POLICY IMPERATIVES FOR SUSTAINABLE HEALTH

FINANCING IN THE CARIBBEAN

Karl Theodore

HEU, Centre for Health Economics, UWI

Presented at 10th Caribbean Conference on

National Health Financing Initiatives

Turks and Caicos IslandsOctober 28—30, 2015

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THE CARIBBEAN IS NOT POOR

As we begin a discussion of health financing in the region, it is important to remember that the Caribbean is not a poor region of the world

Of the 14 countries listed (on Slide 3), only 1 (Haiti) is categorized as “low income” and 12 are either upper middle income (between US$4,126 and US$12,135) or high income (above US$12,136)

Per capita health expenditure ranges between US$77 and US$1,621, with a modal range between US$150 and US$450 (see Slide 4). The WHO Commission on Macroeconomics and Health recommended a minimum of US$35 in 2001. Today that recommendation would be equivalent to US$75, i.e. way below the regional average of US$600

To reiterate: the Caribbean is not poor

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REGIONAL COUNTRIES: INCOME GROUPINGSCountry GDP per Capita

2014, $US (ranking)

World Bank Income Grouping

Bahamas 24,394 (30) High

Trinidad & Tobago 20,380 (36) High

Barbados 15,912 (43) High

St. Kitts/Nevis 14,618 (46) High

Antigua/Barbuda 14.391 (49) High

Grenada 8,971 (69) Upper Middle

St. Lucia 8,410 (73) Upper Middle

Dominica 7,602 (76) Upper Middle

St. Vincent/Grenadines

6, 959 (77) Upper Middle

Cuba 6,848 (82) Upper Middle

Jamaica 4, 912 (94) Upper Middle

Belize 4,842 (96) Upper Middle

Guyana 3,993 (109) Lower Middle

Haiti 830 (161) Low

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PER CAPITA HEALTH EXPENDITURE, 2013

Country Per Capita Health Expenditure, US$

Bahamas 1,621

Barbados 1,007

Trinidad & Tobago 995

St. Kitts/Nevis 873

Antigua/Barbuda 685

St. Lucia 621

Cuba 603

Grenada 499

Dominica 417

St. Vincent/Grenadines 345

Jamaica 305

Belize 262

Guyana 250

Haiti 77

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SUFFICIENCY OF NATIONAL HEALTH SPENDING

In the countries studied, the cost of providing an Essential Package of health services to all citizens/residents has never exceeded the current national spending on health

This evidence tells us that in the

Caribbean we do have the resources to finance our health systems

Saying this may not help our quest for external support, but it is the truth

COST OF AN ESSENTIAL PACKAGEOF HEALTH SERVICES

COST CATEGORIES T&T (1993) BVI (2009)

NHIS/NHIP COST

Total NHIS/NHIP Cost TT$0.83 billion US$58.5 million

As a % of GDP 3.6% 6.7%

TOTAL HEALTH EXPENDITURE

Total Health Expenditure

TT$1.12 billion US$74.5 million

As a % of GDP 4.8% 8.5%

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Sources: Government of Trinidad and Tobago NHIS Project: Financial Model Report (1993) and the BVI NHIP: Financial Model

for the BVI NHI (2012).

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BROADENING THE BASE One of the troubling features of the present health

financing system is the significant place of out-of-pocket spending – averaging more than 30% in the region

Within the past decade, WHO has been trying to get all countries to move away from OOP and in the direction of prepayment systems, through some form of social health insurance

The Caribbean has always leaned in the direction of universal coverage and the assumption was that a health system dominated by public expenditure would achieve this

It is the recognition that public domination is not sufficient to deliver universal coverage which has led to the call for a new financing system with a broader base

The WHO is really calling for a greater role for solidarity in the approach to health financing

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OUT-OF-POCKET SPENDINGCountry Private/

TotalOOP/Private OOP/Total

Antigua/Barbuda 35.5 75.2 26.7

Bahamas 56.0 54.0 30.2

Barbados 39.0 81.9 31.9

Belize 37.6 69.8 26.2

Cuba 7.0 100.0 7.0

Dominica 29.4 91.4 26.9

Grenada 52.7 95.8 50.5

Guyana 33.8 92.5 31.3

Haiti 92.6 32.1 29.7

Jamaica 42.8 58.4 25.0

St. Kitts/Nevis 63.9 88.5 56.6

St. Lucia 44.7 94.9 42.4

St. Vincent/Grenadines

17.3 100.0 17.3

Suriname 29.2 49.4 14.4

Trinidad & Tobago 52.0 81.7 42.5

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CARIBBEAN HEALTH EXPENDITURE:GOVERNMENT, PRIVATE INS AND OOP

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

-

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

14,000.00

16,000.00 3,1

26

3,1

87

3,4

77

3,4

62

3,6

24

4,9

22

5,8

17 8,6

57

9,0

69

9,8

42

9,3

20

10

,23

1

9,7

32

10

,20

7

1,6

89

1,7

93

1,8

30

1,6

82

1,7

40 2

,156

2,2

74

2,6

10

2,8

20

2,9

26

3,0

64 3,3

67

3,6

69

3,9

66

Private Health Expenditure NOT Covered by Insurance

Private Health Expenditure Covered by Insurance

General Government Health Expenditure

US $

M

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SOLIDARITY IMPLICATIONS

Solidarity in health financing will mean that unexpected health care expenditure will not fall solely on an individual or household

The WHO requirement that no household or individual be financially distressed by health-seeking activity has two political implications: (i) cross-subsidies; and (ii) prepayment

There will be a need for strong cross-subsidies within the health system, both in terms of income (cross-subsidies from the wealthy to the poor) and of risk of requiring health care (cross-subsidies from the healthy or low-risk to the ill or high-risk individuals)

There will also be a need for prepayment since this is the known method of coping with potentially catastrophic situations

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COMPLEMENTARY REQUIREMENTS

Complementing the requirement of financing sufficiency, with cross subsidies and prepayment, is an equally important requirement which derives its potency from the universality objective

If the objective of covering every citizen/resident effectively for health care is to be realized and sustained over time, it means that the financing requirement will need to be kept as small as possible. In other words, the health system must be managed on an efficient basis. Waste will put universality at risk

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PILLARS OF HEALTH SYSTEM EFFICIENCY

Keeping costs under control will rest on two pillars: (i) modern management; & (ii) community responsibility

The introduction a health information system, which will allow for the tracking of costs and quality of care, will be essential to cost control

So too will be a programme of increased community responsibility. Universal coverage is not meant to open the door to moral hazard

Personal responsibility for diet and exercise will impact on the national cost of health care

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ENVIRONMENTAL SUPPORT

The major determinants of health originate outside of the health sector e.g. the food and drink industry. If the default supplies from this industry are inimical to health, there will be a tendency for the population to be unhealthy, regardless of the personal efforts made

If community responsibility is to have maximum effect on the cost of health care it will be important to examine the legislative framework governing the food and drink industry to ensure that default supplies are NOT harmful to health.

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ORIENTATION OF HEALTH SYSTEM

In the drive towards universal coverage it will also be important that resources be allocated with the epidemiology of the country in mind

It cannot make sense to have most of the resources in the system allocated to those parts which do not really address the epidemiological challenges

Since NCDs are by far the major challenge facing the region, it cannot make sense for countries to be directing more and more expenditure at hospitals. We need to keep in mind that hospitals cannot cure diabetes or hypertension

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ORIENTATION OF HEALTH SYSTEM

Hospitals can partially respond to late complications of both diseases by dramatic interventions, which can increase costs e.g. amputations and renal dialysis. Also angioplasty will be available for those members of the community who have the means and who may interact with the "correct“ hospital in a timely manner

The need now is to put a cap on hospital spending and put more effort on health management, which focuses on prevention and on the avoidance of complications, on programmes and activities which keep comorbidities to a minimum. In short, a focus on primary care

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THE PREVENTION IMPERATIVE

In calling for prevention to be central to the thrust for universal coverage, there is also the need to emphasize that the use of alcohol and tobacco are major contributors to the "ill heath" situation in the region

The issue for Caribbean people is that poor diet and exercise are impacting from childhood whereas alcohol and tobacco usually start impacting from "young adulthood" with more rapid, direct, devastating results, including the association with violence, trauma and mental illness

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GETTING IT RIGHT - NATIONAL CONSULTATIONS

Getting it right means: Adopting a financing mechanism which will

require some degree of redistribution. This will require tolerance or consensus

Stripping the food environment of biases to ill health

Adopting diets and exercise regimes (by individuals and communities) which will keep the cost of contacts with the health system as low as possible

All these matters can benefit from national consultations on health promotion

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HEALTH FINANCING: THE ROAD AHEAD

Available evidence tells us that what will work for the Caribbean are:

1. For the region to hold on to its long standing "Universal Coverage" objective – our health systems must target every single person in the community

Need to remember that:a) The commitment to universality brings with it the need

to keep health systems on an efficient and equitable track. This is one way the region can respond to the WHO/PAHO call for UHC or Universal Health at this time

b) The coverage responsibility of the State implies a need for an enabling legislative framework that makes the food industry health enhancing

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HEALTH FINANCING: THE ROAD AHEAD

2. For coverage to be universal, the health financing framework must be dominated by a combination of public spending and social health insurance as the two main pillars of the health financing system

Where the income distribution is socially acceptable, private health insurance can play a financing role

The universality of coverage requires that all countries must aim to eliminate OOP, if at all possible

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HEALTH FINANCING: THE ROAD AHEAD

3. The financing system in countries of the region to be supported by a modern health management system geared to efficiency and an enabling environment which place community responsibility for health status at the core of all our health programming

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CONCLUDING STATEMENTS

No magic about health financing

Choices matter - both at the policy and the individual levels – how much we are prepared to spend on health and how we live our lives - in particular, our diet and our activity levels

Single most important fact is that covering everyone for health care means that we cannot finance this care by requiring persons to pay for this care at the time of need

Equally important is that we will not be able to sustain universal coverage if we do not lift efficiency levels and if public policy does not provide an environment where the default choices we make about our lives are healthy choices

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THANK YOU