Facing a Health Crisis

May 25, 2006? A new World Bank report is warning many countries are facing a serious health financing crisis, with an enormous gap between meeting people?s health needs and current health spending.

The report, Health Financing Revisited ? A Practitioners Guide, says issues such as the potential impact of avian flu and the HIV/AIDS epidemic make global health policy both a national security issue and a foreign policy issue.

But even as countries attempt to deal with threats like avian flu, George Schieber, a senior World Bank economist and one of the report?s co-authors, warns all countries now face challenges on the health front.

?All countries in the world, poor and rich, are really challenged to finance their health needs and meet the expectations of their populations, ?Schieber says.

?This is particularly true in low income countries where resources are extremely scarce but needs are very high. Many countries cannot from their own domestic sources raise enough money to provide a basic package of essential services, much less financial protection for their populations.?

Developing Countries: most of the burden but not the funds

The report says developing countries account for 84 percent of the global population and 90 percent of the global disease burden but they only account for 12 percent of global health spending.

It says the poorest countries bear an even higher share of disease and injury, yet they have the fewest resources for financing health services.

?The sad part about it for developing countries is that interventions do exist ? many of them are cost effective, many of them are not expensive but they are not being provided as they should be, ? Schieber says.

He says middle income countries face severe challenges to provide efficient health services and financial protection for their people.

?High income countries face major cost pressures from non communicable diseases and the fact that in many of the higher income countries, their populations are actually decreasing and the base to finance these increased costs from the elderly may be diminished.?

Rising Population Means Greater Challenges

While population numbers may be declining in high income countries, as the report points that?s not the case with the world?s poor countries.

?The world?s population is expected to reach nine billion by the year 2050. Most of that growth is going to be in low income countries and indeed the populations in some 50 of the poorest countries will double by that time,? Schieber says. ?That means that they will have to provide health services for those people and more importantly they will have to provide jobs for those people, which is a tremendous challenge given the economic situation in many of the low income countries of the world today.?

The report raises a serious question mark as to whether it?s possible to meet the Millennium Development Goals ? the international set of agreed targets to improve the health of millions of the world?s poorest people by 2015.

It says developing countries will need anywhere between US$25 to $70 billion annually to meet the goals.

Schieber says neither increased health expenditure nor growth alone will do the job.

?Reaching the goals requires growth a multi-sectoral effort. For example, India would need a 15 percent real average economic growth rate from 2000 to 2015 to reach the goals on the basis of growth alone. Rwanda would need more than a 20 fold increase in public spending on health to achieve the goal on the basis of public health spending alone.?

Paying Out of Pocket

As the report highlights, in low income countries the bulk of spending on health is out of the pockets of individuals.

?It?s private and almost all out of pocket and that?s because governments cannot amass sufficient revenues to provide sufficient funding for the basic needs of their populations and to provide them with financial protection from catastrophic illness costs,? Schieber says.

As Jean-Louis Sarbib, Senior Vice President for the Bank?s Human Development Network says: ?This inequity has tremendous consequences for the health of the world?s poor since it means that falling sick to a major disease and having to pay for a doctor of their own pocket is an automatic recipe for poverty.?

Simply Increasing Aid Not Enough

While there has been increased aid pledged to developing countries, Schieber says much of the increase has been ?targeted to specific diseases and interventions.?

?And more important than potential distortions from such earmarking, the volatility of aid, and lack of donor harmonization is the question of whether countries can make use of that aid in an efficient and effective way. And there we need good public sector management, good governance and good policies both in health and in the macro economy in order to make use of this aid effectively.?

Useless Buzz Words

Schieber is also keen to stress that ?buzz words, flavors of the day, magic bullets and generic models are useless.?

?Countries have to base their policies on the realistic amounts of resources that they have and capacities they have. What I?m very concerned about is people coming forward with magic bullets and anecdotes which don?t rely on the basic economic realities and the basic needs and what we know from the evidence about what works and what doesn?t work.?

?I think it?s pretty clear that the key to what?s worked in most of the developed world has been effective management of the health sector tailored to specific country circumstances coupled with economic growth.. One clearly also has to take into account local economic conditions in terms of raising revenues in an effective and efficient way,? Schieber says.