Governance Mechanisms

When we talk of global health with all its complexity and challenges, the issue of governance becomes very important. The concept of governance of course arose from the feudal times when you had a ruler or a ruling class and those who are ruled or are governed. But even with the advent of democracy we had elected governments which were entrusted with the responsibility of providing a method of organizing the society and insuring the rule of law in an orderly fashion so that the society could function very well.

The notion of governance goes however beyond the formal mechanisms of government and refers to the totality of ways in which a society organizes and collectively manages its affairs. Because now we are living in a state of democracy when we recognize that it is not merely for the government to decide on how the society should be run. There are multiple actors in a society and all of them need to act concertedly after adequate consultation among themselves. So it’s a collective decision in which the responsibilities are shared, but ultimately the process of governance is contributed to by every one of the stakeholder groups.

In terms of global health governance, the concept of governance now extends across countries. It has been defined as the use of formal and informal institutions, rules and processes by states, intergovernmental institutions and non-state actors to deal with challenges to health that require cross-border collective action to address effectively. Where many of the determinants of health actually act transnationally, you’ll require international cooperation- better now known as global cooperation and global concord for collective action. And when we say state, we are talking about the collective, governmental, as well as societal image that captures a country’s interest and provides governance for that particular country.

But there are non-state actors who are acting independent of the elected state and those also need to be recognized as important contributors. In terms of the governance for global health, global governance for health refers to all governance areas that can affect health, implicitly because global health is fundamentally geared towards promoting health equity and reducing inequities. Global health can make the normative claim that health equity should be an objective for all participating sectors which goes beyond the health sector as well.

So, When we are talking about governance of global health, we are talking about governance with the health systems, when we talk about governance for Global Health we are talking about all sectors of development in human activity being aligned to the objectives of global health and being geared to promote global health equity. There are multiple global challenges that we are now seeing. For example, the threats from the past, infections, maternal and child health challenge as well as a host of emerging challenges like non-communicable diseases, zoonosis, antibiotic resistance. We’re also seeing challenges arising from globalization, increasing inequity in multiple areas whether it is access to drugs or even some of the problems of health systems compounded by migration of trained health workers from countries which need them to countries which can afford to purchase their services. We’re also seeing climate change and trade policies having an increasing influence on global health. So we recognize that no single nation or organization is currently capable of single-handedly addressing all its health challenges by itself. So we do need a global health platform in which countries can work together and multiple groups which represent different societal interests can work in concert.

At the global level we have apart from the World Health Organization and the individual national governments, we also have a number of other actors who are now coming into play. We have multilateral organizations which provide technical or even economic assistance for health. We have bilateral organizations which establish country to country collaborations. We have philanthropies which are now playing a much larger role across the world. We have academia. We have the civil society organizations. We have the private sector. We have the media. And we have hybrid partnerships which often link some of these actors. But at the level of the global health we find security becoming an important issue and health security is an important challenge for most countries now.

At the same time, we are finding other issues like migration, education, agriculture, environment, and a large number of other issues like trade and investment, all of them becoming important contributors to our debate on global health governance. So we are now reaching beyond the health sector, but we’re also bringing in a multiplicity of actors into play. But there are several challenges in this complexity. First is the sovereignty challenge. There is no government at the global level obviously. Even if the United Nations exists, it is more of a platform for consultation rather than a single authority which can dictate what should happen across the world. There is inherent tension between national sovereignty and international action. Most countries would like to collaborate with each other as long as their national interests are not affected. And therefore when we ask for shared sovereignty in the area of global health, there is always a concern that nations experience whether they’re actually surrendering their sovereignty. So we do need to find a healthy way media in which nations are comfortable with working with each other rather than feeling that they’re being compelled to act in the interests of another country.

There is also a sectoral challenge. There are multisectoral influences on health and all of these are not embedded in the health sector, therefore we require cross-disciplinary policymaking which is largely absent in global health. Many of the agencies which deal within countries or across countries with agriculture and trade for example are totally insensitive to health concerns. There is also the accountability challenge. There is a democratic deficit related to the legitimacy of international government organizations, or inter-governmental organizations. Also there is a lack of clear mechanism for accountability of non-state actors. So the question is if inter-governmental organizations as well as non-state actors have a considerable influence on the health policies of a country or a group of countries, then are they really accountable in some manner just as national governments are? If they are not, then how can they actually be held to account?

The big question is which is the organization that really represents global health? The World Health Organization was established in 1948 in the aftermath of the Second World War. It is the first multilateral global health organization and the most respected. Its imprimatur is particularly valuable in the low and middle income countries which see it as an honest broker in global health. It functions through its headquarters in Geneva and six regional offices, which are located in the Americas, in the European region, and in what’s called the Eastern Mediterranean region, the Southeast Asia region, as well as the Western Pacific region and the African region. Now each of these encompasses many countries in that region. The Pan American Health Organization for example covers north, central, southern American countries as well as the Caribbean.

Many of these regions, despite the heterogeneity that exists within themselves do try to act in concert at the regional level and are accountable to the regional committees which represent the governments of those regions. And overall, they work in concert with the headquarters in Geneva. But there are often disconnects in that relationship.

The WHO remains the only actor in the current global health system that has universal membership of all sovereignty nations. There are of course several importante international treaties and initiatives that the World Health Organization has taken in the interest of global health. One of the landmark treaties, the very first public health treaty negotiated by the WHO is the framework convention on tobacco control which was adopted in 2003 by the World Health Assembly. And now 180 countries have signed up to the framework convention on tobacco control. There are also the international health regulations to address acute public health risks. There has also been a great deal of work done by the WHO for advancement of the millennium development goals. The WHO also takes the global leadership role or it is the coordination role in mobilizing emergency response, relief work, management of outbreaks, for example recently in Ebola.

While the WHO is a globally respected organization, whose leadership still remains widely acknowledged, the role of WHO has become somewhat diminished or even contested by the emergence of multiple other actors, particularly those who fund major health programs, whether it is individual high income countries, or inter-governmental organizations, or philanthropies. And we now see that there has been a call for a reform of WHO, partly because the WHO’s original role of being a predominantly normative and technical agency which provides guidelines to countries has been supplanted to some extent by having to provide response to multiple health system challenges which it may not be able to do entirely on its own.

There is also the major problem that the WHO is grossly underfunded and as a result has become increasingly donor dependent to run its own programs. To what extent are these donors influencing individual countries, or even now, using the WHO platform to advance their own prioritized agendas for health? So this concern has again started to increase within the global health community. At the same time, there is recognition that many of the regional offices are not performing very well, or perform in a manner that is quite disconnected with the headquarters and there is no real global coordination. While ‘One WHO’ was given as a slogan by the former director general, Dr. Gro Harlem Brundtland, there is little evidence to suggest that WHO functions in smooth unison across the world, because each regional office has a regional director elected by the countries of that region and therefore there is no real accountability to the global health community beyond that region. So we have multiple challenges which the WHO faces currently.

While there has been progress in health brought about by WHO initiatives, the question that has come up is, is the WHO capable of meeting the complex challenges of an altering global health scenario? The Chatham House which is an independent organization based in the United Kingdom, put together an expert group which recently reviewed the WHO’s performance and its changing role and came up with some recommendations for WHO reform. It suggested that the core functions of WHO should be much more explicit. It also suggested reviewing and restructuring regional offices and, and indicated that they should function with far greater accountability to their regions and spend lesser money for more results. It has suggested new avenues for collaboration which must be explored by WHO. It has also called for a reviewing of the skill mix that requires to go into WHO under separation of the technical and governance departments of WHO.

Now these recommendations of course will have to be considered by the countries who are member states of WHO and to see what extent the WHO can actually re-position itself as an important lead public health agency of the world. But that the global health has become a very crowded stage with multiple actors, there are about a 175 global health initiatives, funds, agencies and donors currently existing. Can WHO act as a convening platform for all of them without being unduly influenced by any of them? That’s the big question. At the same time, can WHO engage with other agencies which are dealing with issues like environment, trade, migration which have a substantial influence on health and effectively align them to the interests of global health? That again is a role that the WHO has to define for itself.

At the same time we recognize that the United Nations itself can also play a role as a convening platform for multisectoral action. It has indeed catalyzed broad development platforms initiating action on global health, for example the millennium development goals or the MDGs which were adopted by countries in the year 2000. And now the sustainable development goals which would be adopted by the countries in 2015 are also now likely to have a strong platform for global health action. At the same time, the United Nations held two high level summits, one on HIVAIDS in 2001 which led to the formation of the global fund for AIDS, tuberculosis and malaria and brought in considerable amount of funding into that field, with concerted donor coordination. It also had another high level political meeting on non-communicable diseases in September 2011, which is again, paving the way for global action on NCDs.

It has recently constituted a task force for concerted international action on Ebola. The Ecosoc, or the Economic and Social Council of the United Nations is again another platform where the United Nations can actually coordinate action across its multiple agencies. Whether it is the World Health Organization or the food and agriculture organization, or whether it is the World Trade Organization and the World Bank, this multi-agency platform has been effective in initiating work on tobacco control after the FTCT was adopted. And now that has been transformed into the U.N. task force on non-communicable diseases. When we are looking at multiple agencies now contributing to global health, we also have to look at not only conflicts between them, but also potential synergies. For example, the report for cancer research in U.K. in 2011 suggested that partnership between public authorities as well as charities for medical research could actually bring about great benefits in the form of shared costs, pooled risks, and more stability in family. However the issue of donor engagement brings in the whole question of accountability and responsible behavior by donors. Donors cannot set agendas which are not in the interests of the recipient countries. They also have to be accountable for the manner in which they conduct themselves.

So the Paris declaration of 2005 defined the roles and responsibilities of donor organizations to promote aid effectiveness and enunciated five principles: ownership, alignment, harmonization, managing for results, and mutual accountability. Now all of these are very important, providing ownership to the countries, a greater alignment with national priorities, harmonization among donors and effective managing for results and mutual accountability. It’s not just the countries which are accountable for the aid received, but the donors too are accountable for the way they conduct their business in the countries.

However, one of the major problems has been the multiplicity of donor organizations. With all the good intentions, there have been several donor organizations stepping into countries, for example in the area of HIVAIDS, you have had Ethiopia with 27 donor organizations in that area of health alone. Kenya with 26, or Tanzania with 25, Zimbabwe with 25, Rwanda with 23. It’s a whole crowded field. This imposes a huge burden on countries because they have to coordinate and liaise with all of these donors. They have to have separate reporting system for these donors. And the under-resourced health ministries of these countries crumble under the pressure of having to deal with multiple donors. So there is a great need for harmonization among the donors.

There is also the increasing role of civil society. Civil society groups can range from those which advocate for patient rights, or those which can advocate for better accountability of different health programs and voice the concerns of the communities. They can also participate in delivery of services. So the participation of civil society from policy to actual service delivery is becoming an important component of global health and these include both national NGOs as well as international NGOs. However, with the increasing number of NGOs we also have to differentiate between the nature of NGOs in terms of their intent and their origins. It has been humorously described that there are three categories of NGOs: the PINGOS or the public interest NGOs, the BINGOS are the business interest NGOs, or the GONGOS which are the government sponsored NGOs. So we’ll really have to deal with all of these, recognizing what their main interests are.

But there is yet another challenge in terms of global health governance, even when we recognize that the WHO could be an effective convening platform for multiple agencies, including civil society and the private sector, apart from the governments. The WHO itself is a soft governance organization. It provides guidelines and recommendations that members states can adopt or adapt based on their own discretion. They’re not mandatory. The member states can take them or leave them. Whereas organizations like the World Trade Organization are hard governance organizations. Their policies canbe much more definitive and binding for the member states. And they’re not always conducive to good health.

So we have to again, try and see how this balance of power nor asymmetry of power between different global organizations representing different interests can be reset and corrected so that the WHO get greater traction when it has to deal with agencies such as WTO or even others like FAO, or the World Bank.

So the implications are that WHO remains the lead public health agency of the world, but its influence and its role are now coming in for greater debate and to some extent, are being contested. We need to move towards a better defined global health governance system in which the WHO continues to play a very important role as a convening platform, the honest broker as I said, giving an effective role to each of these major players whether they’re individual governments or philanthropies or the private sector or the civil society, but insuring that the interests of global health predominate over any sectoral interest and also insuring that the roles played by all of these groups are complimentary rather than in conflict. And that is where the WHO has to now become a very new kind of organization, setting the agenda, coordinating and at the same time, becoming the conscience keeper of global public health.

Health for All – The Moral and Social Case for Universal Health Coverage

In this chapter we’ll be dealing with universal health coverage as one of the key requirements of providing health for all citizens across the world.

Quite often we have looked at health as a very important investment for accelerated economic development. And indeed, the need to protect and promote productivity among individuals who contribute to economic growth in a society has been emphasized often enough to make sure that governments continue to provide increasing investments to health year round. However, while increased productivity is an important ingredient for making the argument for improved investments in health and for universal health coverage, we must recognize that merely a utilitarian argument of improved economic growth would not be appropriate because we need to bring in the equity argument as well and position health as a right. Otherwise a large number of people who are not contributing to increased economic growth, either because of age or because of illness and disability may be left out of that whole equation.

The reason why universal health coverage has become a major global priority in the last 15 years is because of the huge amount of impoverishment that healthcare expenditure is causing across the world. The World Health report of 2010, published by the World Health Organization estimated that every year about 150 million people face severe financial hardship and a 100 million are pushed below the poverty line because they fall ill, use health services and pay out-of-pocket. Many have to sell assets or go into debt to meet the payments.

And it is because of this healthcare related impoverishment, especially exacerbated by catastrophic health expenditure, but also because of a continued chronic drain on personal finances that ill health imposes, that we have to look at a more caring healthcare system in which we provide financial protection along with quality health services. And that adds up to universal health coverage. In terms of private, out-of-pocket expenditure, many countries, especially in the low and middle income countries, impose a huge burden on their citizens in terms of personal, private, out-of-pocket expenditure on health. Which means that beyond what the government provides, they’re spending quite often upwards of 50% from their own personal finances.

This is not acceptable because it is indeed a huge burden which results in healthcare related impoverishment. And we see this happening in different countries of Asia. If we look at 11 countries of Asia and look at what the out-of-pocket payment is and the proportion of people who are being pushed in to poverty each year, then we recognize that those countries which have low levels of out-of-pocket expenditure have low levels of impoverishment, especially due to healthcare expenditure. On the other hand, countries like India which have had high levels of out-of-pocket expenditure, have much higher levels of impoverishment annually, of people being pushed below the poverty line.

So we do really need to move towards a system which is much better and that is universal health coverage. Universal health coverage offers a way of sustaining gains

from and protecting investments in the countries that have already invested a fair amount on attaining the millennium development goals, which are related principally to maternal mortality, child mortality, poverty reduction, relief for under-nutrition and so on. Now clearly some of these goals have been attained partially and we need accelerated progress on attaining those goals. But a health system which is relatively inefficient or inequitable cannot bring about the required momentum. Universal health coverage on the other hand can galvanize the health system to perform better and achieve the goals which are only partially met. It also accommodates the changing agenda of global health which as we know, because of health transition is bringing a host of non-communicable diseases to the fore.

So universal health coverage by definition is the practical expression of the concern for health equity and the right to health. Moreover, access to services when needed also provide financial protection and also provide the comfort and assurance that people will get the services they need.

The Rio+20 United Nations Conference on Sustainable Development recognized the importance of universal health coverage for enhancing health, social cohesion and sustainable human and economic development. The U.N. in that meeting pledged to strengthen health systems towards the provision of equitable universal coverage. The countries participating in that meeting called for the involvement of all relevant actors for coordinated, multi-sectoral action to address urgently the health needs of the world’s population.

So universal health coverage as a goal, a strong health system as the vehicle, but also supported externally by concerted multi-sectoral action which will align actions in other sectors to the health needs and to the objectives of universal health coverage. And universal health coverage does provide financial protection which is the critical aim of universal health coverage. But beyond that, it insures greater health equity within countries and across countries. It also provides the population with improved health outcomes. Longer life, better quality of life, greater healthy life expectancy, far less disability. It also enables the creation of efficient, accountable and transparent health systems.

At the same time, it reduces poverty It leads to greater productivity, a healthy population is definitely going to be better for the economy through greater productivity. Most importantly, by creating a strong health system it can actually increase employment opportunities for a large number of young people and women because if universal health coverage is going to be focusing strongly on primary health services, in a world where there are the health workforce crisis, a great shortage of doctors, nurses, allied health professionals, you need to create more jobs on the front line. Many of them won’t be doctors, but a number of technology enabled front line health workers will have to be pressed into service for energizing primary health services. So in an era where the economic situation is not promising a lot of employment for young people seeking to enter the labor market, the health sector by embracing universal health coverage can actually provide a much larger pool of employment for a lot of young people who are aspiring for gainful livelihoods.

When we come to the implementation of UHC, there are two very important interconnected components. Firstly, coverage with the needed health services, prevention, promotion, and treatment and rehabilitation as well as coverage with financial risk protection for everyone. Since we said we will not be able to do everything overnight when we are introducing UHC, unless the country is very rich, many countries the low and middle income grouping will have to prioritize primary healthcare. Many countries look at primary healthcare, most of secondary healthcare, especially comprehensive maternal and child health services, essential surgical services and the emergency services as the initial package which they must introduce for universal health coverage and then expand by addition of other elements.

But again, primary healthcare becomes the absolute mandatory, initial component of any universal health coverage initiative. But at the same time, when we come to financial risk protection, we have to look at multiple sources. Virtually no country has achieved universal health coverage without a substantial infusion of tax revenues. That means a good part of universal health coverage has to be tax funded. Depending purely on health insurance, particularly employer provided or personally purchased health insurance doesn’t usually help because we need a large risk pool for insuring that there is sufficient sustainability for the program.

When we talk about a risk pool, we are talking about a number of people contributing to an insurance program where the sick minority is being subsidized by the healthy majority at any given point in time. Of course those who are sick can be healthy tomorrow. Those who are healthy today can become sick tomorrow. But it assumes that at any given time, the majority are healthy, they continue to pay insurance, but they’re subsidizing the sick. What we recognize is that in many of the countries, people are not always in the majority in the organized employed sector. Like for example in India, 93% of the workforce is in the unorganized sector. So you can’t have payroll deductions which automatically go into an insurance program. Many of the people are poor, they can’t afford to purchase private insurance. Even if the government provides substantially subsidized social insurance, many of the poor may not be able to get enrolled.

So as the risk pool shrinks, then the principle of that kind of an insurance where the healthy subsidize the sick or the rich subsidize the poor does not operate. On the other hand, in a tax funded health insurance system for universal health coverage you have the largest risk pool possible. And there the rich do subsidize the poor by paying higher taxes as a part of their social obligation. And the healthy majority does subsidize the sick. Therefore tax funding becomes an inescapable component of any financing for universal health coverage virtually in most parts of the world. And even in those countries, which have been really talking about insurance based systems, there is a substantial amount of government funding, even in the United States. So we need to look at a mixture of different funding sources with tax funding as the base and possibly other forms of insurance like employer provided insurance or government subsidized social insurance as additional components. One of the best known health economists, Bill Hsiao, or William Hsiao from Harvard writes that empirical evidence indicates that a free market for insurance cannot achieve social equity and that serious market failures allow insurers to practice risk selection.

That means they leave out the most vulnerable and make them uninsured. So if you are cherry picking and taking only relatively healthy people, for whom you do not have to pay much in terms of healthcare reimbursements, the people who really need healthcare are left uninsured. Dr. Hsiao also says that adverse selection among insurance buyers impairs the functions of the insurance market and deters pooling of health risks widely. Moreover the insurance markets high transaction costs yield highly inefficient results. However, there are some advantages. Dr. Hsiao indicates that evidence suggests that reliance on market competition for the provision of healthcare may hold potential for more efficient and higher quality care. What we are really looking at is the weaknesses of multiple competing insurance systems which adopt an adverse selection process. On the other hand, we still would like to bring in quality and efficiency into the healthcare system and even if we are going for a tax funded system, that is a requirement, to look for efficiency and higher quality of care.

Many countries have grappled with this problem and have adopted different models of universal health coverage, basically looking at their own country context and resource scenario. Indonesia has a social security providers law which replaced the previous community health insurance. And under this, 95% is paid by the government with the holder contributing 2% and the employer paying the remaining 3%. This has been particularly effective in Jakarta and is likely to be expanded across the country later.

Now in Canada, Medicare includes coverage based on health on need rather than the ability to pay. Provincial and territorial governments are responsible for the management, organization and delivery of health services for their residents. In Mexico, there have been a combination of different health insurance programs, substantially tax funded or government subsidized. Even though they are called insurance in the broad sense, they’re bringing a lot of government funded and government provided health services. And here particularly the introduction of Seguro Popular in 2003 brought financial risk protection to a further 50 million persons in the population. So that was a huge leap in terms of the number of people provided some assurance of healthcare with financial protection.

In Thailand, the universal health coverage scheme started off with what was called the 30 Bhat Scheme where people paid less than one dollar and that plan added about 14 million previously uninsured people to the Thai system. And this scheme has now been transformed with even greater coverage and a greater degree of financial protection at even lesser contribution at the personal level. In China, where there was previously an urban employer provided insurance scheme and the rural and migrant populations were left uncovered, since 2003, two more schemes have been introduced. One for the rural population and one for the migrant population. And between these three schemes now the coverage by some form of health insurance for provision of healthcare with some financial protection has extended to 96%. That means 96% of the Chinese people have some form of coverage.

But since the depth of services is still a bit limited, they’re still seeing the effects of out-of-pocket expenditure and catastrophic expenditure. As public financing increases, this is likely to decrease, even in China. In Brazil, the unified health system which is the nationalized program, provides primary healthcare while a network of public and contracted hospitals deliver specialist care. Primary care provision has substantially increased since its inception. And this also includes a national immunization program. And Brazil has adopted universal health coverage as an objective because the constitution has a right to health incorporated and therefore UHC is an important value.

In the United Kingdom, where the National Health Service started off as a model for many other countries which are now aspiring for universal health coverage, the government is responsible for funding access to healthcare and for supplying health services. And this is now a very important area where we find tax funded services reaching all sections of the people with assurance.

The whole world is now moving towards universal health coverage it appears, because in 2005, the World Health Assembly adopted a resolution asking all countries to adopt universal health coverage as a goal. In 2010, the World Health report focused on health financing for universal health coverage and then introduced the concept of the cube and how the cube can be progressively filled. We recognize that in most countries you can’t fill cube all at once. But you have to start visualizing the cube, recognizing that universal health coverage will be incomplete unless we try and fill most of the cube, but start moving progressively by prioritizing on each dimension as to where you begin and how you move forward, moving from the essential to the optimal.

In 2012 the U.N. had the Rio+20 conference, which again adopted this as an important goal. And then surprise, in 2012, the United Nations had a session on health and foreign policy in which they brought universal health coverage as an important component, recognizing that universal health coverage is important for global development and therefore for global stability and therefore for global security and therefore must form an important component of foreign policy initiatives as well. So whether it is the World Bank or the WHO or the United Nations or even diplomats or public health experts or economists, now universal health coverage has become the common currency of development discourse.

One of the important things that we must remember is that as we move towards universal health coverage, we are also moving towards a higher civilizational state because universal health coverage cannot exist without social solidarity. Unless society feels that they’re responsible for each other’s health, that they’re willing to support healthcare for another citizen who is in need, by contributing to the risk pool of ensuring that the health of every individual in that society is adequately cared for, you will not have universal health coverage as a successful model. Therefore the moment we adopt universal health coverage, not merely as a political slogan, not merely as a public health system goal, but as a societal commitment, then we are moving towards social solidarity. Without that we will not have UHC. But we have to make it effective through a functioning health system and through adequate financial investments to provide financial protection.

So in the context of the sustainable development goals, we now are likely to see universal health coverage positioned as a part of the health goal in the post-2015 agenda. but it is important that all countries start understanding first what universal health coverage entails and then start preparing not only their health systems, but their financing mechanisms as well as multisectoral coordination processes in order to pave the way for successful introduction and implementation of universal health coverage to promote health equity within countries and across countries.

Access to Medicines-II

When it comes to reliability of supply systems we need a good distribution system that ensures the availability of all essential medicines at all levels of the health system- primary, secondary and tertiary. And we can have several strategies for this. Firstly we need to integrate medicines in the health sector development. We cannot look at this as a separate problem of a pharmaceutical department which is often not even in the health ministry. And if pharmaceutical production is seen more as a commercial or an industrial activity, divorced from the needs of the health sector there can’t be anything worse than that for universal health coverage. So we need to integrate the whole availability and production and supply of medicines into the health sector development program. We also need to ensure that there is a fairly efficient and well-functioning public-private NGO mix in terms of the approaches to supply delivery. So the supply chain, while it may be driven substantially by the public sector, ought to be able to accommodate the private as well as NGO sectors also because they’re also often very major contributors to supply. We need to assure the quality of medicines through regulatory control. This is absolutely important particularly where we are now seeing a huge need for medicines across the world which are being met by generics, but these generics will have to be quality assured. And this requires appropriate drug testing and regulatory control. We need to explore a variety of purchasing schemes and pool procurement often reduces the overall pricing of medicines. Because if you actually have procurement cooperatives, or pool procurement, you’ll be able to eliminate the middle man and then remove multiple intermediate stages where there is price markup and ultimately get almost directly from the manufacturer a bulk procurement which can be substantially low priced and very close to cost of production, rather than the traditional market price which has multiple layers of markup. So we have to look at pool procurement and procurement cooperatives. At the same time we need to look at also procurement of traditional medicines. We’re not only talking about allopathic medicines here, many countries, especially in low and middle income countries have traditional systems of medicine which form a part of the health system and which are frequently accessed by the people and are often affordable. So we ought to be able to look at the supply of traditional medicines as well in healthcare provision.

Coming to the whole area of stock-outs, you can see this happening not only across countries, but even in health systems within countries. For example, in India where there are multiple states with different health system capabilities. The health system in Tamil Nadu, which is very well-functioning, has a very little problem of stock-out. On the other hand, Bihar has much lower availability and a much higher level of stock-out at any given point in time, though recent improvements are beginning to change that situation. So we need to address this whole problem as an issue of health system capacity for effective functioning.

And that the global level, we actually meet other challenges. We see the whole area of trade coming sometimes as an opportunity but quite often as a barrier to access. Trade in pharmaceutical products has been heavily influenced by international trade agreements, intellectual property rights, and globalization. And pharmaceutical companies have been researching on development of new products which are mostly based on the market expectations of utilization in the rich countries and not by the needs in the developing world which constitutes the majority of the global population. They are looking at who is likely to buy and particularly at a high cost rather than who actually needs them in terms of life-saving medication. And therefore, we find that many of the neglected tropical diseases do not have medicines and some of the medicines available for even common diseases are not often available at affordable cost. Many of these companies are also exploiting patent laws for their own profit. For example, stretching of patents, even when the patents are supposed to be expiring and the drugs are supposed to be coming into common domain for production by other companies, some of the companies are actually resorting to what’s called evergreening, which is a method to retain the patent protection and royalties from products, either by extending patents or buying out competitors, particularly by minor changes in formulation. Or in the manner of delivery in terms of the time of release of the actual drug by minor changes in pharmacokinetics. They’re actually declaring a drug to be a new product and are trying to extend the patent and stretch the patent out. And these are some of the things that actually are becoming barriers in terms of pharmaceutical company practice and challenge to countries which want to really take drugs off patent and then put them in the health system in the form of generics. But trade agreements are not entirely dispensable. Sometimes they may actually provide support to the less developed countries in other domains, like for example, traditional knowledge and genetic resources. So some of these actually by patent protection may help some other low income countries and the middle income countries generate more resources for their own health system. So the challenge of global trade is to ensure- yes, there should be some degree of intellectual property rights being protected, but at the same time, we need to ensure that this does not become a major barrier for access to medicines. And we have to look at the availability of medicines as a social contract between the industry and the wider population in the world in which the need for live-saving essential medicines outweighs commercial considerations. And the whole area of affordable pricing has become a subject matter of TRIPS- the trade related aspects of intellectual property rights. This agreement was first signed in 1995 at the Uruguay Round Agreement of the World Trade Organization. This mandated minimum standards for patent protection for pharmaceuticals. Clearly the pharmaceutical industry, particularly concentrated in high income countries, had an interest in ensuring that their products were patent protected so that they could make profits out of them from their exclusivity of production. But between signing of the TRIPS and the WTO Doha Ministerial Accord, the world witnesses a major crisis in terms of access to the drugs for HIV/AIDS. And especially in Africa and this became a major global issue. When some of the generic antiretroviral drugs were being supplied to South Africa by an Indian generic manufacturer, there was a major challenge from the multinational company which was producing the drugs. Indeed, the Mandela government was sued by this pharmaceutical company, much to the consternation and shock of the rest of the world. But fortunately the public outcry and the revulsion as well as civil society action across the world, including communities in the high income countries compelled not only the pharmaceutical industry to withdraw and permit the utilization of generics, but it also led to the global community to look at how trade agreements ought to be modified in order to protect the interests of patients who most need life-saving drugs. And that is why the WTO Doha agreement then came about. In 2001, in Doha, there was a declaration on the TRIPS agreement and public health. While reiterating our commitment to the TRIPS agreement, that’s what the countries said, we affirm that the agreement can and should be interpreted and implemented in a manner supportive of the WTO members right to protect public health. And in particular, to promote access to medicines for all. So public health could now start trumping to some extent the right to intellectual property which became restrictive on occasions. Especially for public health emergencies. So this was a very important victory for looking at how public health could be still advanced despite some of the drugs being on patent. And in 2003, in Cancun, adjustments and provisions were made in the TRIPS agreement to allow improved access to essential medicines. So we have to really look at the whole area of trade and evolving developments in the trade agreements and trade related treaty discussions from the point of view of global public health. And when we come to chronic therapy, long-term therapies for cardiovascular diseases, cancers and diabetes, these countries are going to be bankrupted if the drugs are high-priced and people are going to be dying prematurely if they do not have access to life-saving medication.

So access to effective non-communicable disease related drugs remains a high priority for the rest of the world, especially those in the low and middle income countries who do have access at the moment to drugs produced by pharmaceutical industry in the high income countries, mostly for those markets. Even when we look at generic drugs, there is a disparity across the world in terms of international generic drug pricing. There is really no consensus on how generic drugs should be priced. There is a fair amount of opportunistic pricing which is being employed by different manufacturers. If we look at the potential for lowering of the pricing of generic drugs by domestic manufacture as opposed to internationally available generic drugs, we see a huge disparity. Like for example in South Africa or Kenya or other countries or Brazil, the domestically manufactured generic drugs are far lower than the internationally branded products or the internationally sold generic products.

We therefore need to ensure that in as many countries as possible, at least in the middle income countries, we ought to be able to increase the capacity for domestic production of quality assured, low priced generic drugs. When we look at improving access, we can look at seven major strategies. First is enhancing capacity for generic substitution and the specific solution there is to expand the scope of the WHO prequalification project and build capacity of local regulatory, drug regulatory authorities to fast-track registration of generics. Secondly is to expedite generic availability by overcoming legal barriers related to patents and licensing. This we can do by increasing the use of compulsory licensing under Article 31 of TRIPS. Compulsory licenses are where countries in extraordinary situations, where public health needs are to be prioritized, can actually issue license to other companies, even for a drug which is still under patent protection. Optimizing local procurement practices in the public sector is absolutely important and this is done by recruiting local support for better supply chain management and using mobile and information technology to map stock-outs. We have the capacity now to use information technology to forecast the needs, to track the availability, to spot where the stocks are diminishing and readily replenish them and we ought to use that technology much more effectively than is presently being done.

We also need to broaden global procurement where third party price negotiations. As we said, pool procurement at the national level can be very effective in reducing costs, especially for the public sector, or for networks of private sector hospitals. But even at the global level pool procurement is possible because agencies – whether they are WHO or other international agencies, or a community of countries can actually negotiate jointly to try and obtain drugs directly from the manufacturer at a much lower cost by assuring a very large market size, When it comes to engaging the private sector to differentially price medicines in low and middle income countries, there is a movement in that direction. Many of the large companies are now looking at the market size in the developing countries and saying, okay, we will differentially price medicines for high income countries and for low income countries. And we will ensure that people who need it in low and middle income countries can get it at a different tiered pricing arrangement.

We can regulate retail markups in the supply chain by use of government controls to restrict markups. Price control is an important mechanism that countries must utilize judiciously in order to reduce unnecessary markups. Finally, we must eliminate tariffs on medicines. We must adhere to international treaties to eliminate import tariffs and preferably eliminate national sales taxes. These are not luxury goods. These are goods required for saving people from death and disease. And therefore, to have import tariffs and sales taxes is absolutely improper because we are playing with people’s lives. So by adopting a variety of strategies to provide access to drugs of assured quality, preferably generic drugs, preferably obtained through pool procurement with affordable prices, and ensuring regular, predictable distribution through a supply chain that eliminates stock-outs, we can ensure access to drugs. But this cannot be done only for high income countries, or even for middle income countries, it has to become a globally assured supply of drugs which are needed. And this can only be done if universal health coverage becomes not only a national aspiration, but a shared global value.

Access to Medicines-I

In this chapter we’ll be looking at access to essential medicines. Very clearly the introduction of life-saving drugs has made a great deal of contribution to improving life expectancy as well as reducing disability. And when we are looking at global health, the access to medicines becomes a very important element of universal health coverage[1]. Essential medicines are those that satisfy the priority healthcare needs of the population. Obviously there are several medicines, some of which are taken for relief of very temporary conditions, some are often taken as supplements to diet, some are taken for example to relieve cough or something like that. But essential medicines are those that are really required for protecting the health by reversing disease and reducing disability They’re selected with due regard to public health relevance, evidence on efficacy and safety and comparative cost effectiveness. Clearly there can be a wide range of medicines for treating the same condition but you need to be very sure that they’re effective, safe, at the same time, cost effective. Essential medicines are also intended to be available to the health system so that we are not uncertain about their regular availability for being provided in various healthcare facilities as needed. They should be available at all times in adequate amounts and in appropriate dosage forms with assured quality. Now quality is going to be an absolutely important criterion because without that, you cannot be sure either of effectiveness or of safety. And there should also be adequate information available about each of these drugs, not only for the physicians but also for the patients who are receiving it. And they should be available at a price that the individual and the community can afford and certainly the health system also should be able to afford it as a part of the public financing. Access to medicines has become a worldwide challenge and the World Health Organization estimates that about 1.3 to 2.1 billion, depending upon the criteria that are employed, do not have access to medicines. Unfortunately many of these are in the countries where there’s the greatest need in terms of unmet health challenges that is Africa and India. Access to essential medicines is closely related with the other aspects of the health system performance. That is, we find wherever there is a high level of disability- adjusted life years lost because of major health disorders, there, access to medicines which ought to be assured is unfortunately deficient. In terms of inequities in production and utilization, we ought to be able to really look at where the population lies and where the actual money is being spent in terms of purchase and prescription of medicines. Whereas the largest populations lie in the low and middle income countries and the low income countries and a much lower proportion of the population, about 16% is in the high income countries, the actual expenditure on medicines at the global level is the highest in the high income countries that is about 78.5%. Whereas in the low income countries, the expenditure is only 1%. This is a huge inequity in terms of availability and affordability of medicines across the world, reflected in the utilization patterns. When we are really looking at access, there are four critical elements which promote access. The World Health Organization says firstly there should be rational selection based on first quantification of the medicines that are there in the overall pharmacopoeia and then trying to select among them according to the criteria of essential medicines and forecasting the need according to the disease burdens and the various health system priorities within that country. And rational selection of course goes as I said, on the basis of effectiveness or efficacy, safety, and cost effectiveness. That brings us to affordable prices because we need to really look at how affordable these medicines are, both for public procurement by the health system and also for personal purchase by an individual patient. So that becomes the second element of how we actually ensure that the prices are within easy reach. And then we actually look at the procurement process which then brings the medicines into the health system. And we definitely require reliable supply systems. Unfortunately many public procurement systems and distributions systems do not pay attention to regularity of supply and there are frequent stock-outs that means non-availability of medicines within the facilities. And that means that many of the people who actually go to these facilities do not have the opportunity to get them on a regular basis as needed. And similarly if they’re also not available on a predictable manner in the open market for purchase at affordable prices, that again deprives people of access. So having reliable supply systems is absolutely critical. Rational selection refers to choosing safe and effective medicines which are appropriate to the country’s health situation. Accordingly, essential list of medicines will have to be prepared by each country. The World Health Organization, since 1977, has been providing a reference list of essential medicines, which actually serves as a guideline for individual countries which will adapt it for their own use based on their own national requirements. So each country has to have its own national list of essential medicines. And sometimes within large countries, provinces or states also modify the national list to suit some of their regional priorities. The number of countries which have essential list of medicines is of course is fairly large. But the number of medicines that enter the lists varies based on the national income. Low income countries for example have much lower number of essential medicines on their lists as compared to middle income. But the high income countries have a far higher number. The low income countries have had on an average, 355 drugs. The middle income countries have 441. Whereas the high income countries have a total of 1700 drugs as a part of their armamentarium in their essential list. Sustainable financing is the next step that we need to really look at, and here we need to increase the public funding for health system in general, but especially for essential medicines. Unless public financing of health through universal health coverage programs increases to a level where essential medicines can be procured and distributed at no cost or low cost we will find that there will be a continuing barrier to essential medicines for most of the people in that country. So we need to raise public financing and use a substantial fraction of that for procurement of medicines. We also will get an added benefit in that because much of the out-of-pocket spending in many of the countries is related to private expenditure on purchase of medicines. Of course by expanding various forms of health insurance, particularly social insurance or government subsidized insurance, we will be able to provide greater coverage and we need to bring in medicines also into the ambit of insurance programs which frequently do not cover outpatient care or provision of medicines. And of course there are other financing mechanisms that we ought to be looking at, including debt relief as well as international supply by various donor agencies. Sustainable financing of course requires a fair amount of public expenditure, which is predictable. As a paradoxical situation, high income countries seem to be having a greater degree of public financing as compared to private financing. And this situation has remained unchanged or even worsened over the years, when you compare 1996 to for example, 2006. In the other categories of countries, which are in the middle income or the low income bracket, we find that the private expenditure on medicines is increasing, which is again, quite indicative of the fact that public financing is at low levels as a response to the needs of the people and certainly fall short of the objectives of universal health coverage. When we look at the overall global situation in relation to sustainable financing, out of the high income countries, categorized by the WHO, the share of pharmaceutical expenditure in high income countries is about 18.2%. Whereas in low and middle income countries, it’s about 26.6%. And the low income countries, it’s 29.5%. Which means that these countries, despite the fact that they’re unable to invest adequate amounts of public financing into the universal health coverage program, or even into the health system as it exists today, are still having to spend a fair amount of their health budget on medicines. Unless the overall health financing goes up as public financing for the health sector, we will be unable to raise within the limitations of the currently available funding the expenditure on medicines to meet the huge gap in access to medicines.

[1] http://www.unmillenniumproject.org/documents/TheLancetTrade.pdf, http://whqlibdoc.who.int/hq/2004/who_edm_2004.4.pdf, http://globalhealth.thelancet.com/2014/06/06/stepping-out-silos-integrating-global-health-trade-negotiations, http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1001485,

The Politics of Health Systems and Universal Health Coverage

In this final lecture on health systems I want address a topic that’s often neglected in these discussions and that concerns the politics of health systems and universal health coverage. Universal health coverage and health systems reforms are fundamentally political. One could see this all over the world, not least in the United States, which is having great debates how it moves towards universal health coverage.

But this is true in every country across the world. Now why is it that this issue of health coverage and universal health coverage is so political? It really is for a variety of reasons. Firstly, everybody wants good quality health services with financial protection. Universally it comes out in polls that this is the expectations of people across the world. So it matters a lot to people that they get this financial protection and they get the health services they need. Secondly, it’s actually a very easy concept to understand. And politicians find it therefore very easy to sell to electorates that this is something they’re going to bring to them. And in fact people demonstrate specifically for universal health coverage and an expectation that the states will deal with the healthcare financing. Now as I’ve mentioned in the previous lecture, universal health coverage requires public financing and a lot of it as well. It also must be done progressively with the healthy wealthy cross-subsidizing the sick and the poor. Now delivering this is inherently political. Finally, universal health coverage and health systems reforms can actually bring nationwide results very quickly. This is quite unusual for a government policy to have an impact right across the country, benefiting virtually all households so quickly. It doesn’t happen with infrastructure reforms and other economic reforms. Therefore it can bring very quick political benefits to people and that’s really why politicians are so interested in it. Now because it is so important to so many people, and it is so political, it’s absolutely essential that health reforms like this are led by the head of state. If it’s just done by the ministry of health, often this doesn’t work. There are so many political benefits to be gained, but also costs to be taken care of that this really is a head of state’s issue. Also, successful universal health coverage reforms really need the full cooperation across all of government. It’s way beyond just the remits of the ministry of health to deliver on this, but across cabinets and local governments as well. Often what you find though is ministries of health are actually often rather weak ministries within the cabinets. And ministries of finance often actually don’t want to suddenly increase public financing, maybe doubling the health budget. And really the only way they’ll be persuaded to do so is when they’re instructed to do so by the head of state. We’ve mentioned that big UHC reforms require significant increases in public financing. And the decision on, on doing that is therefore one that must be taken right across government. And in particular, the head of state, needing to take control of the situation, mobilizing supporters behind this political strategy, making sure that the public financing is, is raised properly, but also tackling the opponents which there will undoubtedly be for these reforms. What’s also interesting to note is that universal health coverage reforms are particularly popular in post-conflict states, or in new democracies.

And this is really for the reason around the quick wins that these policies can deliver. And new heads of state are often looking to demonstrate to the population that they brought around change that’s benefiting everyone. So universal health coverage could be quite a good way to legitimize the state and particularly a new state, because it provides tangible benefits to the population very quickly. And here’s some examples of countries that have done this, include the, the United Kingdom in the immediate aftermath of the Second World War, in introducing the National Health Service. Also right across Latin America, in the, in the last 20 or 30 years where there have been transitions, particularly from military dictatorships to democratic governments, often one of the first things the governments have done is introduce massive universal health coverage reforms. And other examples include Nepal in 2008. The new ANC governments in South Africa in 1994, one of their first policies was universal free healthcare for pregnant women and children. In Liberia, Sierra Leone, Burundi and Rwanda, these are all countries that have come out of periods of conflict and one of the first major policies they’ve introduced is universal health coverage reforms. Now looking at the transition that countries make from a system of privately financed system where there isn’t universal coverage to one where there is, what are the economic and political determinants of that process? Well firstly it’s undoubtedly the case that it’s economic growth and more resources that drives up health spending. Not surprisingly, as countries get richer, they spend more money on health. But what’s interesting to note is that as a proportion of GDP that rises as well. As countries get richer, people want more money to be spent on health. But another thing happens as well, which is very interesting is that as countries develop, the proportion of the financing of the health sector, that is public financing usually increases as well. You get this switch from a private voluntary financing system to one that is more governed by the state. Now that process is inherently political. And we’ve seen this process happening in countries all across the world, particularly in making the transition from being low income to middle income countries. But this process isn’t a slow and gradual linear process, what you tend to find happens is that suddenly there’s a step when countries make this transition to covering the entire informal sector, which as I mentioned before, invariably requires a big increase in public financing. Typically in the order of about 1% of GDP, which is a lot of money.

Now what prompts that is usually political windows of opportunity. A new government coming to power, a contested election. When a politician announces that they’re going to run on this platform and you see this sudden transformation. And therefore these processes are very associated with particular individuals and very strong charismatic leaders. And it’s very striking that across the world one can name almost the year and the politician that prompted these reforms. So for example, Nye Bevin in 1948 in the U.K. President Park in Korea in 1977. So if this is a good idea to move towards universal health coverage through a publicly financed system, why is it so difficult? Why do you find these processes are so contested? And really it’s because in making that move towards universal health coverage, there are undoubtedly winners in terms of people who are now covered, but also financially there are losers, people who now have to pay more into the public pool. The costs and the, the…associated with that transition tend to be concentrated in organized groups who possess a lot of political resources. Powerful groups like the medical profession like pharmaceutical industry and insurance companies and the urban elite who will have to, to pay more for their health services. Whereas the beneficiaries, the people who really like these transformations tend to be more in unorganized groups, lacking political resources, particularly the rural poor population. Now I’d like to describe one or two countries that are making this transition to illustrate these, these points. One country where there’s been a fascinating transformation or ongoing transformation of the health sector is Indonesia which recently elected a new president, President Joko. Now he previously was the governor of Jakarta and in becoming governor of Jakarta only in 2012, one of the first measures he introduced was universal health coverage in the city of Jakarta. And it was largely on the basis of the popularity of that scheme that he became so popular nationwide and in the election campaign announced that he was going to extend the benefits of this to the, the whole Indonesian population. And he was elected president only in July and has already started implementing this universal health coverage program. Now interestingly he’s financing this through increased tax revenues that he’s secured by reducing fuel subsidies. Indonesia had very high fuel subsidies. In fact they were spending three times as much on subsidizing fuel as they were on their health system. And now by removing these fuel subsidies he has the resources to be able to pay for universal health coverage. Now this is quite an interesting political tactic which seems to be followed by other countries as well and makes a lot of sense in terms of the broader sustainable development goals. Because many governments have found themselves historically now subsidizing fuel which they recognize isn’t a good idea economically and it’s also not a good idea for the environment as well. But unfortunately, these fuel subsidies are very popular and the population have got used to them. So therefore, in removing these subsidies, one needs to give something back to the population in return and give them benefits that they see relatively quickly. Governments therefore looking for quick win policies that can benefit all households and people being able to make the tradeoff between having subsidized fuel and other services. Now universal health coverage reforms fit this bill perfectly because all households require health services on a pretty regular basis. And governments are very cleverly looking now at linking increasing access to health services, in particular, access to medicines with removing fuel subsidies. So this is happening in Indonesia, but it’s also happening in Iran which has recently introduced universal health coverage reforms and likewise is linking these reforms to reducing fuel subsidies. So maybe this might be a trend for us to encourage thinking about the sustainable development goals. Other countries where this could be highly relevant are Nigeria, where there are to be elections in February, 2015, which now has a GDP of $3000 dollars per capita, relatively high and higher than Thailand had when it introduced universal health coverage 12 years ago. And Nigeria has a lot of oil resources that really one feels ought to be made available for providing universal health coverage. India is another country that spends a lot of money on fuel subsidies and surprisingly little on its health sector. Only about 1%, 1.2% of GDP. And it would be interesting to see as a, as a political strategy where the Indian population would be like other countries in recognizing that them getting better access to health services is a good deal as fuel subsidies are removed. Now one can’t really talk about health financing and universal health coverage without mentioning the United States as well, where President Barack Obama has invested enormous amounts of political capital in trying to improve the health financing situation in the U.S.’s notoriously inefficient and inequitable health financing system. And he’s taken big steps moving towards more of a mandatory health financing system which may indeed form a precursor towards more of a socialized health financing system in the future. So in concluding, universal health  coverage is really as political as it is anything to do with technical issues, especially in moving towards a more equitable public financing system. Universal health coverage is also popular with people and politicians across the world. It really brings politics in to the health systems debate. And worldwide political actors and not really technocrats are the driving force behind universal health coverage. And really looking to the future that health developmental agencies should engage much more in the political economy of these health reforms and promote these health benefits and political benefits to political leaders.

Health Systems Financing

In this third lecture on health systems I’m going to talk about a very important function of a health system and that is how the health system is financed. You’ll remember from previous lectures that one of the primary objectives of a health system is to achieve universal health coverage whereby all people receive the quality health services they need without suffering financial hardship.

Now health financing is extremely important. You’ll notice in that definition there’s a reference to not only people being covered by health services, but them not being financially compromised when they access these services. So there is this aspect of health financing built in to universal health coverage. And in recognizing this, the World Health report in 2010, produced by the World Health Organization, specifically addresses this issue of health systems financing. And if one looks at that definition of universal health coverage, you’ll see it’s  fundamentally about equity. Firstly, that because it’s universal, everybody should be covered. Nobody should be left behind. Secondly, that the definition talks about health services being allocated according to need, with some people needing more health services than others. Thirdly, and this is the financial aspect, the financial contributions for paying for the health system are made according to one’s ability to pay. Now if one combines those two elements you can see that the health financing is really about healthy wealthy people cross-subsidizing the sick and the poor. So what are the major challenges facing countries as they try and finance their health systems to achieve universal coverage? First of all, they clearly need to raise sufficient funds to finance the health system. One needs a certain quantum of financing and recent estimates suggest that around $87 per capita is required as an absolute basic minimum to achieve universal health coverage. But secondly there’s this vital element of risk protection, financial risk protection so that people don’t face financial barriers which prevent them accessing the health services that they need. Also, that they don’t suffer financial ruin when accessing health services. And the third major challenge is ensuring that one maximizes efficiency in the use of these resources and also making sure that resources are allocated equitably, fairly. Now this whole issue of health financing has been extremely contentious over the years and continues to be so across the world. But the good news is that there really does appear to be a consensus emerging now on how countries should finance their health systems  to achieve universal health coverage. The first point and very importantly is that market driven health systems which are privately financed never reach universal health coverage. And this is a realization from countries across the world now. Instead there’s a very high role for the state in organizing the way that the health financing system is organized, particularly enforcing healthy and wealthy people to cross-subsidize the sick and the poor. This doesn’t happen naturally in markets. Now achieving this of course is inherently political because not surprisingly, a lot of the healthy, wealthy people don’t necessarily want to cross-subsidize the sick and the poor. So this means that there is a very big role for the state in all the main functions of health financing, both in terms of raising the revenues to pay for the health system, in pooling of those revenues to create a big risk pool to buy services and in the allocation of those resources and the way that services are purchased. Now despite this big role for the states in, in health financing this doesn’t necessarily mean there’s no role for the private sector. Either in the administration arrangements of some of those financing arrangements, but also in the provision of services. What we’re talking about is public financing, but when it comes to the provision of services, this can be either done in the public or the private sector. Now other areas where a consensus is emerging, where there’s been tremendous controversy is in what are the best financing mechanisms to raise funds to finance the health sector? Now the most obvious way to finance a health sector is people just paying for services as and when they need them, through user fees. But really this is a terrible way to finance a health system because it involves no pooling of resources and is grossly inequitable in that poor people are excluded from getting the care that they need. And in fact, the president of the World Bank has recently said that user fees are unjust and unnecessary. Now other people have been suggesting that maybe a way to finance a health system would be through private voluntary insurance, including community based insurance, which is a mechanism that’s being piloted in a number of developing countries. But again, the evidence shows that this isn’t really a viable route to reach universal health coverage, because private insurance tends to be ineffective. It often doesn’t raise enough money. It’s inefficient, it has extremely high administration costs and it’s also inequitable because it excludes the poor. Now what does that leave? Quite simply the best way to finance the health system is through public financing. Now here there are two major mechanisms. Firstly, tax financing, out of general revenues, but then also through compulsory social health insurance contributions which in effect are a tax on wages. And you can see that the difference between the two is quite subtle. And in fact, what many countries are doing now is actually mixing those mechanisms of tax financing and social health insurance contributions. But the key point is that they’re compulsory and that they’re publicly governed. And another thing that countries are recognizing though is that where there are large informal sectors, it’s actually very difficult to get health insurance contributions from the informal sector. And really if you want to cover the entire informal sector you’ve got to predominantly use tax financing. Now as I mentioned, this has been quite a controversial area over the years and there have been great disagreements about the roles of these different mechanisms. But even people who 20 or 30 years ago were advocating a more privately financed health system are now recognizing that in fact public financing is better. And in a recent Lancet commission report called ‘Investing In Health’, the authors of the 1993 world development report that were advocating a more privately financed health system now  acknowledge that public financing is best. And in fact they, a quote from one of the lead authors saying that, ‘the path to universal health coverage cannot work with reliance on voluntary private insurance.’ So there is this consensus now that public financing is best. Now given that, how can countries increase their public financing? And here there are a variety of methods that countries might look to do. Firstly, to improve existing tax collection, making sure people pay their taxes and clamp down on tax avoidance schemes. But also of course, introducing new taxes, particularly in developing countries, it’s often difficult to tax people’s income. In which case it’s a good idea to introduce new taxes on things like alcohol and tobacco, so-called ‘sin’ taxes, which actually these are products that adversely affect people’s health. So to tax them is a very good idea. But also potentially taxing remittances sent from abroad, or introducing a new value added tax like has been done in Ghana which is funding its national health insurance scheme largely out of this VAT levy. Another way of course is for governments to reallocate funds within the budget from less productive and less useful areas. For example, in reducing military spending or maybe trying to reduce subsidies that don’t make sense, either economically or for the environment, for example, in reducing fuel subsidies. And the third major area where countries can free up more resources for the health sector is in improving efficiency. WHO estimates that the countries can realize efficiency gains in the order of 20% to 40% and therefore get more health for the money that they have. And here, mechanisms can be reallocating money from specialist hospitals towards primary healthcare services and more cost effective community services. The area of medicines, where there are tremendous savings to be made in switching from branded medicines to generic medicines and improving procurement systems and reducing prices. And also in adjusting the skill mix and for example, investing more in community health workers who are very effective at reaching people in remote areas. These are good mechanisms for countries to follow, but how might a country start off on this route towards financing its health system? And a typical situation that countries find themselves in when they’re starting this process is that the richest quintile of the population are covered, maybe through social insurance schemes or they’re so rich that they don’t mind paying user fees. Also governments often make an attempt to cover the absolute poorest strata of society, maybe giving them a free health card. But unfortunately, these services often tend to be very poorly financed and really not adequate for, for people’s needs. But of course the major problem is that the majority of the population are still uncovered. And this is clearly not good for their health status, but also politically it’s not a good idea to leave these people in the cold. Now how do countries move away from this situation? One approach is to do it quite slowly and incrementally and from the top, down, maybe extends the health insurance schemes. Also from the bottom up, one can perhaps be a bit more generous with these basic safety nets as schemes. But unfortunately this process can take an awfully long time and leave a lot of people still uncovered. And what a number of countries are finding for example, in Indonesia or in Vietnam and the Philippines is that about a third of the population remain uncovered. Now another approach is to move much more rapidly to basically cover the entire informal sector at a stroke by injecting a large amount of tax financing into the system and not differentiating in the informal sector between the poor and non-poor. Now this is a strategy that’s been employed in many countries worldwide in the last 20 years, particularly right across Latin America and in Sri Lanka and in Turkey. And one very good example, which figures prominently in the World Health report is in Thailand. Thailand in 2002 had a situation where they hadn’t reached full coverage and a large proportion of the informal sector were uncovered. But on one particular day the government announced they were going to introduce a universal coverage scheme. And this at a stroke basically covered the rest of the informal sector and meant that everyone was now part of the health insurance program. This had the impact of increasing the utilization of services dramatically across the population and reducing unequal acecss. It also had the impact of reducing out-of-pocket expenditure and medical impoverishment which went down 82%. Also, satisfaction with this universal coverage scheme increased from 83% when it started to over 90% now. So you can see on all these measures of a health system that we’re tracking of utilization of services, financial protection, and satisfaction with this system, this is a very sensible thing to do. And it’s this type of approach that other countries seem to be looking to as they move towards universal health coverage.

Introduction to Health Systems

Today I want to talk about health systems and in particular, the role of health systems in delivering universal health coverage which you’ve heard about in another lecture[1]. So what is a health system? According to the World Health Organization, a health system consists of all organizations, people and actions whose primary intent is to promote, restore or maintain health.

This includes efforts to influence determinants of health as well as more direct health improving activities. So you can see this is really quite a broad definition. And the health system is certainly much bigger than really just talking about public health units and hospitals. And in fact, if one thinks about the entire health system, it also includes the private health sector providers, both in terms of commercial, for-profit providers, but also non-government organization providers of services. But it also includes people caring for sick relatives at home. Another big area of course is in preventive healthcare and things like vector control programs to control mosquitoes for example. Behavior change programs would also be in the health system, encouraging people to lead healthier lifestyle by reducing the amount of fat intake and tobacco and taking more physical exercise. The health system also includes occupational health and safety legislation. Those are all activities that one would typically associate with the health sector, but also in really thinking about the much broader health system, it also includes intersectoral action to promote interventions that improve health. For example, the education of girls is very important for improving health status. Encouraging legislation to reduce tobacco, alcohol and sugar consumption and road safety measures. These are all what we’d call part of the broader health system. So that’s what a health system is. Now what should a health system be trying to do? Now here the World Health Organization have been extremely helpful and back in 2000, produced a memorable World Health report all about health systems and improving the performance of health systems.

In this document, they stated that there are three major goals for, for a health system. Firstly, to improve health indicators. Measures such as life expectancy, mortality rates, but also associated with people leading healthier lives. Here we’re not only interested in the overall levels of these indicators, but their distribution as well, to avoid the situation of there being big health inequalities between different population groups. Another goal for the health system is that it should be responsive to people’s non-medical expectations. That when people interact with the health system they’re treated courteously and in a timely manner and with respect as well. And the third major area is that the health system should be fair, particularly in terms of the financial contributions that people make towards financing the health system. So we’ve described what a health system is trying to achieve, now how does it go about trying to do that? And again the World Health report provided good structure in terms of describing four key functions of a health system. Firstly, in creating the resources that are required to run the health system, the inputs that go into the health system. Here one can think of things like medicines and health workers and computers, the basic inputs that go into the system. The next major area of course is in combining those inputs in delivering services. And this whole issue of how does one deliver efficient and equitable services? This will be the topic of the next lecture. The third major function concerns the financing of the health system. Again, we’ll discuss this in another lecture, but here one should consider the functions of how one raises the finances for the health system, how one pools resources, and then also the very important issue of purchasing services efficiently. And the final major function concerns stewardship. The overall management and oversight of the health system, where it’s an extremely important role for the state. Now when these functions combine effectively together and work well in an efficient and equitable way, this is how one improves the health system and delivers those outcomes that one’s looking for of improved health indicator figures, better fair financial contributions and also a system that is responsive to people’s needs. I’d like to just dwell briefly on this very important issue of stewardship and why it’s so important that the state gets involved in the running of the health sector. Now why should this be the case? Well firstly because health should be a national priority, all countries everywhere, people, it’s very important for them and the welfare of their families that they lead long, healthy lives and don’t suffer financial hardship in accessing services. So health really should be a national priority that good governments are concerned about. Secondly, it’s clear that free markets in health services don’t deliver equitable health systems. And really this is to do a lot with what they call market failures in the way that health systems worked. And the, the providers and suppliers of health services have a lot more information than the users of services. And in this type of situation, it’s very easy for people to be exploited by unscrupulous healthcare providers. And really this is one of the major reasons that it’s very important for the state to be heavily involved in the stewardship of the, of the health system. So the state really should be involved in setting the rules of the game of running the health system. And also in monitoring the performance of providers of services and improving accountability to the population who are paying for them. Now one area that has attracted quite a lot of controversy over the years is the role of the public and private sectors in, in a health system. And here, Professor Julio Frenk at the Harvard School of Public Health has provided a very useful description of the different roles of the public and private sectors, looking at those functions I was describing before. So thinking of that overall stewardship and accountability function, clearly that lies predominantly within the public sector, to set the rules and regulations to the system, with only perhaps a very small role for the private sector there. Likewise, it’s becoming increasingly clear that to achieve universal health coverage in an equitable health system, one needs to predominantly be looking at a publicly financed system. However, looking at the issue and function of service provision, it’s slightly less clear. And indeed, many countries the, the majority of health service providers are actually in the private sector, contracted, using public financing. So here there tends to be more of a mix of public and private providers. But when one looks at that final function or resource generation, manufacturing the inputs that go into the health sector, here the tendency is more for the private sector to produce the medicines and the computers and the basic inputs that go into the system. Now another area that’s attracted quite a lot of controversy over recent years is how one measures health service performance. And countries are very keen to match, to identify how their health sector is performing against others. Now how does one do this? How do you measure performance? Well clearly the indicators you should be trying to use are those around those objectives we were talking about of improved health status, better financial protection, and a more responsive system. And again, we don’t want just to be looking at absolute levels of those measures, but how they’re distributed across society. Now the World Health report in 2000 did this and ranked health systems across the world and created an index and therefore created a lead table. This was quite a controversial exercise and in that, at that time it was the French system that was deemed to be the best performing. Other organizations have been doing this as well. Most notably the Commonwealth Funds that assesses the performance, particularly of high income countries looking at measures of quality of care, access to health services, the efficiency of the system, equity and also those all-important health indicators. And in the most recent study that the Commonwealth Fund done, they showed that the British National Health Service scored the highest, was ranked the highest performing sector. Of course the system that is predominantly publicly financed and interestingly, the United States, of the eleven countries surveyed was actually bottom of the lead table, largely due to problems with inequitable access to services. Now what was striking is that the United States’ health system spend more than twice what a number of other OECD countries are doing, are spending. So it’s interesting therefore that necessarily spending more money on a health system doesn’t always improve performance. And therefore governments can learn about improving efficiency and doing more with the money that they have available. Thank you.

[1] http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTHEALTHNUTRITIONANDPOPULATION/EXTHSD/0,,contentMDK:22523961~menuPK:6485077~pagePK:148956~piPK:216618~theSitePK:376793~isCURL:Y,00.html