The World Health Report 2010
Dr Margaret Chan
Director-General of the World Health Organization
Excellencies, Minister Niebel, Minister Rösler, honourable ministers, distinguished delegates, colleagues in public health, ladies and gentlemen,
Let me begin by thanking Germany’s Federal Ministries for Health and Economic Cooperation and Development for jointly organizing and hosting this international ministerial conference on health systems financing.
Let me also thank Germany’s Ministry of Health for its financial contribution to this year’s World Health Report on health systems financing, which has also been supported by the Rockefeller Foundation and the US Agency for International Development.
Like this conference, the World Health Report aims to put more countries on the path to universal coverage and help others maintain their gains. The report is being launched today, and I will be introducing you to some of its main findings and conclusions.
Your discussions during this conference will no doubt further enrich our understanding of best practices in health care financing and social protection.
Ladies and gentlemen,
Policy-makers in every country are continually reviewing the way health care is financed. They look at the way funds are collected, how funds are pooled to spread risks, which services are provided free and which are purchased, and how doctors, nurses, and other staff are paid.
They look for ways to cope with soaring health care costs, changing disease patterns, and the rising expectations and demands of their populations. They experiment with different schemes and policy options, sometimes with success, often with unintended consequences and surprises. They look for money, and they look for guidance on the best way to spend it.
I commissioned this World Health Report in response to a need, expressed by rich and poor countries alike, for practical guidance on how to improve the financing of health care.
The need for guidance in this area has become all the more pressing at a time of global economic downturn and rising health care costs. In every region of the world, the costs of health care are going up as populations age, chronic diseases increase, and new and more expensive treatments become available.
During my discussions with health officials and ministers, I heard widespread agreement that moving towards universal coverage is the right vision to guide health care reforms. Nearly all countries want to move in this direction, but do not know what policy options are most effective, what they will cost, and where to find the funds.
European leaders are likewise committed to the goal of universal coverage, not only in your own countries, but also in the European Union’s recent strategies for supporting global health.
This is the first way this report differs from other advice on health care financing. The emphasis is firmly placed on moving towards universal coverage.
A commitment to universal coverage means, in practical terms, that all people within a country should receive some degree of financial protection from the costs of at least some basic health services. This means, in ethical terms, that no one in need of health care, whether curative or preventive, should risk financial ruin as a result of having to pay for care.
Access to basic health care is a fundamental human right, as stated in the WHO Constitution, and not just a privilege to be enjoyed in a few wealthy societies. But this right hardly matches the reality. In many countries, the rich receive all the health care they need, while the poor are left to fend for themselves.
This situation needs to be corrected. It can be corrected, as this report shows. And it is being corrected in a growing number of low- and middle-income countries. As documented in the report, any country that gets the policies right can move towards universal coverage, often with remarkable improvements in health outcomes.
This is a core purpose of the report: to help countries get the policies right, whether to collect more resources for health or distribute these resources more fairly.
In my view, universal coverage is an admirable goal, a feasible goal, and a timely one. It is a challenging goal, but we have to bite the bullet now. If health systems do not find the right answers now, the bill further down the line is going to keep getting higher.
Many policies for health care financing get the incentives wrong. They encourage unnecessary tests and procedures, overprescribing of medicines, and longer than needed hospital stays. They let prevention fall by the wayside.
Obesity has reached epidemic proportions, also in several poor nations. Lifestyle-related chronic conditions, like hypertension and diabetes, are increasing with a dramatic speed and sweep. If left unchecked, these costly, yet preventable conditions can overwhelm insurance schemes and unravel safety nets for social protection.
Many policies for health care financing exclude the poor, whose health needs are usually greatest. Systems that rely heavily on direct payments, including user fees, at the time of care actually increase poverty. This is a bitter irony at a time when the international community is pursuing better health as a strategy for poverty reduction.
Already today, the differences, within and between countries, in income levels, life expectancy, health outcomes, and access to care are greater than at any time in recent history.
As the report notes, government expenditures on health range from as little as $1 per person to nearly $7,000. As the report also notes, higher spending on health does not guarantee better health outcomes. Policies make the difference.
Ladies and gentlemen,
The best way to finance health care has long been a confusing area for policy-makers. Different policy options have been debated for decades.
But when a country decides to aim for universal coverage, advice becomes more precise, the advantages and disadvantages of different policy options are clarified, and lines of action become more sharply defined.
This is another distinctive feature of the report. It simplifies some very complex economic arguments and theories, and distils a vast amount of country experiences into a menu of options and policy choices, with advice given for each.
This is a deliberately slender report, of just 100 pages, but its straightforward advice is backed up by detailed technical evidence and economic analysis set out in more than 50 background papers. These are being published on the WHO website today.
The report concentrates its recommendations and advice on the three biggest questions facing any move towards universal coverage: how to raise more money for health, how to extend financial protection to the poor and sick, and how to deliver health services more efficiently. In doing so, it sets out a number of new economic arguments and estimates. These should help equip ministries of health to negotiate more persuasively with ministries of finance and commerce.
In its advice on how to raise more funds for health, the report discusses ways to increase the efficiency of revenue collection, increase the priority given to health in government budgets, and make development assistance for health more effective.
The report also identifies nine options for raising new domestic resources from innovative sources. The so-called “sin taxes” are one. As just one example, a review of 22 low-income countries shows that, by raising tobacco taxes by 50%, these countries could together generate new funds for health amounting to more than $1.4 billion each year.
Frankly, WHO loves “sin taxes”, as they raise money while also protecting health.
The report reaches some new conclusions, settles some controversies, and ends some long debates. Let me mention two that shape the advice on extending financial protection.
First, direct out-of-pocket payments at the time of care are identified as the single biggest barrier to universal coverage. While user fees have been promoted as a way to reduce the overuse of services, this is not what happens.
User fees punish the poor. They are inefficient. They encourage people to delay seeking care until a condition is far advanced, and far more difficult and expensive to treat. And when people do pay out of pocket for care, financial ruin can be the result.
In some countries, up to 11% of the population experiences catastrophic financial hardship each year because of health care bills, and as many as 5% of these people are pushed below the poverty line because of these costs.
And it is not just a bout of severe illness, emergency surgery, or an accident that causes this magnitude of financial hardship. The steady drain of paying medical bills for chronic diseases or disabilities can easily push people into poverty.
As I said, given current and projected trends, especially for obesity, diabetes, cancer, and hypertension, this is a situation that must be dealt with now. This tells us, too, how important it is to have incentives that place a premium on preventive care. Ways of doing so are also addressed in the report.
The report strongly recommends a reduced reliance on direct payments, but it does not call for an immediate end to user fees in all settings. As experience shows, eliminating user fees brings an almost immediate increase in the use of services.
If publicly-financed services cannot cope with this demand, because of too few staff or two few medicines, people will turn to more expensive services offered by the private sector, cancelling out any real gains.
As a second clear conclusion, prepayment schemes, with pooling of funds and the sharing of risks, are put forward as the most equitable way to finance health care. These are solidarity schemes, in which the rich subsidize the poor, and the healthy subsidize the sick.
Such schemes work best when they include large numbers of people. Nearly every country that has achieved universal coverage or come close to this goal has relied on prepayment and risk pooling schemes involving large numbers of participants.
This is not an argument about health insurance versus taxes. Most countries use a mix of the two. This is an argument for solidarity.
The report also addresses ways to stretch resources further by spending them more wisely. It identifies ten areas where better policies and practices could improve efficiency, reducing expenditures on health care by 20% to 40%.
Better policies for the purchasing, prescribing, and quality control of medicines are a major source of savings in every country, with the use of generic medicines singled out as especially effective. As the report notes, a policy that encourages the use of generic medicines could save around 60% of the costs of medicines in many countries.
As further noted, the global pharmaceuticals market is neither transparent nor efficient. Prices paid by different countries for identical medicines vary enormously. Many countries pay way too much for medicines, sometimes as much as 60 times higher than the international reference price.
Worldwide, around half of all medicines are prescribed, dispensed, or sold inappropriately. For example, fewer than half of all patients with acute diarrhoea, one of the biggest childhood killers throughout the developing world, obtain cheap and extremely effective oral rehydration salts.
Instead, they are given expensive antibiotics that are useless in treating diarrhoea. This is a costly prescribing error, and it is deadly.
Hospitals are another area where better management could bring considerable savings. Excessive inpatient admissions and length of stay are common problems. Some hospitals are too large to be efficient, and others are too small.
Ladies and gentlemen,
The World Health Report advises, but it also warns. Policy options can be easy to describe, but hard to implement.
Health systems are complex adaptive systems and their different components can interact in unexpected ways. At the same time, if policy-makers get the financing wrong, nothing else in the health system will work well.
The right solutions to any problem are highly context-specific. This means that countries cannot directly apply policies that work well in one setting to others and expect to get the same results. Any effective strategy for health care financing must be home-grown.
The report also warns health officials to expect some strong opposition. Systems for health financing tend to resist change. Any reform will bring opposition from some powerful vested interests.
The health care industry is a big and lucrative one. It is also an exceptional industry. Advances in technology in many industries bring greater simplicity and lower prices. But innovations in medical products and medical devices, when linked to rising expectations, bring greater sophistication and complexity at ever higher prices.
Worldwide, annual expenditure on health amounts to around $5.3 trillion. In particular, efforts to cut waste and improve efficiency are bound to provoke some powerful resistance.
While much advice is addressed to national policy-makers, the report also has something to say to the international development community. More effective aid is another important way to help countries move towards universal coverage.
WHO currently estimates that the cost of providing a minimum package of key health services, in the world’s 49 poorest countries, amounts to around $44 per person per year.
Despite dramatic recent increases in international financial assistance for health development, most spending on health still comes from domestic sources, even in some very poor countries.
In many developing countries, most workers are engaged in informal sectors, like agriculture, leaving a small tax base. Clearly, external financial support will be needed for some years to come.
Of these 49 countries, only eight have any chance whatsoever of generating the funds required to reach the health-related Millennium Development Goals from domestic sources alone. Global solidarity is required. If donor countries would immediately meet their financial pledges for health development, external funding for health would more than double overnight and the estimated shortfall needed to reach the MDGs would virtually disappear.
The best aid aims to eliminate the need for aid. It does so by building the fundamental infrastructures and capacities that move countries towards self-reliance.
The best financial aid is channelled through domestic financing systems and institutions. Doing so strengthens capacities and builds self-reliance. Failing to do so overburdens countries with high transaction costs and multiple, repetitive demands for monitoring and reporting.
Let me give you some numbers to illustrate what this means. In 2009 alone, Viet Nam dealt with more than 400 donor missions to review health projects or the health sector. Rwanda has to report annually on 890 health indicators to various donors, with nearly 600 relating to HIV and malaria alone.
Ladies and gentlemen,
The report’s overarching message is optimistic and encouraging.
It encourages every country in the world to adopt at least some policies that will extend coverage to more people, and reduce the number of people who risk financial ruin because of health care costs.
All countries, at all stages of development, can take immediate steps to move towards universal coverage and to maintain their achievements.
Countries that adopt the right policies can achieve vastly improved service coverage and protection against financial risks for any given level of expenditure.
The evidence is in this report, and it is compelling.