Public Expenditures in Health

Main Principles

• Establish Market Failures

• Identify beneficiaries of expenditures

• Balance potential benefits with ability to deliver services

Health - Market Failures

• Public goods (pest control, sanitation, health education)

• Externalities (infectious disease control)

• Information advantage of doctors

• Insurance

Health - equity concerns

• Inequities in health status

• Inequities in benefits of services

The poor are sicker than other people: Under two mortality by “wealth”- Brazil, 1996

0

2

4

6

8

10

12

Poore

st 2 3 4 5 6 7 8 9

Riches

t

Under two mortality by US$ PPP

0

0.05

0.1

0.15

0.2

0.25

0.3

0.351 3 5 7 9

11

13

15

17

19

21

23

25

27

29

31

33

35

37

39

Brazil

BurkinaFasoCoted'IvoireBolivia

Colombia

Egypt

Ghana

Kenya

MadagascarMali

Niger

Peru

Philippines

Senegal

Tanzania

Yemen

Zambia

Pakistan

Prevalence of disease by “wealth”: India 1992-3

0123456789

Poore

st II III

IV V VIVII

VIII IX

Riches

t

TB (x10)MalariaBlindness

Female 45Q15 by cause of death by income group, China 1987

Incomequartile

Group I Group II Group III Total

1 (highest) .4 6.7 1.2 8.3

2 .4 7.9 22.0 10.3

3 .6 7.6 2.4 10.6

4 (lowest) 1.4 8.9 2.7 13.0

Health - Problems of Implementation

• Management challenge– Personnel placement– Quality of services

• Conscientious providers

• Maintenance of facilities

• Political Influence

Percentage of health centers without doctors by province: Indonesia

0

10

20

30

40

50

60

Absenteeism in primary facilities

05

1015202530354045

Uganda

Bangladesh

IndiaIndonesia

Ecuador

Peru

Teachers

Healthworkers

% a

bsen

t

Details from IndiaAbsence Rates from Primary Facilities in Selected States, 2003

0

10

20

30

40

50

60

70

Bihar

Orissa

Uttar P

rades

h

Uttara

nchal

Assam

Rajast

han

West

Ben

gal

Andhra P

rades

h

Kerala

Karnat

aka

Tamil

Nadu

Gujura

t

Haryan

a

Punjab

Primary School Teachers Primary Health Care Workers

Health: Complementarity/ conflict between goals

• Public goods - strong complementarity

• Primary health care - modest efficiency effects (varies), potentially high equity effects, difficult management

• Hospitals - high efficiency, high potential but low actual equity effects, easier management(?)

In Brazil, the poor have worse sanitation facilities…

0

10

20

30

40

50

60

70

Poorest III V VII IX

Percent of households with no sanitation facilities

…they have less access to safe water…

0

10

20

30

40

50

60

70

80

90

Poorest III V VII IX

% with piped water% with surface water

…and this costs the lives of their children

0123456789

10

Good watersource andsanitation

Nosanitation

Bad water Both bad

Health: Complementarity/ conflict between goals

• Public goods - strong complementarity

• Primary health care - modest efficiency effects (varies), potentially high equity effects, difficult management

• Hospitals - high efficiency, high potential but low actual equity effects, easier management(?)

Determinants of infant mortalityVariable Malaysia PhilippinesIncome -1.06

(.97)-.223(.042)

Safe Water -.147(.05)

-.026(.027)

Immunization (DPT) -.113(.04)

-.018(.013)

Public medicalpersonnel per capita

1.03(.79)

Public health subsidy -.404(.113)

Subsidy income .041(.012)

Adjusted R2 .55 .988S.e. in parentheses

Philippines: Effect of public medical care

Poor area Not-so-poor area

Substitution between public and private providersCountry/Sample Policy change Increase in private

sector as a percentageof decrease in public

Price increasesBenin (rural) Community Health

Center fees61

Bolivia (urban)-adults Ministry of PublicHealth (MoPH) fees

33

Bolivia (urban)-children=15

“ “ 0

Bolivia (urban)-children= 4

“ “ 0

El Salvador (urban) –males

Ministry of Health fees 56

El Salvador (urban) –females

“ “ 50

Ghana Public facility fees 60Kenya (rural) – adults Government facility

fees (0 to 10Ksh)37

Nigeria – adults Public facility fees 100Pakistan (urban) –children = 5

Government clinic price 71

Increases indistance or time

Bolivia (urban) – adults Waiting time – MoPHfacilities

100

Bolivia (urban) –children = 15

Travel time - ““

20

Bolivia (urban) –children = 4

Waiting time- ““

20

Ghana Distance to nearestpublic facility

50

Kenya (rural) “ “ 44

Distribution of health care subsidies, Indonesia

020406080

100120140160180200

Poore

st 2 3 4 5 6 7 8 9

Riches

t

Hospital inpatientHospital outpatientHealth centerHealth sub-center

Absentee rates by level of health facility: India and Bangladesh

0

10

20

30

40

50

60

70

80

Doctors Other staff Doctors Other staff

India Bangladesh

Community (India)or Thana(Bangladesh) Health Centers

Primary HealthCenters

Subcenters (India);Upgraded familywelfare centers(Bangladesh)

Health: Complementarity/ conflict between goals

• Public goods - strong complementarity

• Primary health care - modest efficiency effects (varies), potentially high equity effects, difficult management

• Hospitals - high efficiency, high potential but low actual equity effects, easier management(?)

Value of insurance as a % of expected cost

0

10

20

30

40

50

60

Poorest 2 3 4 Richest

OutpatientInpatient

Priorities in health policyTraditionalPublic Health

Primary HealthCare

HospitalBased Care

ApproachStatus quo (variesgreatly)

Low Low (?) High

Alma Ata (ideal) High High LowAlma Ata (real) Low(er) High Low

Economicefficiency

High Low(ish) High

Full economicrationale:(efficiency plusequity)

Even higher (?) Not quite sohigh (?)

Equity, efficiency,implementability

Higher still Low High