How can we increase resources for health care in the developing world? Is (subsidized) voluntary health insurance the answer?

In 2001, the Commission on Macroeconomics and Health estimated that a country needs to spend $34 per person per year to make a package of basic health services available to all its citizens (WHO, 2001). In today's dollars, that number is probably closer to $50. Most low-income countries are cur...

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Bibliographic Details
Published in:Health economics 2012-01, Vol.21 (1), p.55-61
Main Authors: van der Gaag, Jacques, Stimac, Vid
Format: Article
Language:English
Subjects:
Africa South of the Sahara
Crowding
Developing countries
Developing Countries - economics
Expenditure
Foreign aid
Health
Health care
Health care policy
Health economics
Health Expenditures
Health insurance
Health Policy
Health Services - economics
Healthcare Disparities - statistics & numerical data
Humans
Insurance, Health - economics
Insurance, Health - organization & administration
International Cooperation
LDCs
Low income groups
National health insurance
Per capita
Studies
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Summary:In 2001, the Commission on Macroeconomics and Health estimated that a country needs to spend $34 per person per year to make a package of basic health services available to all its citizens (WHO, 2001). In today's dollars, that number is probably closer to $50. Most low-income countries are currently spending only half of that or even less. About 50% of this is public money. The main question in the health economic field for low-income developing countries is thus how can we increase total resources for the sector? A simple answer would be to increase foreign aid for health to those countries that are too poor to finance all health care from domestic resources. On the surface, it appears that the international community has been highly successful in achieving that goal. Foreign aid (official development assistance (ODA)) for health increased from $5.6 billion in 1990 to 21.8 billion in 2007 (Ravishankar et al, 2009). Although these are big numbers, we have to keep in mind that on a per capita basis, the amount of foreign aid for health remains very low (about $4 per year for the average country receiving donor money for health). Still, the creation of the Global Fund, the activities in the health field of the Gates Foundation, and the Global Alliance for Vaccines Initiative (as well as the US President's Emergency Plan for AIDS Relief program and other bilateral aid efforts) have led to a significant increase in global resources for health care in the developing world. Those new resources are mostly channeled through the government budgets of the recipient countries. Perhaps surprisingly, the question remains: did this increase lead to a commensurate increase in healthcare resources at the country level? This question comes to mind once one remembers one of the strongest and best documented 'laws' in the health economic literature, namely that per capita health expenditure at the country level is almost completely determined by per capita GDP, no matter what type of health system we are talking about, or what health policies are put in place. In this short note, we will take a closer look at the impact of ODA for health on per capita health spending at the country level. Our results suggest the existence of significant crowding out effects. We then ask how these crowding out effects can (at least in part) be avoided and put (subsidized) voluntary health insurance forward as a possible solution. We will discuss the significant implementation problems inhere
ISSN:1057-9230
1099-1050
DOI:10.1002/hec.1811