Doing it the Thai way

IN 2013 A GROUP of doctors and health economists argued in the Lancet that a “grand convergence” would be possible over the next two decades. If governments spent more on health, and more wisely, mortality rates in the poorest countries could fall to those seen in the healthiest middle-income ones. That would amount to saving 10m lives a year.

To see what a high-quality health-care system in a developing country looks like, consider the case of Farida Waree, a 55-year-old housewife in Thailand. In early 2016 Mrs Waree felt a lump on her right breast. She went to her local primary-care centre, which referred her to Nakornayok provincial hospital. She was diagnosed with cancer, and over the next year was given a mastectomy, chemotherapy and Herceptin, an anti-cancer drug. Five years earlier her treatment might have cost her 800,000 baht (about $25,000), much more than she and her family could have afforded. Instead, nearly all the costs were covered under Thailand’s Universal Coverage Scheme. The cancer is now in remission. “I consider myself very fortunate,” she says.

Introduced in 2002, Thailand’s scheme has become a model for other countries trying to extend coverage. It shows that universal health care can be affordable if policymakers think carefully about how to spend scarce resources. And it demonstrates the power of health insurance to bring “the magic of averages to the aid of millions”, as Winston Churchill put it.

Nearly 10% of global GDP is spent on health care, according to the latest data from the WHO. Rich countries spend an average of 12%, with America an outlier well above that; middle-income ones (including China) 6%; and low-income ones just under 6%. In developed countries, 60% of health spending comes from public sources. In poor economies the figure is around 40%. As economies grow and governments are able to allocate more resources to health, the share of individual out-of-pocket spending typically falls. But the variation in such spending in poor countries suggests that the health systems they end up with depend on their choice of public policies.

In the 1980s and 1990s many health economists were relaxed about out-of-pocket payments, also known as user fees. The World Bank saw them as a way of making sure money was not wasted, and of helping health-care consumers hold providers to account. There is merit to this argument. Research by Jishnu Das of the World Bank found that when Indian health workers saw patients in their private clinics, they spent more time with them and asked more questions than when the same health workers saw patients in public clinics.

Pockets of resistance

Yet that does not make it a good idea to rely mostly on user fees to fund a health system. They stop those who need care from seeking it. Concerns that users will consume too much health care unless they have to pay are overblown. And when people are not getting vaccinated to save a few cents, others suffer, too.

Out-of-pocket payments are also “cannonballs of inefficiency”, says Timothy Evans of the World Bank, which is now sceptical about user fees. If spending is pooled, it can insure more people against the risk of ill health and put pressure on providers to cut prices. Of the $500bn generated globally by user fees every year, the World Bank estimates that 40% is wasted.

More than 110 countries now have some sort of social health-insurance scheme. Yet most are patchy, so users have to supplement them with out-of-pocket payments or private insurance. In parts of Africa such private schemes are expanding quickly as telecommunications companies branch out into health care. BIMA, a provider in Ghana, among other countries, offers schemes that reimburse users for hospital costs, and has recently set up its own telemedicine service. In Kenya, where about half of health costs are paid out of pocket, M-TIBA (tiba means “care” in Swahili) offers a dedicated mobile health account, letting people use their phones to put in money and pay approved providers. Developed by various groups including Safaricom, a telecoms company, it has more than 900,000 users.

These new services show there is demand for protection against ill health, especially among informal workers. Yet relying on voluntary private insurance and out-of-pocket payments will never get a country close to universal coverage, according to a report published in 2015 by the Institute of Global Health Innovation at Imperial College London. In voluntary schemes the sick buy lots of insurance whereas the healthy buy less. Since the sick will need lots of treatment, they will price out the healthy. This dynamic has plagued the United States, as well as poorer countries. Universal health care needs the rich, the young and the healthy to subsidise the poor, the old and the sick.

Countries that want to expand their coverage have taken two distinct approaches. The first is to start by covering a small group of workers in depth and work outward from there, adding workers from other industries as you go along. Inevitably, though, this leaves groups of people without insurance, and those with coverage have little incentive to help them get it.

Start small

The second, better approach is to cover more people but start with a limited range of benefits. In 2004 Mexico introduced Seguro Popular, a scheme that covered 50m people in the informal sector. Studies suggest that Seguro Popular has drastically reduced the number of Mexicans facing catastrophic health costs and reduced infant mortality.

Rwanda is another example. More than 90% of its people have health insurance, mostly under its Mutuelles de Santé policy that gives access to community health services as well as various treatments partly paid for by the Global Fund. Most visits involve a small co-payment and there is a tiered system of premiums, with exemptions for the poorest people. The scheme has helped cut out-of-pocket expenditure and improved health outcomes. Between 2000 and 2011, for example, the mortality rate for tuberculosis fell from 50 to 14 per 100,000 people.

In Thailand the Universal Coverage Scheme replaced two existing schemes for the rural poor and for informal workers. Today 98% of Thais have health insurance. The scheme was accompanied by reforms such as incentives for doctors to work in rural areas and extra payments to hospitals to take on patients. Crucially, Thailand’s Health Intervention and Technology Assessment Programme, a quasi-governmental body, analyses the cost-effectiveness of treatments, as well as ensuring that cancer cases such as Ms Waree’s are dealt with sympathetically. Despite the increased coverage, Thailand still spends only 4% of its GDP on health, about the same as it did 20 years ago. That works out at roughly $220 per person per year.

Finding the best way to spend limited resources is critical. In November the DCP3 report proposed about 100 high-priority services, including public-health measures (such as informing people about family planning), immunisations, antibiotics, antenatal care and basic surgery. If implemented, these would cost an additional $26 per person per year, or an extra 3.1% of average GDP per person in low-income countries. A broader package of more than 200 treatments would cost $53 per person. The report estimates that this could save 1.6m-2m lives per year. The numbers may be approximate, but they can guide policymakers on which treatments to make available.

Another option is to expand the tax base in poorer countries. Possible candidates are taxes on extractive industries and on goods harmful to health such as tobacco, alcohol and air pollution. That would not only raise money but have great public-health benefits. Energy subsidies could also be curtailed; some poor countries, including Bangladesh, Indonesia and Pakistan, spend more on these than they do on health and education.

However, the poorest countries will still need foreign aid. That way they can continue to fight communicable diseases while also building their health systems and expanding coverage. Some of the most cost-effective aid spending does both. The Global Fund, for example, uses its spending on HIV prevention to develop cadres of community health workers who could also help deal with other diseases. Elsewhere, for example in Rwanda, aid spending has been used to match domestic resources that have gone into expanding health insurance.

But aid alone will never be enough to realise universal health care. Even in the poorest countries it amounts, on average, to only a third of health spending. And after rising rapidly during the 2000s the sums dished out by Western governments, especially America’s and Britain’s, have recently remained flat. During the days of plenty, governments in poor countries relied on big annual increases in aid so they could use their own budgets for other purposes; in effect, aid often replaced domestic health spending.

Recent research by the Institute for Health Metrics and Evaluation suggests that just one-fifth of the health-related targets set as part of the Sustainable Development Goals will be met on time. If there is to be a grand convergence, that will need to change. Poor countries will still need aid, but they will also have to step up their own efforts to bring about better health care for all.