AFRO-NETS> New food for a wrong thought - from Hanoi (1)

[Claudio Schuftan <aviva@netnam.org.vn>]

New food for a wrong thought - from Hanoi (1)
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HEALTH SECTOR REFORM MEASURES: ARE THEY WORKING?... AND WHERE DO WE GO 
FROM HERE?

In many a health forum these days, scores of colleagues seem to be 
talking about Health Sector Reforms (HSRs). The questions that come up 
as a natural in the wane of this fervour are: What exactly are those 
HSRs that are being applied in developing countries? How have they been 
adapted to different local national realities? Are they working in the 
respective local national contexts in the developing world?

When trying to answer these questions, one has to be aware that gener-
alisations - or the opposite: very particular, limited examples - tend 
to caricaturise things; one cannot forget how vast and diverse the de-
veloping world is... Further, if one is tempted to say that these HSRs 
are working, then what is the tangible evidence for this? Conversely, 
if one is sceptical as we are, perhaps the time has come for us to be 
bold and to ask some hard additional questions.

It does not take a very critical attitude to say, in all honesty, that 
some of what is being proposed as HSR measures - including nutrition 
intervention packages - are sometimes Structural Adjustment measures in 
disguise. They are often also just too complicated and are mostly too 
'top-downish'. Other HSR measures call for major changes that are po-
litically unsavoury and take a strong determination to get under way. 
Getting started is so often such a problem that implementation plans 
tend to stay in the drawing board.

But more important - and overshadowing the above constraints - is the 
fact that if one does not look at HSRs critically, one can easily miss 
the point that HSRs have really come to mean "market oriented interven-
tions in the health and nutrition sector". The concept has literally 
been 'hijacked or monopolised' by what one could call a 'World Bank-led 
paradigm of health reforms'. It is thus of utmost importance to address 
the underlying assumptions being made about market-oriented HSRs as 
currently being aggressively promoted around the world.

Without much analysis, it is contended that a more decisive market ori-
entation of the existing public health sector will bring about in-
creased efficiency. However, the evidence that market-oriented health 
care systems are more efficient than public health care systems is not 
even to be found in countries such as the US with its already highly 
market-oriented health care system. 

The very fact that almost twice as many financial resources (equivalent 
to 14% of the GNP) have to be used in the US to provide the same type 
and quality of care as Western European countries are providing (only 
spending 7-8% of their GNP) certainly indicates that great inefficien-
cies remain in the most market-oriented health care system in the 
world. One major reason for this is that it is still profitable to pro-
vide unnecessary care, another is that - in systems where private-for-
profit health insurance companies play a major role - the transaction 
costs (administration and other) are very high (in the order of 20-
40%). Consequently, even using pure traditional efficiency criteria, we 
need to be aware that evidence from many countries clearly indicates 
that public health care and nutrition systems can be, not only more eq-
uity-oriented, but also more efficient than market-oriented health care 
systems.

Of course, this does not imply that all public health care systems are 
efficient. The point we want to make is that inefficient public health 
care systems can indeed be made more efficient by improving relevant 
public policies and that, therefore, embracing a market orientation is 
not, by definition, the preferred way out to improve health care and 
nutrition for the people. Reforms being proposed to strengthen public 
health policies and public financing of health care via taxes are being 
gratuitously dismissed as supposedly being 'non-viable' as a realistic 
option for the future.

This dismissal is further reinforced by the theoretical contention by 
mainstream health economists that the role of government is 'to adjust 
the market failures' found in the health sector. The underlying assump-
tion here is that a 'perfect market' - one with no failures - will pro-
vide the best health care system. But this implies that demand, as ex-
pressed by purchasing power, should ultimately determine the supply and 
utilisation of health care services; it is thus, by definition, impos-
sible for a perfect market to provide health care services according to 
need - regardless of ability to pay. Only if the groups with the great-
est need for care would also be those with the most resources for buy-
ing the care they need would 'the market forces' be a possible regula-
tor of access to care. But in reality, as seen in all countries, the 
opposite is the truth, i.e. the economically least privileged groups 
are the ones experiencing the greatest disease burden thus having the 
greatest need for care. 

If we yield to this reality - and our objective still is to provide 
health care according to need - we are left with no choice but to look 
for ways to improve the public health care system, the one that can ca-
ter to the health and nutrition needs of those with less ability to 
pay. This contention does not exclude a role for a parallel private 
for-profit health care sector that follows market forces primarily ca-
tering to the needs of the most privileged groups.

The main concern for HSRs must continue to be to secure quality health 
care services for the great majority of the population thus reducing 
social inequities in terms of economic, geographic and ethnic access to 
care. Consequently, we strongly feel that the focus of an equity ori-
ented HSR has to be to gear scarce financial and skilled manpower re-
sources to achieve this objective.

Within this conceptual framework, let us now review the shortcomings 
and future opportunities we see as they relate to the overall objective 
of developing an efficient, equity oriented HSR.

Risking some of the caricaturising we warned against above, a number of 
truths on the shortcomings of HSRs (as currently being applied) can be 
found in some of the very bare-bone statements that follow:

- There is no evidence of current sustainable financing of health sys-
  tems for the poor in the Third World without governments providing
  significant support.

- Government financing of the health and nutrition sector in developing
  countries is at best stagnating and, at worst, declining.

- Salaries of rural health personnel more often than not puts them at
  the threshold of poverty.

- Their technical skills are (sometimes grossly) out of date.

- Workshop-based training for them is mostly an income source and may
  increase their knowledge, but is not an effective approach to chang-
  ing their practices.

- Health staff is sometimes involved in the private sale of drugs - 
  most often non-essential drugs.

- The percentage of the population self-medicating has been increasing
  pretty much across the board.

- Uncontrolled drug sales by market vendors is on the rise.

- Essential drug programs are suffering as a consequence.

- Revolving drug funds have a nag for not fully revolving (if for no
  other reason or irregularity, because mark-ups do not cover the costs
  of the drugs or other treatments dispensed to patients being ex-
  empted), therefore, these funds slowly de-capitalise themselves.

- As the problems of access to PHC subside in many countries, we are
  facing a new threat: one that is making the established infrastruc-
  ture's capacity to be under-utilised (...or facilities being over-
  staffed in relative terms which is the other side of the same coin).

- The fee for service system is a form of regressive tax in which the
  poor pay as much as the non-poor. (High user fees for health are, at
  present, a major cause of pauperisation of the near-poor).

- Becoming sick thus penalises the poor more as disease becomes a
  greater economic burden for them than for the better-off, even when
  the fees are waived for the very poor.

- Private wards in public hospitals - supposed to subsidise the costs
  of care in adjacent public wards - more often than not have ended up
  subsidising the economically more privileged groups that use them.

- Short of deliberate government subsidies, prepayment schemes (health
  insurance) are not working for the poor and the rural population. (A
  consequence of this partial coverage of health insurance schemes is
  often that social inequities in access to health care increase as
  better-off groups with an insurance utilise public hospital services
  far more than their share).

- Equity in the provision of quality health care services is regress-
  ing, most probably both in the developing and developed countries in
  the world.

- Governments have been slow or non-responsive to remedy most of the
  above (well known) situations hoping that a shift of the health sec-
  tor towards a market orientation (including privatisation) will solve
  the problem.

- Donors have not always reacted fast enough (or at all) to these
  shortcomings either, and there are renewed signs of donor fatigue.

The caveat here is that the perennial problem in the taking of deci-
sions on all these issues is the limited involvement of the beneficiar-
ies themselves!

One has to be aware that many of the strategies of health sector reform 
have been designed (mostly from the top) to specifically address a good 
number of the situations listed here (plus other). But providing what 
kind of solutions? Are most of them market-oriented solutions? If yes, 
how have they fared? If mixes of the above shortcomings still reflect 
the realities that besiege most developing countries, then the forced 
response to the latter question would be: so far, they have not fared 
so well... Then, it becomes crucial, of course, to qualify what this 
'so far' means. Are countries applying new HSRs on the right track? And 
if so, is it just a matter of more time for things to turn around for 
the better?

The more radical corresponding hidden question obviously is: Is the 
HSRs agenda - contents-wise, as well as operationally - (already) in 
need of a face lift? Or, do most poor countries need a special (differ-
ent) brand or package of HSRs.

Let it be understood here that there is nothing inherently wrong with 
market-oriented reforms in health, provided:

- they work in the direction of greater efficiency and equity,
- they receive NO government subsidies, and
- they comply with well monitored regulations set-up up-front.

But these prerequisites hardly seem to exist anywhere at present - in-
cluding countries with a 'socialist market-oriented' economy as are the 
cases of China and Vietnam...

The bottom line is that some important deep, structural changes need to 
be enforced to get reforms in the health and nutrition sector into a 
more sustainable track; such a track has to lead to the more urgently 
needed outcomes, especially those assuring minimum care and nutrition 
for the growing number of poor. Public hospital care, for example, has 
become unaffordable to the poor due to steep user fees. (Quite a few 
hidden costs add to this situation - 'under the table payments' to doc-
tors being just one type of them). Subsidising such a system, instead 
of reforming it, will only channel additional funds to the wrong (non-
poor) recipients.

HSRs can and have thus been used as crutches to pretend one is changing 
the system, but basically staying the course or even going backwards. 
Historically, there is a non-accidental link between SAPs, Adjustment 
with a Human Face and HSRs. The link is actually a progression, one 
with a calculated internal logic, namely to apply the principles of the 
market economy to the health sector.

The bottom line is that HSRs alone (as conceptualised and promoted in 
most of the current literature) cannot address a significant number of 
the structural constraints to equitable access to preventive, curative 
and rehabilitative health care and nutrition services faced by the 
poor. Not even with good targeting!

Furthermore, as currently being applied, HSRs use some technical termi-
nology with misleading imprecision (or bias). Examples that come to 
mind are:

- "efficiency" (which is measured in economic terms only);

- "willingness to pay" (which is used in place of the much more real
  determinant, namely "ability to pay");

- "cost-sharing" (which is applied to regressive fee for service sys-
  tems forgetting that general taxes have the potential of being a more
  progressive cost-sharing system when those who have more are made to
  pay more). The issue is thus not whether people should share the
  costs - because it is always them who end up paying anyway - the real
  issue is who is to pay more and who less or nothing.

The point we want to make is that the terminology used is more and more 
linked to one specific ideological outlook (and thus type of HSR). But 
we do not want to go any deeper into this semantic issue at this time; 
we are aware the list is much longer.

(continued next e-mail)

Claudio Schuftan
mailto:aviva@netnam.org.vn

Goran Dahlgren               
mailto:dahlgren@hn.vnn.vn

Hanoi, Vietnam

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