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THE MAGAZINE OF THE WORLD HEALTH ORGANIZATION

Theme articles

Better health through better use of resources 3 Hiroshi Nakajima Health care: who should pay for what? 4

Germano Mwobu Health insurance in the

Republic of Korea 6 Young-Jin Orn Balancing fairness and financial

benefits in health reform 8 Mikko A. Vienonen Costa Rica reforms 'model' health

care system 10 Alvaro Solos & Guido Mirando Costs should not exclude the poor

from health care 12 William Newbronder Hospital autonomy 14 Hedi Achouri, Abdelhoy Mechbol & 8elgocem Sobri

Inverting the pyramid 16 Michael Borowitz & Sheila O'Dougherty

Lowering drug costs, improving care in Azerbaijan 18 R. Laurenti, N. Agazode & A. Seidovo

The cost of AIDS 20 Donald S. Shepard New technological approaches 22 Seymour Perry, Richard Hong & Moe Thomer

Banking for health 24 Maria Sokenu & Catherine Mulholland

The Bamako Initiative 26 Kosa Asila Pongu Health and poverty in Bangladesh 28

Binayak Sen & Shambhu Acharya

Features

Nurses and midwives 30 Nurse practitioners in medically

underserved areas Letter to the editor WHO publications 31

World Health • SOth Year, No. 5 September-October 1997

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HEALTH

Photo: WHO/PAHO/C. Gaggero

World Health is the official illustrated magazine of the World Health Orgonizotion. It oppeors six times o yeor in English, French ond Sponish, and four times a year in Arabic ond Forsi. The Arabic edition is avoiloble from WHO's Regional Office far the Eastern Mediterranean, P.O. Box 1517, Alexandria 21511, Egypt. The Forsi edition is obtainable from the Public Health Committee, Iron University Press, 85 Pork Avenue, Teheron 15875·47 48, Islamic Republic of Iran.

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World Health • SOth Year, No. 5, September-October 1997 3

Editorial

Better health through better use of resources

I

Thus, institutional arrangements

are changing. We should learn as much as we can about them, but we should also propose mechanisms and programmes to help ensure that these arrangements move us towards the goal of health for all. In particular, three operating principles should be kept in mind.

Firstly, we should promote the economical use of resources, whether they come from the public or the private purse. This does not necessar- ily mean spending less. It means making an investment in health.

Setting up an efficient administra-

tion, for instance, that avoids dupli-

cation and coordinates both publicly and privately funded health services, may require a substantial initial investment. Well-tried cost-saving methods are available, and the need to use them cannot be overempha- sized. Generic essential drugs, low- cost but effective therapies, and disease prevention activities all help to reduce the cost of curative care. To be beneficial, however, cost reduc- tion efforts must take fully into account the need for basic services of an acceptable quality.

Secondly, finding the right com- bination of local and central adminis- trative responsibility can make a major contribution to improving health status. Assigning more re- sponsibility to the local level will often make services more flexible and adaptable to changing needs. At the same time, responsibility for coordination and management of the overall health system, including its financing, has to be maintained at the central level.

Thirdly, the health sector should play a very active role in reducing the huge disparities in access to health services that exist today. Even in high-income countries with rela- tively good health status, many of the rural people and the poor have little or no access to the basic necessities for health. In lower-income countries this means that the vast majority of the population is underserved.

Disparity is also growing in many of the world's cities, where rising stan- dards of living for some are accom- panied by rapid growth in the population of shanty town dwellers with no access to services.

Mechanisms and financing methods exist that can make access to health care more equitable, and health authorities must insist that they be used.

The articles in this issue of World Health provide useful information and ideas on how to tackle the many challenges we are still facing. Each situation is different, and the compet- ing needs are often difficult to under- stand and even more difficult to meet. However, in all of them one imperative is clear: to achieve better health through better use of

resources. •

Dr Hiroshi Naka;ima, Director-General of WHO. Photo WHO/H Anenden

Hiroshi Nakaiima, M.D., Ph.D.

4 World Health • SOth Year, No. 5, September-October 1997

Health care: who should pay for what?

Germano Mwabu

A vaccination suNey in Honduras. Immunization campaigns benefit all members of society Photo WHO/PAHO/C. Gaggero

T

Public financing

Arguments in favour of public fi- nancing of health services frequently revolve around the concepts of pub- lic goods, social externalities, and merit goods. These concepts are simple but very powerful in mobiliz- ing human emotion and reasoning in support of public funding for health services.

Some health services are consid-

erect to be public goods because their benefits accrue to all members of society. An example would be dis- ease eradication campaigns by means of immunization or vector control.

Such preventive public health inter- ventions are appropriately funded by the government because they protect everyone from illness.

Social externalities are the ef- fects on the health of the general public of decisions made by individ- uals about their own medical care.

These effects may be positive or negative, and are external to the individual making the decision. For example, the treatment or immuniza- tion of one person protects the health of others. Conversely, a person's decision not to seek treatment for an infectious disease can result in many healthy people becoming infected.

Since the price of care can deter people from seeking it, it makes sense to provide it free of charge.

Thus, if social externalities associ- ated with use or non-use of specific health care services are significant, they provide sufficient reason for

No single model of health care financing will apply

everywhere. Principles must be adapted to the specific local context.

public funding of these services.

Basic health care is referred to as a merit good because without it human life is at risk. Therefore, everyone should have access to it.

This social objective can be pro- moted by making such care freely available through public financing.

Despite these strong reasons for publicly financed health services, experience in many developing coun- tries has not been encouraging. In many instances, access to basic health services is universal in principle, but in practice the services are not avail- able, or are of insufficient quality.

Efficient provision of good quality care in government health facilities is rare in many developing countries, given the severe budgetary constraints their governments face. Such practical realities have tended to outweigh the theoretical rationale for public fund- ing of health services, resulting in an increased reliance on private funding of publicly provided services.

Private financing

In an attempt to overcome the ineffi- ciencies and budgetary constraints associated with public provision of health care, many countries have introduced market-based reforms in the government health sector. In low- income countries, the most important of these has been to introduce user charges in public health facilities.

The objectives of this policy were to

World Health • SOth Year, No. 5, September-October 1997

enhance efficiency, generate revenue and improve service quality so as to increase the use of services.

Unfortunately, the results of applying this policy have so far not been promising. In many countries, the use of medical services dropped by 40-50% after modest fees were introduced. In most cases, gains in service quality have not been sus- tained, and income from fees gener- ally accounts for only 3-4% of health budgets.

None the less, user charges may be necessary for sustainable national health services in developing coun- tries. But they have to be part of a well-structured system which pro- motes efficiency and equity in the use of public referral health services without excluding people from basic and specialized health care.

A mix of financing methods

In many developing countries, health services are provided through a pyramid-like system of health facili- ties, with health centres and dispen- saries at the base, regional and district hospitals in the middle, and national hospitals at the top.

Appropriate policies on user charges are needed to make sure the flow of patients through the referral system is efficient and equitable.

Health services at the base of the referral system and specialized medical care at national and regional hospitals should be provided practi- cally free of charge by the govern- ment, while charges are made for services at the middle-level facilities.

Such a fee structure should be de- signed to make tertiary care accessi- ble to all who need it. This is important because specialized med- ical care is expensive and is typically best financed by private medical insurance, a financial arrangement not feasible in most low-income areas. In this context, public funding should provide this insurance func- tion.

Provision of primary health care free of charge at the base of the system would facilitate efficiency and equity, as persons unable to

afford care at middle-level or private facilities would seek treatment at lower levels. Treatment for common ailments should be of the same qual- ity everywhere in the system, even though some patients may choose to pay more for convenient access to it.

General tax revenue is the main source of health financing in the above scenario, supplemented by revenue from user charges. The nature of an individual's medical condition, rather than his or her income, would be the basis for deter- mining exemptions from payment at higher levels of the system.

Essentially, the proposal amounts to a tax-funded government health insurance scheme, with patient fees used to reduce the likelihood of over- use or waste of services. This kind of financing is much simpler to operate than a system in which user fees are charged throughout the referral system, with exemptions granted on the basis of inability to pay.

Need for flexibility

The system of health care financing proposed above is based on two crucial assumptions: that markets for health services either do not exist or function with undesirable social consequences, and that the state is strong enough to generate tax rev- enue and to use it to provide a decen-

s

tralized national health service.

Where the state is unable to function so effectively, health care financing would rely more heavily on charges in the short run. But the long-term goal would be to

strengthen state institutions to ensure effective health service provision, both directly through the public health sector, and indirectly by creat- ing an environment for the develop- ment of the private health care sector, including organizations such as not- for-profit groups that provide health- related information to consumers.

Over the past 20 years, health care financing reforms in developing countries have often failed to im- prove the population's health status because they were based too rigidly on assumptions of economic theory or on experiences in quite different situations. Differences between countries mean that no single model of health care financing will apply everywhere; principles must be adapted to the specific local context.

Developing countries must spare no effort to find financing solutions which work for them, because a population's good health is one of a country's most precious assets. •

Dr Germano Mwabu is a Senior Research Fellow at the United Nations University and World Institute for Development Economics Research (WIDER), Kata;anokanlaituri 68, 00 160 Helsinki, Finland.

A clinic in India. Basic health services of good quality should be accessible to all.

Photo WHO/). & P. Hubley

6 World Health • SOth Year, No. 5, September-October 1997

Health insurance in the Republic of Korea

Young·Jin Om

Political action and

government support are key factors in the establishment of a viable and equitable health insuranc~ system.

he people of the Republic of Korea have benefited from universal health insurance coverage since 1989. The rapid expansion in the coverage of the social health insurance system was due in large part to favourable eco- nomic circumstances combined with explicit government policy. The current status of the system is a far cry from the harsh reality that pre- vailed in the early 1960s.

Prior to the 1960s, the Republic of Korea was a poor, agrarian coun- try in which seasonal famine was a serious problem. The Korean War (1950-53) had all but crippled the country's industrial capacity, and per capita income languished at around US$ 87 in 1962. Widespread poverty led to poor health, and life

expectancy at birth was only 52 years in 1960. There was no health security system whatsoever, and people unable to pay were often turned away from clinics and hospi- tals which were predominantly owned by private doctors. From this dire situation, subsequent economic expansion and government policy successfully extended effective health insurance to the entire population.

Ironically, the roots of the coun- try's present-day health insurance system can be found in the policies of the authoritarian military govern- ment which took power after a coup in 1961 and adopted an "economic

A graphic representation of the important shore given to health insurance in the Economic Development Pion of the Republic of Korea.

Illustration WHO/Ministry of Health and Welfare of the Republic of Korea

development first, welfare develop- ment later" policy. It was felt that economic growth would promote welfare improvements in the future through the creation of jobs and rising incomes. At that time, the government insisted that welfare programmes should not place a financial burden on either the gov- ernment or industry, but initial experiments with voluntary health insurance proved financially unfeasible.

However, changing circum- stances would soon make compul- sory health insurance a more viable proposition. Powerful economic development between 1962 and

1976 transformed the country from a predominantly agrarian society to a rapidly expanding manufacturing and industry-based economy. Per capita GNP had risen to US$ 765 by

1976. Export-led economic develop- ment based on the manufacture of labour-intensive light goods dramat- ically changed the sectoral composi- tion of employment. The labour force in the manufacturing sector rose from 9% in 1962 to 20% in 1976, while employment in the agricultural sector fell from 63% to 38% over the same period. Such changes were a significant factor in bringing about the development of the Republic of Korea's social health insurance system.

Compulsory coverage

Rising income and employment in the manufacturing sector paved the way for the introduction of compul- sory health insurance for industrial workers. The first compulsory sys- tem, which covered the personnel in companies with more than 500 workers, was introduced in 1977.

World Health • SOth Year, No. 5, September-October 1997

Check-up for hepatitis B in on industrial insurance company in Seoul.

Photo WHO/Ministry of Health and Welfare of the Republic of Korea

The system was financed by contri- butions paid by the workers and their employers, and was administered by independent health insurance soci- eties which were established by each company.

Continued rapid industrialization in the 1980s further increased em- ployment and incomes in the indus- trial sector, and the economy grew by an average of more than 10% annu- ally between 1980 and 1988. The consumer price index had remained relatively stable during the same period, and the government budget showed a financial surplus of 1.4%

in 1986.

Other favourable developments included the expansion of the Republic of Korea's banking system and the government's overall admin- istrative capacity. In these circum- stances, coverage of industrial workers was progressively extended to firms with as few as five workers by 1988. By that time, the pro- gramme covered more than 16 mil- lion people, which represented 40%

of the total population.

One side-effect of the expanded coverage among industrial workers was a growing inequality compared with other sectors of the population in terms of health insurance benefits.

Uninsured farmers and the urban self-employed, for example, argued that the relatively rich industrial workers and government employees enjoyed disproportionate benefits. At that time, people outside the national

system were still required to pay for health care at private prices, which were estimated to be twice as high as official health insurance prices.

The advent of democratic govern- ment and sustained rapid economic growth in the 1980s created condi- tions which encouraged the govern- ment to consider expanding the system once more. Immediately prior to the presidential and parliamentary elections in 1988, the government became more responsive to demands from farmers and the self-employed, especially since political support from agricultural special interests formed a critical part of the ruling party's parliamentary majority. Such concerns prompted the government to extend coverage to farmers and the urban self-employed by the end of the 1980s.

The country's unique resident registration and comprehensive identity card system facilitated the expansion of coverage to the self- employed. This system enabled health insurance societies for the self-employed to identify persons to be insured, and to take the total numbers of families into account in estimating the contributions.

A separate initiative to bring farmers into the national scheme was introduced in 1988, with the govern- ment sharing up to 50% of the farm- ers' individual contributions, depending on income level. With the full introduction of the system for the self-employed in 1989, the entire

population was covered by the com- pulsory health insurance system.

7

The main lesson learnt during this process is that rapid economic devel- opment creates favourable socioeco- nomic conditions for the expansion of coverage to all industrial workers and government employees. It is clear that political action and govern- ment support are further key factors in the establishment of a viable and equitable health insurance system.

This experience also demonstrates that contribution-sharing on the part of the government is critical if farm- ers and the self-employed are to benefit from compulsory health insurance. •

Mr Young:fin Orn is Director-General for the Notional Pension and Health Insurance Bureau of the Ministry of Health and Welfare in Seoul, The Second Government Complex, Kwochon- city, Republic of Korea.

Since 1989, when formers and urban self-employed people were included, health insurance in the Republic of Korea hos covered the entire population.

Photo Still Pictures/M Edwards©

8 World Health • SOth Year, No. 5, September-October 1997

Balancing fairness and financial benefits in health care reform

Mikko A. Vienonen

A

For the past two decades, health policy reforms have been driven to a large extent by the rising cost of care. The ageing of populations, associated with higher levels of chronic disease and disability, the availability of costly new treatments and technologies, and higher public expectations have contributed to the rise in health-related spending.

People are demanding better quality and more efficiency in the health services. They want more treatment choices, and a greater voice in decisions made about the health system.

In many countries, including Belgium, Germany, Israel, the Netherlands and Switzerland, politi-

Does competition between insurers lead to better health care? Can solidarity be combined with competition?

cians have sought to bring about market reform by introducing com- petition among health insurers. However, governments have been cautious about this, as they are reluctant to introduce measures which might undermine their "soli- darity" systems. In such systems, the healthy subsidize the sick, the young subsidize the old, and the rich subsi- dize the poor, so that essential health services are provided to the whole population. This was the underlying principle of Chancellor Bismarck's insurance system in Germany 120 years ago.

l~REEl)OM 01~ (~HOU~E IN HEAt'l,H (~AllE

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People ore increasingly demanding more treatment choices and a greater voice in decisions about health. Drawing by Falke Nordlinder ©

The objectives of health care financing reform in Western European countries have varied. In some cases the main aim has been to provide universal access to insur- ance by opening enrolment to all citizens. In others risk-redistribution systems have been introduced to make coverage of the elderly and the sick more equitable for insurance companies.

The aim of stimulating competi- tion among health insurers is to make the systems more efficient. But competition among insurers works against the sharing of financial risks and burdens, since it puts pressure on insurers to seek the lowest possi- ble risk. This is a common problem for many European governments.

In Germany, a risk adjustment formula introduced in 1994 factored in age, income, sex, and such ele- ments as whether the applicant received a disability pension.

Insurers with a disproportionate number of young, affluent, healthy clients were required to contribute part of their revenue to funds with more "bad risks".

Universal enrolment

Then, in 1995, all insurance funds in Germany were opened to everyone.

This open enrolment was a mile- stone for citizens, as traditionally many insurance funds were "closed clubs" accessible only to certain professional groups. Previously, a well-endowed insurance fund for engineers or lawyers could offer better services with lower premiums than the general fund. Now, such

"cream skimming" is barred, though

it may take years before the public truly benefits from the reform.

World Health • SOth Year, No. 5, September-October 1997

Similarly, Israel has introduced a new national health insurance pro- gramme designed to promote fair- ness in sharing financial burdens.

Employer and individual health taxes are now paid into a central fund, and combined with government contribu- tions. The combined amount is distributed to insurers on an age- adjusted basis. As a result, the largest

fund, which insures more elderly and

poor clients than others, now re- ceives additional revenue. Insurers with healthier subscribers receive a smaller amount. As with the German reform, insurance funds can no longer be selective in enrolment. So, as the position of the large fund improves, small "elite" funds find themselves in the new position of covering clients in varying states of health, with less revenue.

In the Netherlands, the govern- ment has tried to encourage competi- tion among insurance companies.

Initially, the plan was to merge pub- lic and private health insurance programmes, but after eight years of debate, there has been little progress.

Market competition has been op- posed on the grounds that it would undermine solidarity, a cornerstone of the country's health insurance system.

Market-oriented measures are not confined to financing systems based

Vulnerable groups, such as elderly people, tend to represent o higher risk in terms of cost.

Their health needs nevertheless hove to be addressed. Photo WHO/E. Mondelmann

9

A waiting room at a paediatric clinic in Germany. Health core reforms have to balance equity and financial benefits. Photo Keystone/DPA/W. Weins©

on defined contributions to health insurance funds. Health care systems funded by general tax revenues, as in Finland, Sweden and the United Kingdom, also use competition in an attempt to make their systems more efficient. The principles that "money follows the patient" and that doctors should manage their own budgets are applied in an effort to ensure that health care providers are paid ac- cording to the amount and quality of the services they deliver.

Ensuring that vulnerable groups continue to be covered through contributions from more affluent, healthier groups, while introducing competition among insurers is an ambitious and difficult undertaking.

Ljubljana Charter

At a conference in Ljubljana, Slovenia, on European Health Care Reforms, European Member States outlined the fundamental principles which they thought should underpin the health care systems of Europe.

The guidelines of the Ljubljana Charter on Reforming Health Care are based on an analysis made by the WHO Regional Office for Europe, the World Bank, and university experts. According to the Charter, health care reforms should be value- driven, health-focused, people- centred, quality-based, financially sound, and oriented towards primary health care.

The Charter further outlined these principles for managing change:

• health care reforms should be part of a coherent policy base;

• policy-makers and planners should pay attention to the voice of the people;

• they should re-examine health care delivery methods;

• they should build and strengthen human resources for health;

• they should strengthen manage- ment capacity;

• they should learn from the experi- ence of others.

Professor Robert Evans, a keynote speaker at the Ljubljana conference, referred to a Scientific American article ('Health care without perverse incentives', Scientific American, 1993, 260(1): 109), saying that

"fundamental economic principles place competitive efficient markets for health care in the same category as powdered unicorn horn. They are works of imagination." In the same way, perfect relationships among partners in health care systems are difficult to find. In organizing health care delivery, economics and market competition cannot be the only basis for successful performance. The system's fairness must also be considered. •

Dr Mikko A Vienonen is Regional Adviser for Health SeNices Management, Health Core Systems, WHO Regional Office for Europe, 8 Scherfigsvei, DK-2 100 Copenhagen 0, Denmark.

10 World Health • SOth Year, No. 5, September-October 1997

Costa Rica reforms 'model' health care system

Alvaro Salas & Guido Miranda

A primary health core worker gives advice on the siting of a latrine in rural Cosio Rico. Active preventive health programmes contribute to the improvement of general health.

Photo Still Pictures/P Harrison ©

T

As in all Latin American coun- tries, social security institutions are having severe financial problems.

Although Costa Rica's health system and social security programmes are not in a critical situation, growing financial strains threaten to reverse gains which have improved quality of life and productivity. Outpatient care is in crisis. At morning hours, clinics are so overcrowded that some patients wait for hours to be seen. A four-hour wait for prescribed med- ication is not unusual. Poor people are having more and more difficulty in getting access to medical services.

Administrative services are becom-

ing inefficient. These problems, compounded by spiralling costs, hospital and public health budget cuts and declining revenues, have caused significant deterioration in the quality of care.

To a degree, the system is ham- pered by its own success. With the population living longer, there is an increased demand for treatment of chronic conditions such as heart and neoplastic diseases, and injuries, and for the use of costly high-tech equip- ment in diagnosis and treatment.

Other factors, such as massive migration from neighbouring coun- tries and rural areas, are putting pressure on the health care system.

Among 15-19 year-olds, high risk pregnancy and low-birth-weight babies receive special attention, with the common background problems of sexually transmitted diseases, alcohol, tobacco and drug abuse.

While infectious disease has declined from the leading to the seventh highest cause of death, a new threat looms. The re-emergence

Health care in Costa Rica is viewed as an investment in the nation. According to a World Bank report,

progressive health policies have increased the income of the poorest l 0 % of the

population by more than 65%.

elsewhere in the world of tuberculo- sis, cholera and dengue have alerted our health authorities to the need for vigilance and epidemiological moni- toring.

To meet the many challenges, Costa Rica has embarked on its most extensive social security and health care reform in decades, to shift the nation's health priorities and rebuild the administration of medical ser- vices. The reform, estimated to cost more than US$ 64 million, was undertaken with the help of a US$ 42 million loan from the Inter- American Development Bank, and a US$ 22 million loan from the World Bank.

Restructuring social security

Under the reform, the two main health institutions, the Ministry of Health and the Social Security System, are being restructured. The Ministry will now be responsible for setting health policy and for plan- ning, while the Social Security System will provide primary care in 80 designated health areas encom- passing hospitals and clinics, using a decentralized approach tailored to local needs.

World Health • SOth Year, No. 5, September-October 1997

Workers in the metol industry in Son Jose. Socio/ security funds come portly from workers, portly from employers. Photo Still Pictures/M. Edwards©

One aim of the reform is to de- I i ver services more efficiently, and reduce the waiting time for elective surgery and other services. Another aim is to emphasize prevention and wellness, not simply a curative approach to medicine, and to exam- ine social factors such as drug abuse and violence, which affect large numbers of people.

Fundamentally, health care in Costa Rica is viewed as an invest- ment in the nation, a necessity for social vitality and economic

progress. According to a World Bank report, progressive health policies have increased the income of the poorest 10% of the population by more than 65%.

With per capita income of about US$ 2000, Costa Rica is considered a lower-middle income country, yet many key indicators of social well- being are similar to those of higher- income countries. To a large extent, this is a consequence of several decades of stable democratic govern- ment and extensive social

programmes.

The Social Security System was created in the 1940s, to cover health, old age pensions and other aspects.

The protection of underprivileged groups was a high priority, and expanded health care was a key element in this strategy. In the 1970s the country prepared its first Health Plan with the objective of universal coverage.

About 86% of the population is now covered, and an aim of the

current reform is to extend health care to everyone. By taking a decen- tralized approach to health care, inequities can be targeted. For in- stance, in poorer cantons, infectious diseases and pregnancy are still associated with high death rates.

While wealthier cantons show crude death rates below 10 per I OOO, the poorest canton in the Huetar Atlantica region has a crude death rate of 40 per 1 OOO.

But providing good health care is expensive. Most revenues of the Social Security System (85%) are generated by compulsory social security contributions from the payroll tax on salary and wages.

Besides the contributions made by workers and employers, funds also come from fees for health services, such as fees charged to private pa- tients, and from central government and lottery transfers, and other sources.

Besides saving money by elimi- nating duplication and improving budget administration, new models of health financing would encourage private, third-party provision of services. Pilot alternative health care models will foster development of private sector services and a stronger public-private sector relationship.

Changing p atterns in health c are

An improved health services network with strong preventive health pro-

II

grammes would help the Social Security System become more re- sponsive to changes in epidemiologi- cal conditions and would contribute to reducing deaths from chronic diseases and injuries. Savings from improved distribution of resources could be used to expand health ser- vices among the poor and to help ensure the future financial stability of the social security programme.

Quality assurance will be part of the streamlined system, and will include detecting abuses, such as overuse of services, or nonpayment by tourists and other health care recipients who are ineligible for social security. The insured are being registered and issued identification cards.

But even as cost-saving measures are implemented, care is being taken to protect the quality of service, and to respond to the citizens' strong desire for continuity of service.

People want their own doctors, and are unhappy when the doctor-patient relationship is dis- rupted. Recent studies show wide- spread dissatisfaction with the manner in which outpatient care has been provided. People yearn for more human and individual attention.

Many costs of the health sector reform should be offset by improve- ments in efficiency of the health services, and by consolidation in coverage, through the public and private sectors, to satisfy the increas- ing demand for services.

Costa Rica faces difficult eco- nomic choices. If we spend too much on one sector, such as education, job training, or environmental protec- tion, other sectors will suffer, and all of them influence the nation's well- being. The reforms are complex and will take years to implement. But failure to make these difficult deci- sions will only increase financial instability, and make the current health care problems worse. •

Or Alvaro Salas is Executive President of the Costa Rica Social Security System, Sanjose, Costa Rica. Dr Guido Miranda is former Executive President: his address is Apartado Postal 596 l · I OOO, Sanjose, Costa Rica.

12 World Health • SOth Year, No. 5, September-October 1997

Costs should not exclude the poor from health care

William Newbrander

This family lives in a slum in Nairobi. Health programmes must balance the need to generate revenues with the need of the poor to use health seNices. Photo Still Pictures/M. Edwards ©

Campaigns ore needed to inform the public, patients and staff at health facilities about health financing mechanisms that con improve access to health core.

M

Measures to recover costs, such as user charges, have been intro- duced in many countries where they

had previously been considered unthinkable because of the prevail- ing ideology.

A variety of cost recovery sys- tems have been tried in order to replace or supplement government funds, but the impact of user fees is often ignored. Concerns about the equity of cost-sharing programmes have arisen as these schemes have become more widespread and their unintended effects have become apparent. In particular, how have cost recovery systems affected poor people's access to health care? And what mechanisms can ensure that the poor and other vulnerable groups receive care?

Protecting the poor

In many countries, these concerns have led to measures whjch exempt the poor from user charges in order to ensure that they have access to health care. Various targeting mech- anisms are used for doing this.

Targeting can be either "direct"

or "characteristic". Direct targeting means providing free or reduced- price benefits to people who cannot pay because of low income. It often uses means testing to determine how much people can afford to pay.

Characteristic targeting involves providing free or reduced-price benefits to people with certain attrib- utes regardless of income level, such as infants or the elderly, or people with certain illnesses such as tuber- culosis. These ways of targeting can be used singly or combined to work out a solution which fits the local situation.

World Health • SOth Yem, No. 5, September-October 1997

Do exemption measures work?

Exemption measures have not worked well in practice. A study conducted in five countries to deter- mine the effectiveness of exemption measures in ensuring access to health care by the poor showed that the poor often pay for health services even when they are supposed to be free. In Ecuador, for instance, public hospital services are free, but there are no supplies of drugs, so the poor have to buy these from the private sector.

There are no explicit guiding principles for cost sharing. In many cases the objectives and financial targets are not spelled out, nor is the likely impact of fees or exemptions known. Facilities in poorer areas are not compensated with additional funding. Managers and staff have no way of knowing if they are achieving the desired level of equity or not.

Realistic guidelines must be set before a policy on user charges and protection of the poor is put into practice.

Health programmes must balance the need to generate revenue with the goal of ensuring access for those who cannot pay. But hospital and health centre managers have difficulty finding an appropriate balance. In Kenya, where health staff have been taught about the need for user fee revenues, many facilities offer no waivers at all.

This approach is counterproduc- ti ve. An overemphasis on fees may lead to the abandonment of national cost-sharing schemes. On the other hand, overemphasizing free services has resulted in insufficient operating revenues at some facilities. Both problems make the user fee system difficult to operate.

Public information about waivers has also been lacking. The study showed that most patients were uninformed about eligibility for exemptions. Patients usually learned of exemptions from family, friends, or hospital staff. Campaigns are needed to inform the public, pa- tients and staff at health facilities about the reasons for cost sharing and how funds are used, and about partial and full fee exemptions.

Creative approaches

Creative exemption measures have been found in both public and pri- vate health institutions. Health managers may choose to exempt certain patients or services, or to charge below-cost fees. In some cases, they might be wise to charge very low fees for outpatient services, or to provide them without charge. It is more difficult to grant exemptions for costly inpatient services.

Other options include sliding scales for patient visits, free consul- tations, reduced fees in lower in- come areas, and reduced fees for primary care. Preventive services

could be exempted, as well as the treatment of certain illnesses, such

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as AIDS, and HIV testing. Each patient can be individually evalu- ated, and it is sometimes possible for staff to negotiate with patients to determine a feasible payment.

The basic priority is the appropri- ate financing of health systems to meet national health objectives. User fees are only one option for resolv- ing the broader issue of paying for health care. Health officials can also pursue other possibilities, such as allocating more public resources, and using existing resources more efficiently. Preventive services, for instance, can be emphasized, and waste can be reduced. Health insur- ance programmes can be used to oenerate revenue and share financial

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risks. Private sector resources can be developed and used more systemati- cally.

User fees are simply one strategy for health care financing. The provi- sion of health care should be based on need rather than ability to pay.

When this principle can be applied, policy-makers and managers are more likely to find creative solutions to the dilemma of ensuring both the quality and the accessibility of health care. •

Dr William Newbronder is Director of Management Sciences for Health, Health Financing Programme, 165 Allondole Rood, Boston, MA 02130, USA

A community health worker in Calcutta. The public need to be kept fully informed about affordable health core.

A family planning talk in a shanty town of Rio de Janeiro Creative approaches ore being used to finance health oct1v1t1es which wdl lead to improved social status. Photo Still Pictures/M. Edwards©

Photo Still Pictures/M. Edwards©