Strengthening health financing can provide more people health services
22 NOVEMBER 2010 | BERLIN | GENEVA -- Governments worldwide are struggling to pay for health care. As populations get older, as more people suffer chronic diseases, and as new and more expensive treatments appear, health costs soar.
Even in countries where health services have traditionally been accessible and affordable, financing mechanisms are increasingly stretched. In countries that depend heavily on people paying directly for services at the point of delivery, health bills push 100 million people into poverty each year.
This year's World health report gives governments practical guidance on ways to finance health care. Taking evidence from all over the world, it shows how all countries, rich and poor, can adjust their health financing mechanisms so more people get the health care they need. It encourages the international community to support low and middle-income countries' efforts to increase health coverage.
"No one in need of health care should have to risk financial ruin as a result," said Dr Margaret Chan, Director-General of WHO. "The report sets out a stepwise approach. We encourage every country to act on this and do at least one thing to improve health financing and increase health coverage over the coming year."
WHO highlights three key areas where change can happen: by raising more funds for health, raising money more fairly, and spending it more efficiently.
Raise more funds for health
In many cases, there is scope for governments to allocate more money for health. In 2000, African heads of state committed to spend 15% of government funds on health. So far three countries (Liberia, Rwanda and the United Republic of Tanzania) have achieved this. If the governments of the world's 49 poorest countries each allocated 15% of state spending to health, they could raise an additional US$ 15 billion per year - almost doubling the funds available.
They can also generate more money for health through more efficient tax collection, as Indonesia has done, raising revenue by 10% points. They can find new sources of tax revenue, such as sales taxes and currency transactions. Ghana, for example, has funded its national health insurance partly by increasing the value-added tax (VAT) by 2.5%. A review of 22 low-income countries shows that they could between them raise US$ 1.42 billion through a 50% increase in tobacco tax. India could generate US$ 370 million per year by implementing a levy of just 0.005% on foreign exchange transactions.
The international community has a key role to play. An average of US$ 44 per capita is required to ensure access to even a small set of quality health services in low income countries. Many struggle to do this. Today, 31 countries spend less than US$ 35 per person on health. If all donors joined the Government of Norway and others that have kept their promise to allocate 0.7% of gross domestic product (GDP) to official development assistance, three million additional lives could be saved in lower income countries by 2015.
Raise money more fairly
This means removing the key financial barriers to obtaining care. Countries like Japan that manage to ensure health services are available to the entire population have done so by reducing dependence on direct, out of pocket payments and increasing prepayment - generally through insurance or taxes or a mix of the two. The funds raised are then pooled, so that it is not just those who are unlucky enough to get sick that bear the financial burden. This is the model used in many European countries, with Chile, Colombia, Mexico, Rwanda, Thailand and Turkey all making significant progress in the last decade - along with Brazil, China, Costa Rica, Ghana, Kyrgyzstan and the Republic of Moldova.
Spend money more effectively
Smarter spending could increase global health coverage by anything between 20%-40%. The report identifies ten areas where greater efficiencies are possible. One of these is the purchasing of medicines. France has adopted a strategy of using generic drugs wherever possible - this saved the equivalent of almost US$ 2 billion in 2008. Hospitals are another. Hospital care often absorbs from half to two thirds of total government spending on health: almost US$300 billion is lost annually to hospital-related inefficiency. More efficient spending on hospitals could boost productivity by 15%.
The international community has a key role to play in improving efficiency. Five years after the Paris Declaration on Aid Effectiveness, which aimed to harmonize aid around country-led programmes, more than 140 global health initiatives run in parallel - imposing logistic and reporting burdens on recipient governments that stretch resources still further. The Government of Rwanda, for example, currently reports on more than 890 health indicators - a hugely time-consuming process.
On 22 November, WHO presents the report to a ministerial conference on health financing, hosted by the Government of Germany. The organization and its partners will then embark on a programme to help countries review their health financing systems and strategies alongside their national health policies and plans. It will encourage and facilitate exchanges of experiences between countries, and help countries adjust financing systems so that more people get to access the health services they need.