GHF2006 – PS06 – Financing Health Systems Pro Poor

Session Outline

Parallel session, Thursday, August 31 2006, 11:00-12:30
Chair(s): Raphael Bengoa, Switzerland, Jacques Martin, Switzerland
Health Insurance: Is it Globally Relevant?
David B. Evans, Health Systems Financing, World Health Organization, Geneva, Switzerland 
Alternatives in Healthcare Financing: Examples from Low and Middle Income Countries
Sania Nishtar, President, Heartfile, Pakistan
The Impact of Sustainable Private Sector Investments
Guy Ellena, Director, Health and Education Department, International Finance Corporation, World Bank Group, USA 

Session Report

Submitted by: Philippe Berset (ICVolunteers); Contributors: Martin Elling (ICVolunteers), Jocelyn Poirier (ICVolunteers)

Image: Viola Krebs, ICVolunteers.org

Financing of health systems is well known for raising controversial ideas and provoking stormy debate. This session put the accent on whether a prepayment system should be applied to deficient health systems in under-developed countries. Different judgements on the global relevance of insurance were presented.

The first speaker, David B. Evans from the World Health Organization (WHO), began his presentation about health system financing by evoking the reversals which took place during the 1990's in the sub-Saharan and south-east Asian regions. In these regions life expectancy has reduced despite health improvements worldwide. In comparison to the most developed countries which spent a lot on health, expenditure in developing countries has remained insufficient. This fact recently led the WHO to adopt a resolution urging countries to develop health financing systems that ensured that their population had access to necessary healthcare, without financial risk to the recipient. But health financing systems are far from being realized in many developing countries as is demonstrated by the fact that a high proportion of health spending in these countries comes 'out-of-pocket'. In south-east Asia the 'out-of-pocket' proportion of spending is up to 70 per cent. These upfront costs discourage the use of health services and cause people to discontinue treatment. In China, more than 40 per cent of people in need of treatment do not seek it and this places a burden of care on family members with negative consequences for their ability to work.

Objectives are to improve the quality and efficiency in service delivery and help countries to optimize their health coverage. Most developed countries have systems based on a mix between insurance contributions and different sorts of taxes. Mr. Evans gave many examples to illustrate the major part private funding plays in emerging economies. Some countries, like Moldova, succeeded in transitioning quickly and balancing both approaches to financing health. The solution put forward by the speaker is to set up progressive tax systems and provide for insurance contributions based on income. But how to raise the contributions is the greatest problem and that requires increasing inflows of external assistance. It must not be forgotten that the key to the whole system is the way the funds raised are used. The speaker concluded that transition can take considerable time and that insurance can play an essential role, but has to be supplemented by taxation.

In the second part of the symposium Mr. Guy Ellena, Director of the Health and Education Department at the IFC (World Bank), presented and lead discussion on the impact and role of the private sector in health care. Mr. Ellena made it clear that the question of whether the private sector's contribution is good or bad is not relevant here. Private sector investment in health care exists and needs to be dealt with. In fact, it impacts as much the poor as it does the rich (for example in the Dominican Republic, most middle class people use the public system). Mr. Ellena elaborated on four different questions: Does the private sector matter? Is it sustainable? Does it serve the poor? How can the private sector investment be supported? The fact is that poorer countries tend to rely more on private sector funding (for example the Democratic Republic of Congo 80%, versus Japan only 20%) and private sector funding is closely related to the capacity of a government to collect taxes. Since people, regardless of their origins or the country they live in, are willing to pay for good services and accessible health care system, the private sector not only matters but becomes an essential piece of the puzzle. Unfortunately, in order for the private sector to be sustainable, it needs to be profitable. Consequently, in order for the private sector to be well integrated into the public system the right conditions need to be established. Governments play a major role, since the private sector is also their responsibility, by regulating it without imposing burdensome constraints and by providing an improved business environment. To do this they need to understand private sector health care so that they are aware of how it contributes and improves existing health care systems.

Financing health is a challenge and, as statistics show, it is not necessarily a profitable business in some countries, which means banks tend to shy away from investment in it. Private financing in health care is not always looked on favourably by public opinion. This is where the World Bank comes into play by helping financing the private sector into health care in under developed countries.

Private funding in health care is a reality which affects populations all over the world; more specifically in under-developed countries. The key is to influence poorer countries to establish balanced funding of their health care systems through government, insurance and the private sector.  The combination of these will lead to a transfer from richer to poorer groups and especially from the healthy to the sick.

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