Health Sector Reforms

Professor dr JW BjörkmanInstitute of Social Studies & Leiden University

The Netherlands

National School of Public HealthRio de Janeiro, Brazil

11 March 2009

Overview of LectureI. Introductory definitions and issues

II. Approaches and generations of reform

III. Historical context and policy goals

IV. Capacity constraints and corrections

V. Models of funding and contracting

VI. Markets and public-private partnerships

VII. Types and strategies of health reforms

Comparative Health Reforms

Reform = modify current arrangements Re-form seeks to change ‘form’ Target-issues in the health sector

1) access to health services

2) cost of health services

3) quality of health services

Overview of Major Approaches

1) Institution Building – 1950s, 1960s

2) Institutional Strengthening – 1960s, 1970s

3) Development Administration – ’60s, ’70s

4) Human Resource Management – 1980s

5) Capacity Development – 1980s, 1990s

6) Millennium Development Goals – 2000s

Generations of Reforms1) First– cut public expenditures and revive

the public sector

2) Second– improve efficiency & effectiveness of public administration

3) Third– improve service delivery through sector-wide approaches

Repetoire of Policy Instruments

Establishment of autonomous organizations

Introduction of user-fees (pay for service)

Contracting out of service delivery Enablement and regulation of the

private sector

Basic Goals in Health Policy

I. Universal access to health servicesII. Equity in sharing financial burdensIII. Good quality health careIV. Efficiency and cost controlV. Satisfaction of patientsVI. Autonomy of professionals

Financing Health Care

General taxation

Health insurance

Out-of-pocket expenditures

Historical Antecedents 1883 Germany’s mandatory social

health insurance for workers & their families (employment-based scheme of premiums)

1948 Britain’s national health service for entire population (population-based scheme paid out of general taxation)

21st Century ‘Hybrids’

Employment-based arrangements for certain categories of workers are combined with population-wide and tax-based universal schemes.

Retrenchment in 1970sOil crises and economic stagnationHigh unemployment, declining state

revenue, rising public expendituresDemographic shiftsIdeologies about the role of the statePolicy alternatives of competition and

market choice

Recognition of Private Sector

Extensive private sector for health care in (almost) all countries

Primarily out-of-pocket paymentsLargely un-regulated and dominated

by medical professionals‘Public-Private Partnerships’ due to

declining government budgets

Stage of Raising RevenuesReforms stimulated by economic recessionDeclining government revenues & budgetsPressure for reform emanate from central

ministries of finance & planningImposition of user-feesDwindling capacity of citizens to payTransaction costs

Capacity Constraints (i)

Limited implementation of policies Time needed for proper assessment ‘The smaller the capacity, the greater the

ambition’ and vice-versa Staff features (numbers, skills, motivation) Organizational culture Patronage and favoritism

Capacity Constraints (ii) Management information systems Incentive structures Lack of feedback Poor coordination Limited extent of the private sector

Pressures for Policy Change Proliferation of cross-national studies Faulty assumption that policy as stated in

law is the same as policy implemented ‘Spending-Services’ cliché Reform = shifts in decision-making power

over allocation of resources and risks Shifts = intergovernmental, inter-personal

Empirical Experience of HSR

Countries implement reforms within (a) their own institutional legacies, (b) varying speeds of change, and (c) with different timings

Describe any health system in terms of a country-specific mix of funding, contracting & modes of delivery

Five Main Sources of Funding

1) General taxation

2) Public and private insurance

3) Direct payments by patients

4) Voluntary contributions

5) External aid from donors

Three Basic Contracting Models

1) Integrated model – funding and ownership under same (public or private) agency

2) Contracting model – governments or third-party payers negotiate long-term contracts with health care providers

3) Reimbursement model – patient pays the provider, then seeks reimbursement from his/her insurance agency

Other Contextual Elements

Country-specific mixes: Formal and informal care Traditional and modern medicine Medical and related social

services

Health Care Reform: Bottom-line

Combinations of core elements – funding, contracting (including payment modes) and ownership – determine the allocation of financial risks and decision-making power among the main players in the health care sector.

Explanatory Variables External and internal pressures for change Structural features of social policy-making Institutional legacies and history Popular support and/or opposition Top-down versus bottom-up reforms Degree of ‘ambition’ – overly elaborate =

plans remain on the ‘drawing board’

Types of Health Reform (i) Structural Adjustment in disguise

(primarily cost-cutting) Market-oriented reforms

*Assumption: markets create efficiencyBut profits from unnecessary

careBut transaction costs

*Assumption: perfect information & choice

Types of Health Reform (ii) Public health and public financing

(the ‘Cinderella’ of all options for reform) Note: there is nothing inherently wrong with

market-based reforms, provided they:

*work for greater efficiency and equity

*receive no government subsidies

*comply with regulations

Types of Health Reform (iii)

‘Idealist model’ is flawed – a ‘perfect market’ (where demand, expressed as purchasing power, determines supply and utilization of health care services) only works if those who need care are also those with the most resources for buying the care they need … whereas, in reality, the opposite is true!

Strategies of Reform (i)

1) Deep structural changes to ensure minimum care for all citizens

2) Beware ‘pretended’ reforms

3) People always pay – but who is to pay more and who is to pay less?

4) Centrality of the ‘central’ level

Strategies of Reform (ii)5) Replace regressive fee-for-service with

prepayment schemes

6) Progressive taxes are the best revenue for public health and insurance

7) Rationalize resources by reallocating personnel and mobilizing for outreach

8) Participatory dialog for empowerment

Strategies of Reform (iii)9) ‘Political will’ = choice and commitment

10) Health systems must help people get well when they are sick

11) Health systems must keep people healthy and stop them for becoming sick

12) Health systems must advance medical intervention and social transformation

Observations (i)The role of governance in social policy and

development (Lavis & Sullivan 1999):

‘Healthcare systems play a significant role in why we get well when we are sick;

social environments play a significant role in why we are healthy or why we become sick in the first place’.

Observations (ii)

Landmark aspirations*1947 United Nations Covenant on Social,

Economic and Cultural Rights*1978 Alma Ata Declaration of ‘Health for

All by the Year 2000’*1981 World Health Assembly strategy of

‘HFA & Primary Health Care’*2000 Millenium Development Goals

Recent Trends in Reforms

public/private partnershipsstate ‘failure’ and market ‘failure’shift in emphasis from ‘poverty causes

ill-health’ to ‘ill-health causes poverty’ – and therefore health care provides opportunity for poverty alleviation as well as social development

Conclusions about Reforms

Greater socio-economic equity is vital to tackle the challenge of health

Human right to health requires political commitment at all levels

Health inequalities are rooted in socio-economic structures

Action is needed in all social policies

Health Sector Reforms

Obrigado!

Thank you for your attention!