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Does Efficiency Matter in Getting to Universal Health Coverage?
January 10, 2012
This is a joint post with Robert Marten at the Rockefeller Foundation
How do we get to universal health coverage? This was the focus of a panel with William Hsiao, David de Ferranti and Yanzhong Huang at the Council for Foreign Relations in Washington yesterday. Of the many salient points discussed, including defining “universal health coverage”, Hsiao emphasized the importance of improving efficiency. He noted that 20-40% of money in health-care is “wasted” due to inefficient processes, as cited in the World Health Report 2010 (see p. 79) and Hsiao’s own research in China. Other studies have found similar results. In the Philippines, Paul Gertler found that providers (i.e. hospitals and doctors) capture rents from social insurance. And, in an evaluation of Aarogyasri health insurance in the Indian state of Andhra Pradesh, my own work (Fan) calculated very roughly that for every dollar reportedly spent, only 40 cents went to actual household savings, with the remainder likely going to one-time costs and rents by hospitals and doctors.
But why does efficiency matter for achieving universal health coverage?
- Ideally, increasing efficiency makes more resources available to the health sector, which is especially important in today’s constrained economic environment.
- Universal health coverage is an ideal – a “true north” for which health systems should aim. But in practical terms, as a country pushes to “universalize” health care access, coverage and service, it will inevitably face financial constraints and need to prioritize. In many developing countries this priority-setting and allocation process is often conducted on an ad-hoc basis, rather than being based on explicit principles and trade-offs between equity and efficiency (see the CGD working groups on priority-setting institutions and value for money).
- As economies continue to grow and transform, health spending is rising. In terms of financing systems aimed towards universal health coverage, some policymakers believe that “If you build it, the money will come”. Yet one participant noted, “The money is coming, so you better build it right”. One way to help get it “right” is by getting “value for money” and increasing efficiency, by being explicit about who will benefit from any expansion of health coverage and by how much they will each benefit. Or as another participant put it, “getting to” universal health coverage in a country without careful design, though socially popular, may end up as a substantial cash transfer to health-care providers, more so than the intended beneficiaries – the patients and the people.
These technical questions can be esoteric to politicians and bureaucrats who push for health-care reform through political processes. Instead of focusing on health financing reform, will the concept of ‘universal health coverage’ help to overcome such political challenges? This will be the topic of the annual Prince Mahidol Award Conference in Bangkok at the end of January.
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6 Responses to “Does Efficiency Matter in Getting to Universal Health Coverage?”
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January 12th, 2012 at 5:53 am
Interesting post. Raises a question?
Should economists continue to use the discourse of public health (schools) which (positively) frames what is in effect a medical cartel as a ‘(integrated) health system’? Particularly when discussing insurance market development. The Dutch competition authority has, for example, just fined the association of primary care doctors:
http://www.nma.nl/en/documents.....tions.aspx
Short-term micro-economic inefficiencies would seem to be an inevitable (even potentially desirable) component of change and innovation in an ‘efficient’ macro-economic (system) dynamic. Making good sector governance not equal to good organizational governance:
http://www.thebrokeronline.eu/.....thin-means
January 19th, 2012 at 11:05 am
Grant, Thanks for your comments! You raise an interesting anthropological observation on the choice of language, and it’s a question that I’m not able to answer. With its market failures, health is a field where discourse on monopoly and monopsony is present except when talking about integrated delivery systems.
Others have raised the question whether this efficiency is necessarily a ‘bad’. I think the jury is out and we’ll need to get more evidence on this — like much in the field of health policy!
January 20th, 2012 at 6:59 am
Hi Victoria,
Thanks for the mail. Maybe it would help not to think of medical insurance, health and medical care goods and services, public health activities not just as one big blob. Maybe an interesting link and I think April even works back at CGD these days?:
http://siteresources.worldbank.....-whole.pdf
Talking about ‘health care’ as one ‘system’ or ‘blob’ might have made some sense in 1948, but in 2012 it makes no sense at all. The toilet in a Japanese hotel has more diagnostic power than the hospitals of 60 years ago. Average Joe’s do not suffer from a lack, but probably rather an inundation of information.
Of course we can also look at ‘integrated health systems’ from a completely different angle; as a form of human organization. Is there a characteristic of the system architecture of an ‘integrated health system ’ that would make it interesting and possible to push or enforce discourse? (hence maybe a bit more Foucault and philosophy/political science than anthology).
Interesting coffee break exercise:
Type ‘health systems’ or ‘the health system’ into Google n-grams. What events correspond to the peaks?
I am willing to bet that as capital intensity in medicine increases (and IT has only just started), ceteris paribus, it is likely to be yesterday’s way of getting priests into the parishes and the path on the n-gram will follow. Occam’s razor will help cut a far more efficient and effective path to income redistribution and social cohesion.
January 21st, 2012 at 6:26 am
Sorry now being a nuisance but perhaps the post on Prof. Lant’s CCT page is also useful here. ‘Social Insurance’ was of course the mother of all policy ‘framing’ exercises. Bismarck worked out that ‘income tax’ had been a tough sell for millennia. But neither medicine, medical professional organization, or communications are what they were in the late 19c. But people still know what compulsory deductions from household income feel like…if indeed they have anything to be deducted from.
Maybe the real question is, ‘can universal (comprehensive) medical coverage still be an effective and efficient means towards income redistribution and social cohesion in the 21c.?’ Is it possible we are trapped in an expensive ‘branding’ exercise for one or two products that are just past their sell-by date?
January 28th, 2012 at 4:03 am
Very interesting and compelling post. But I think is some countries is does boil down to local politics and medical insurance providers. Which is why thinking globally and perhaps working with companies like CIGNA Global and others may prove to be goo d for all in the future. Just a thought. Thanks for sharing.
February 3rd, 2012 at 8:28 am
Grant and Josh,
Thanks so much for your great comments and thoughts.
Grant,
I particularly enjoy the Google n-grams website. Thanks for reminding me about that again. I also liked your point about thinking about branding. I think many of these discussions often overlook the fact that health is ultimately an extremely political issue, and in that sense, how you brand something really matters.