TRIPS & GATS �

Impact on price and availability of Drugs and Medicines

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Salient Features of SEAR

0

1

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4

5

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C o unt rie s

Po pulat io n Gro wth To tal Fertility rate (b irths p er woman)

01 02 03 04 05 06 07 08 09 0

1 00

C o unt rie s

Po p ulat io n with acces s to safe d rinking water Po p ulat io n with acces s to ad eq uate sanitat io n (%)

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Salient Features of SEAR

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20

40

60

80

1 00

C o unt rie sLive Bir t hs At t e nde d by t ra ine d pe rsonne lWome n of c hildbe a ring a ge using c ont ra c e pt ive s

0

10

20

30

40

50

60

70

80

90

100

Bang

lades

h

DPR

Kor

ea

Indi

a

Indo

nesia

Mald

ives

Mya

nmar

Nep

al

Sri L

anka

Thail

and

Countries

Adult literacy Rate (2001)Life Expectancy at birth (2001)Infant Mortality Rate (2001)

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Millennium Development Goals

� Unparalleled importance to Health– 8 Goals, 18 Targets, and 48 Indicators– Health related - 3 Goals, 8 Targets and 18

Indicators - Centrality of Health in MDGs� Health Goals by 2015:

– Reduction of U-5 Mortality by two-thirds– Reduction of MMR by three quarters– Reversing the spread of diseases, especially

HIV/AIDS and malaria.

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Assessment of MDGs� Mixed Results

– No reversals of MDG indicators in SEAR while lastyear was of many reversals globally

– Good performance by Bangladesh, Bhutan andIndonesia in reducing U-5 mortality rates.

– Moderate performance in DPR Korea, Malaysia andThailand.

– Myanmar's progress in U5 has been not satisfactory– Thailand excelled in preventing the spread of

HIV/AIDS by more than 80 % since early 90’s– Sri Lanka’s achievement on life expectancy front is

especially commendable.� Sub-national level, inter-group disparities and gender

inequalities are all over, especially so in India

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Direct and Indirect Costs ofill-Health

� Reduction in DALYs� Acute physical pain and suffering.� Increasing medical expenses and contraction

of other essential expenditures.� Loss of valuable work-hours due to disability

and life-years arising out of death.� Loss of personal income and national income

as well.

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Direct and Indirect Costs ofill-Health

� impoverishment of the household due toreduced income and increasing expenditure.

� Under-investment in children’s education andother basic requirement

� Additional pressure on public funds andgovernment allocations under stress.

� Reduction in sources of resource mobilization(lower number of tax payers).

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Longevity, Health andDevelopment

Longitivity

Investments

Income

Savings

EconomicGrowth

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Cost to Firms

� Continuing disease Episodes affectProductivity� productivity of firms

� Firms encounter increase cost of production� Lower and falling profits � fall in National

Income� Better health of labour force improves firms

capacity to compete in international biddingprocess

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Role of Health inEconomic Development

� High and advanced qualities of Health and educationtrigger economic development from high levels.

� Essential � that ill health aggravates poverty ratherthan adhering to the view � that poverty accentuatesconditions of ill health.

� Healthy individuals are more productive and live longerto generate high levels of income.

� Sri Lanka - a reduction in malaria from its endemiclevels during the second half of 1970s, contributed to a9 percent increase in GDP.

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Role of Health inEconomic Development

� Persistent episodes of ill health diminishes thereturns to business and infrastructure investments.

� Childhood sickness � disability in adulthood,explains one way in which the quality of futurestock of capital is adversely effected.

� Health is a cause rather than a fallout of economicdevelopment.

� Europe, Britain & Japan rapid growth during industrial revolution was supported by the existence of advanced health gains and standards.

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Health SpendingNational health spending: sources and uses (per cent)

SourceCentral

Govt.State &

Local Govt.Corporate

3rd PartyHouseholds Total

Uses Primary Care 4.3 5.6 0.8 48.0 58.7 Secondary & Tertiary Inpatient Care

0.9 8.4 2.5 27.0 38.8

Nonservice Provision 0.9 1.6 NA NA 2.5 Total 6.1 15.6 3.3 75 100Source: World Bank (1995b).

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Health Spending

Incidence of preventable diseases and ill-healthAmongst the bottom 20 per cent of the global population

0

10

20

30

40

50

60

70M

alar

ia

Child

hood

Dise

ases

Dia

rrhe

alD

iseas

es

Perin

atal

Cond

ition

s

Tub

ercu

losis

Mat

erna

lCo

nditi

ons

Resp

irato

ryIn

fect

ions

HIV

/AID

S

Wei

ghte

dA

vera

ge

Disease

Perc

enta

ge

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Health Spending

� Health (Public) expenditures should be directed towardsdiseases of the poor � Cost Effective.

� Differentiate Primary (public) health care, Essentialclinical services � PUBLIC GOOD vCurative Care � PRIVATE GOOD

� CMH Report � an investment of $4 for public healthand $8 for clinical services are capable of achieving areduction of over 32% of all DALYs amounting to 226million years of DALY in low income countries.

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Health Spending

� Cost Efficient expenditures benefiting masses.� A total cost per capita worth $15 will reducethe disease burden by 25% or 301 millionDALYs in less developed countries

� Prevailing per capita health expenditures in SEAR arequite low.– Eg. Bangladesh 1.6 per cent of GDP in 1996-98.– In India it is less than 2 per cent and in Nepal less

than 1%.

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Public Expenditures on healthEssential so is Public-Private

Compact� The significance of the presence of

government in the health sector is tenfold:– health being a public good is subject to market

failure and problem of free riding, which can beresolved by the government.

– financial risk coverage is provided by thegovernment in times of crisis, especially to the poor.

� Promote Public - Private Compact �especially in insurance, production of drugs andmedicines, and training

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WTO, Globalization and TRIPS� The era of globalization has added to the disease

burden of the people in region under study andsimultaneously broadened the horizons of reducing it.

– disease related to HIV/AIDS, tobacco intake have escalateddue to enhanced economic activities effecting the behavioralpattern of the masses.

– emphasis has been laid on R&D as a means to improve thequality of health care.

� The WTO lead TRIPS and GATS � will they improveavailability of drugs in low income countries? Not Clear

– the low income countries have been more hurt than benefiteddue to the patenting of processes and products related topharmaceuticals, having to pay higher prices.

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Public-Private Compact

� Weak Public Institutions, lack of resources, poormanagement, and low accountability- Public Provision ofHealth Care � not a enduring solution.

� Experience of Developed countries suggest-basic healthservices should be comprehensively provided by thestate early on, followed by more targeted interventions,and then public-private partnership.

� Recent household surveys of many countries around theworld indicate private providers play a significant role inhealthcare delivery, even to the poor.

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Public-Private Compact

� Reviews of disease control and child andreproductive health programs have similarly foundthat the private sector will prove to be a contributingfactor in controlling the burden of disease in theSEA region.

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Public-Private Compact

� Some of the ways to improve the quality ofservices poor patients receive –

– Government can ‘contract / ‘purchase’ from private sources foridentified poor.

– Government may focus their contacting and funds on diseasesthat disproportionately affect the poor, or on services of criticalimportance to the poor such as MCH, family Planning services.

– Improving the health insurance facilities so that the people arenot forced to pay out of their pocket at the time of need.

– Enhancing quality regulations and professional ethics toinformal providers located in rural areas or slums.

– ‘Community financing’ by pooling its own resources and thatwould mainly cover basic curative health services other thanthe package of essential interventions.

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Rich and Poor Country Compact� High-income donor countries- helping the low-

income countries pursue their health objectivesand bridge the existing gap in health financing.

� Millennium Development Compact: Top andHigh Priority Countries can’t wait untileconomic growth- rather they need largeinjections of donor financing.

� Financing on the eradication of diseases is notthe only objective- A rigorous R & D initiativehas to be undertaken by the donor countries-would help to achieve a healthy world.

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A Frame Work for ReviewingDevelopment Assistance in Health

Individual and Household Behavior

Health SystemPerformance

Health Status Outcomes

Health Care SystemPublic and Private Delivery Structure Policy

and Institutional Capacity

Owners/GoverningBody forDonorAgency

AgencyVision onDesired

Outcomes

DonorAgency

Capacity

GovernanceInstitutionalEndowment

MacroeconomicEnvironment

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Rich and Poor Country Compact

� Developmental Assistance for Health (DAH): Governments with taxpayer’s money are the fundamental source- delivered through publicagencies in the aid receiving countries.

� 47% of DAH allocated to countries that spend less than US$20 percapita on health and about 28% to those spending less than US$40per capita. The overall amounts of DAH are very small, amounting toless than US$1per capita even in countries with low totalexpenditures.

� Overall international donations grew to US$679 million in 2000, withabout US$109 million or 16% allocated for health purposes of alltypes.

� DAH � objectives have shifted from single purpose efforts toexpanding health system capacity and strengthen national healthpolicy framework through systemic reforms.

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Rich and Poor Country Compact

Diseases Support(in million

US$)

Percentage

HIV/AIDS includingsexually transmitted disease

337 20

Vaccine preventablechildhood disease

250 15

Maternal and prenatalconditions

180 10

Malaria 87 5 Tuberculosis 81 4.5 Non communicablediseases

47 3

Disease and Health Sub-Sector Specific DonorFunding

Source: summarized from p17 of the Report of the Working Group 6 ofthe CMH.

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Rich and Poor Country Compact

� As trading partners it is beneficial to donor countries toprotect the interest of low cost labour force in low-income countries.

� Monterrey Consensus of Millennium Declaration:developed countries that have not done so to makeconcrete efforts towards the target of 0.7 per cent ofGNP as official development assistance (ODA) todeveloping countries � as opposed to only 0.15 -0.20 per cent.

� ODA @ 0.7 per cent of GNP � aid would be $165billion a year that is three times the current level andadequate to achieve Millennium Development Goals.

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Health Access to the Poor

� Donors reluctant due to absence of dependableassurance that funds are spent prioritized sectors andand that transparent monitoring and evaluationmechanisms are put in place to assist the sustainability inoutside funding.

� Recipient countries to evolve implimentative platforms,institutions, procedures and inventory control systemsthat bring utmost amounts of transparency andaccountability.� It is important that creditable output measures are

agreed upon to undertake annual or regular evaluationof the programs being implemented.

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Health Access to the Poor

� Increasing Physical Access to Servicesessential

� Increase number of health centres and small health posts in rural areas. � Improve Outreach � regularly visiting health workers to distant villages to provide preventive and promotive care is a simple but effective means of increasing the coverage of services for the poor.� Providing adequate travel allowances and other

incentives can act as a powerful motivation for healthworkers to visit the remote areas regularly.

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Health Access to the Poor� Increasing the Resources Available for Health

Facilities Frequented by the Poor– Identify key public health services relevant for the poor.

– Decentralized provisioning and involvement of thecommunity creates the possibility of mobilizingadditional resources for the health sector at the locallevel.

– Carefully planned user-fee and cost recoverymechanism

– Attempt health risk pooling through social healthinsurance schemes � not easy but high returns ifsucceeded.

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Health Access to the Poor

� An important means for improving the health ofthe poor is to regularly measure the extent towhich they benefiting from health services.

� Since most governments in this region arelikely to continue their role as health provider,the strategy should involve identifying ways toimprove the quality and efficiency of thegovernment health services so that poor canoptimize their use of these services.