Karen Cavanaugh, Scott Stewart, Azada Hafiz Mini-University March 7, 2014 Economic Transition of Health: What is it and Who cares?

1.What is a basic package of health services? 2.Can developing countries afford a basic package of health services? 3.What is the Economic Transition of Health (ETH)? 4.What are ETH implications for foreign assistance? Outline 2

WHAT IS A BASIC PACKAGE OF HEALTH SERVICES? 3

4 World Development Report 1993Commission on Macroeconomics and Health 2001 High Level Taskforce on International Innovative Financing for Health Systems 2009 TBTreatment (short course)Treatment (DOTS)Diagnosis and Treatment Child HealthManagement of sick child Immunization (EPI) Deworming Treatment (IMCI) and immunization Deworming Oral rehydration therapy Case management of pneumonia Newborn care MalariaPrevention (ITNs, IRS) and Treatment Prevention and treatment HIVPrevention Treatment of STDs Prevention, Treatment (HAART), and Care Prevention, treatment and care Prevention of mother to child transmission Maternal HealthAntenatal care and deliveryAntenatal care, Treatment of complication during pregnancy Skilled birth attendance Emergency obstetric care Postpartum care Antenatal care Labor and delivery Postnatal care Emergency obstetric and neonatal care Family PlanningFamily planningIncluded in Maternal Health as part of postpartum care Family planning as part of Maternal Health NutritionMicronutrient supplementationChildren: Micro nutrition Vitamin A Children: Vitamin supp. and fort.; Supp. food and counseling Non-communicable diseases Tobacco and alcohol control programs; School health including health education; information on health, nutrition, and family planning; Smoking control policies as part of Maternal Health Health promotion and early detection Basic Package of Health Services

Cost of Packages World Development Report 1993 Commission on Macroeconomics and Health 2001 High Level Taskforce on International Innovative Financing for Health Systems 2009 Cost per person in 2010 US dollars $18 Low-income $34 Middle-income $46 for low-income and low-middle-income countries $54* or $70* for low- income countries *(depending on costing assumption) Includes cost of Health Systems Scale up NoYes 5

USAID-assisted countries can now/soon buy essential package of health services 6

CAN DEVELOPING COUNTRIES AFFORD A BASIC PACKAGE OF HEALTH SERVICES? 7

USAID-assisted countries can now/soon buy essential package of health services 8

WHAT IS THE ECONOMIC TRANSITION OF HEALTH? 9

Unprecedented economic growth across the globe 10 World per capita GDP 1990 dollars Maddison DeLong

11 Extreme poverty is declining fast Source: Frontiers in Development conference, 2012 Number of people living in poverty ($1/day)

Global distribution of countries by income group, 2000– WHO, 2012 Most low-income countries reaching middle income status

“The First Law of Health Economics”: Total health spending grows with GDP 13 Log Total Health Expenditures/Capita Source: Jacques van der Gaag; WHO/IMF 2004 N = 178 R2 = 94%

Strong positive correlation between total health expenditure (THE) per capita and gross domestic product (GDP) per capita. 14

Expect a greater role of private investment 15 Source: OECD database: *Private includes private flows at market terms and net private grants ODA Private Private capital flows dwarfing ODA OECD countries project slower growth BRICS, TIMBIs, Korea, others will have a larger role Window of opportunity to influence agendas of new actors

Summary: What is the economic transition in health? Many developing country economies are growing rapidly. As they grow, they will spend more on health. How can we know this? Because of the tight and consistent relationship between income and total health spending. This means countries can transition away from donor dependence. They can achieve greater health impact. But whether they will depends on policy decisions by both donors and countries. 16

WHAT ARE ETH IMPLICATIONS FOR FOREIGN ASSISTANCE? 17

Default scenario: high out-of-pocket associated with poor health outcomes and subsequent impoverishment 18

19 Implications for our work in foreign assistance  Shift from direct delivery of services to technical assistance for health systems strengthening  Help countries to reorganize their health financing systems to avoid excessive reliance on out of pocket spending and provide financial protection  Promote coverage of a package of services that meets the needs of poor, marginalized and otherwise underserved populations  Ensure equitable access to high quality, responsive services

What is Universal Health Coverage (UHC)? 20 Source: WHO

UNIVERSAL COVERAGE: a new frontier for global health Positive Negative Source: Lancet 2009 (ILO data 2008; map by R4D.) # countriesTHE as % GDP Median formal coverage High income6511.2%100% Middle income955.4%82% Low income494.3%5% 21

Health financing improvements work in low-income countries USAID has track record of effective support. 22 Year Universal Health Coverage Introduced GDP/k PPP (current international $) Philippines 19952,056 Ghana 20041,131 Vietnam

Reorganizing Domestic Financing: Ghana’s NHIS 10 th Anniversary Ghana has transitioned from a low income to a lower middle income country NHIS enrolls over 50% of the population with a benefits package that covers 80% of the disease burden Financed through a progressive VAT (~70%), Social Security and National Insurance Trust contributions (~23%), and premiums (~5%) OOPs as a share of THE have decreased from 32% to 29% between 2002 and 2011 Source: Joint Learning Network; WHO NHA; Ghana NHIS website 23

Health financing improvements work in low-income countries, but there are challenges... Pooling funds in economies with large informal sectors Prioritizing cost-effective health services Mobilizing public and private providers Ensuring quality of care Targeting the poor Managing information Aligning provider incentives with social objectives 24 What are the challenges?

In conclusion… 25 The context of our work is changing, through what we are calling the “Economic Transition of Health” Implies new ways of working in the context of the ETH …to achieve a decisive turn-around in the fate of the less- developed world, looking toward the ultimate day when all nations can be self-reliant and when foreign aid will no longer be needed. President Kennedy, 1961.

Discussion 1.For countries that are not going to have their own money to pay for the basic package of health services, what is the solution? a. Donor community subsidizes package b. Cut back on interventions in package 2.If countries can afford a basic package of health services but choose not to, what should the donor community do? a. Pick up the costs for poor people b. Provide technical assistance to encourage countries to provide package 26

THANK YOU! Karen Cavanaugh Scott Stewart Azada Hafiz 27