Prioritising profits reversed health progress

Anis Chowdhury and Jomo Kwame Sundaram

SYDNEY and KUALA LUMPUR: Instead of a health system striving to provide universal healthcare, a fragmented, profit-driven market ‘non-system’ has emerged. The 1980s’ neo-liberal counter-revolution against the historic 1978 Alma-Ata Declaration is responsible.

Alma-Ata a big step forward

Neoliberal health reforms over the last four decades have reversed progress at the World Health Organization (WHO) Assembly in the capital of the then Socialist Republic of Kazakhstan, now known as Almaty.

Then, 134 WHO Member States reached a historic consensus reaffirming health as a human right. It recognised that heath is determined by environmental, socio-economic and political conditions, not only medical factors narrowly understood.

The Declaration stated, “Governments have a responsibility for the health of their people which can be fulfilled only by the provision of adequate health and social measures”. Also, “The people have the right and duty to participate individually and collectively in the planning and implementation of their health care”.

Countries committed to the fundamental right of every human being to enjoy the highest attainable standard of healthcare without discrimination. They agreed that primary healthcare (PHC) is key to addressing crucial determinants of health.

Alma-Ata eschewed overly ‘hospital-centric’ and ‘medicalised’ systems, instead favouring a more ‘social approach’ to medicine. In the Cold War divided world, the Declaration was a triumph for humanity, promising progress for global health.

It recognised the crucial contributions of multilateral cooperation, peace, social health determinants, health equity norms, community participation in planning, implementation and regulation, and involving other ‘sectors’ to promote health.

Primary healthcare

Some developing countries – e.g., China, Costa Rica, Cuba and Sri Lanka – had already achieved impressive health outcomes at relatively low cost, raising life expectancy by 15 to 20 years in under two decades.

Instead of just curative medicine and clinical care, prevention and public health were given more emphasis. Basic health services, improved diets, safe water, better sanitation, health education and disease prevention became central to such initiatives.

Mainly rural community health workers (CHWs) were trained to help communities address common health problems. Differences in national government approaches, contexts and needs have also shaped PHC outcomes, reach and efficacy, e.g., in delivering healthcare to the poor.

But despite reversals elsewhere, some efforts have continued, even expanded. Even in the 21st century, large-scale PHC efforts have made remarkable health gains, e.g., Brazil’s Programa Saude da Familia and Thailand’s Universal Coverage Scheme.

Lalonde Report turning point

Thus, Alma-Ata inverted health policy priorities, as 90% of health problems were recognised as due to lifestyles, environments and human biology, with only 10% due to the “healthcare system”, as noted by Canada’s 1974 Lalonde Report.

The Lalonde Report reaffirmed WHO’s basic approach. Its 1946 constitution had affirmed, “Health is a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity”.

The Report’s multidimensional approach to human health marked a turning point, reshaping policy approaches. Similar health assessments, with more holistic understandings, were also influential.

Reports from the UK, USA, Sweden and elsewhere also challenged the dominant medicalised approach to healthcare promoted by big pharmaceutical and other health-related businesses.

Neo-liberal ascendance

Developments since the 1980s have set back and reversed the Alma-Ata commitments. Latin American and other debt crises paved the way for the neo-liberal ‘Washington Consensus’ counter-revolution.

‘Rescue packages’ from the International Monetary Fund and World Bank, especially structural adjustment programmes (SAPs), demanded public spending cuts. These reduced social spending, cutting funding for health.

Thus, many PHC, including CHW programmes did not last. Citing cost recovery, SAPs pressed to impose user fees and privatise health services. The outcomes betrayed Alma-Ata’s promise of greater health equity, and ‘Health for All’ by 2000, undermining prospects for universal health coverage.

The World Bank’s 1993 World Development Report, ‘Investing in Health’, also undermined Alma-Ata. Justifying state healthcare provisioning cuts, it promoted for-profit health financing and other private solutions.

Healthcare financing key

In neoliberal dialect, strengthening health systems meant “enhancing public-private partnerships” among other such interventions. The Bank provided substantial financial support to fund its recommendations.

Despite Alma-Ata, the WHO’s 2000 World Health Report (WHR 2000) criticised developing countries for “focusing on the public sector and often disregarding the – frequently much larger – private provision of care”. It argued, “Health policy and strategies need to cover the private provision of services and private financing”.

Addressing health progress became more ‘siloed’ with the UN’s Millennium Development Goals (MDGs) indicators’ focus on curing and preventing particular diseases. Neither WHR 2000 nor the MDGs reiterated Alma-Ata’s emphasis on social justice, equity and community participation.

Instead, that era saw more healthcare privatisation, public-private partnerships and contracting out of services. After this neo-liberal eclipse, WHO’s attempted U-turn, starting over a decade ago, has emphasised universal health care (UHC) and socio-economic determinants, but the Alma-Ata betrayals prevail.

Thus, the Bank’s International Finance Corporation has been promoting private investments in healthcare services and infrastructure. Deploying billions, it buys public policy influence in Africa, India and beyond.

Philanthropy rules

Unsurprisingly, cash-strapped governments have welcomed financial support from supposed ‘do-gooder’ philanthropists. Many states have to cope with fragile, even crumbling health systems, often overwhelmed by old killers and new epidemics.

Such MDGs-inspired support has typically been via ‘vertical funds’ targeting specific diseases – contrary to Alma-Ata. With more money than WHO’s paltry budget, corporate philanthropy has been remaking policies the world over.

Thus, the policy and ideological prejudices of the Gates Foundation, Global Alliance for Vaccines and Immunisation and Global Fund to Fight AIDS, Tuberculosis and Malaria have obscured Alma-Ata, also reshaping national health priorities.

COVID-19 has unveiled some more effects of various profit-driven healthcare inequities, chronic under-investment in PHC, and over-investment in profit-driven healthcare. They have not only hastened the retreat from ‘health for all’ and UHC, but also made the world more vulnerable to epidemics.

Worse, the interests and priorities of corporate philanthropy have not only raised the costs of, and thus delayed containing the pandemic, but also reversed much of the modest and uneven progress of recent decades, besides worsening inequalities.

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Privatised health services worsen pandemic

Anis Chowdhury and Jomo Kwame Sundaram

SYDNEY and KUALA LUMPUR: Decades of public health cuts have quietly taken a huge human toll, now even more pronounced with the pandemic. Austerity programmes, by the International Monetary Fund (IMF) and World Bank, have forced countries to cut public spending, including health provisioning.

‘Government is the problem’

“India’s COVID crisis: A deadly example of government failure”, “Government failures still hamper [UK] Covid-19 response”. Such headlines have become commonplace as the pandemic rages on, with no sign of ending soon. Their godparents deserve due recognition.

UK Prime Minister Margaret Thatcher claimed, “no government can do anything [good]… people look to themselves first... There is no such thing as society … quality of our lives will depend upon how much each of us is prepared to take responsibility for ourselves and each of us prepared to turn round and help by our own efforts those who are unfortunate”.

US President Ronald Reagan declared, “government is not the solution to our problem; government is the problem”. Inspired by them, government capacities and public sectors have been decimated in recent decades, ostensibly to liberate entrepreneurship and progress.

Four decades of defunding, delegitimization and demoralisation of governments and their personnel since Thatcher and Reagan have taken their toll. Unsurprisingly, most governments have failed to respond more adequately to the pandemic.

To justify social spending cuts, politicians of various hues the world over have been parroting mantras that government is too big and bad. ‘New Democrat’ US President Bill Clinton proudly declared the “era of big government is over”.

Neoliberal reforms worse

This ‘politics of small government’ legitimised privatisation of public assets and services. Authorities have tripped over one another to privatise potentially lucrative public sector duties and activities, while reducing taxes and expenditure.

COVID-19 has revealed the nature and purpose of neoliberal health spending reforms. New policies have included privatisation and contracting out public services. Social spending has not only been cut, but also used to pay private suppliers.

Health system failures highlighted by the pandemic have been long in the making. Four decades of neoliberal policies -- including marketisation, or commodification of healthcare -- have greatly increased private provisioning.

Private healthcare provisioning in low and middle-income countries (LMICs) took off in the 1990s. It gathered pace after the 2008-2009 global financial crisis with more hedge fund and other investments in hospitals and allied health services.

Such provisioning now accounts for most health services in many LMICs, catering mainly to medical tourists and patients with means. Thus, profit considerations and financial markets have remade LMICs’ national health systems.

Unhealthy reforms

Increasingly privatised and outsourced, public health systems in developing countries have been underfunded, undermined and understaffed. Fractured health systems, with poor governance and regulation, have become even less able to respond well to new challenges.

Such changes have been promoted by new aid-sponsored financial arrangements, such as public-private partnerships, as urged by the World Bank. The pandemic has exposed the results as grossly inadequate, ill-suited and vulnerable.

Profitable private services remain parallel to and separate from the public system. The reforms have not only undermined public health systems, but also weakened governments’ ability to cope. Even in rich countries, about 40% of health spending is now for private services.

Neither privatisation nor commodification have improved the quality of care, equity and efficiency of public services. Thus, deregulation, privatisation and liberalisation have squeezed health access, raising morbidity and mortality.

Meanwhile, donors have been diverting aid from governments to non-government organisations (NGOs), especially ‘international’ ones. But patchworks of foreign-run NGOs are no substitute for integrated national public healthcare systems.

Austerity kills

Analyses of economic shocks around the world, from the 1930s’ Great Depression to the 2008-2009 Great Recession, show fiscal austerity kills. In England since 2010, austerity has been linked to 120,000 more deaths and over 30,000 suicide attempts.

Despite declining alcohol abuse and smoking, and without counting flu and other epidemic fatalities, 100 ‘early deaths’ daily were expected in the UK, even before the pandemic. Social security cuts have also been devastating.

Despite growing patient demand and rising healthcare costs, during 2010-2020, the UK National Health Service suffered the “largest sustained fall in … spending as a share of GDP in any period” since its creation after the Second World War.

Earlier, Greece’s 2010 austerity package required cutting its national health budget by 40%. Infant mortality rose 40% after some 35,000 doctors, nurses and other health workers lost their jobs.

As Greeks avoided routine primary healthcare due to long waits and rising drug costs, hospital admissions soared. Meanwhile, mosquito eradication programme cuts led to a resurgence of malaria.

Austerity also worsened Ebola in West Africa. Cutting public health spending from 1990, Guinea, Liberia and Sierra Leone further weakened their already poor health systems, undermining their ability to cope with emergencies. Thus, in the year before the Ebola outbreak, Guinea spent more on debt repayment than public health.

Meanwhile, austerity-driven funding cuts to the World Health Organisation (WHO) by the US, UK and European governments critically delayed responses to the Ebola outbreak, worsening it. Funding shortages also set back needed WHO efforts to respond to future global health crises.

Government not main problem

Health threats posed by the pandemic have not been well addressed by the reforms of recent decades. Some have been made worse, with LMICs particularly hard hit by COVID-19. Unsurprisingly, confidence and trust in governments everywhere have dipped.

In fact, public health investments before the pandemic were projected to yield three times as much in economic growth. Thus, such spending would have not only saved lives, but also accelerated economic expansion.

With COVID-19 endemic, and most government pandemic containment and fiscal capacities in the global South limited, the pandemic will drag on, further setting back progress and worsening inequalities.

Meanwhile, Thatcher and Reagan still haunt us all until the world exorcises their ghosts forever.

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How to Sustainably Finance Universal Health Care

By Mary Suma Cardosa, Chan Chee Khoon, Chee Heng Leng, Jomo Kwame Sundaram

KUALA LUMPUR: To achieve universal health coverage, a country needs a healthcare system that provides equitable access to high quality health care requiring sustainable financing over the long term. Publicly provided healthcare should be on the basis of need, a citizen’s entitlement for all regardless of means.

Health inequalities growing

But recent decades have seen health care trending towards a two-tier system – a perceived higher quality private sector, and lower quality public services. One typical consequence is medical doctors, especially specialists, leaving public service for much more lucrative private practice.

This ‘brain drain’ has led to longer waiting times and complaints of deteriorating public service quality, as more people with means turn to private facilities. As costs in private hospitals are high and increasing, this causes those who can afford private health insurance to turn to it to hedge their bets.

If these trends are not checked, the gap between private and public health sectors in terms of charges and quality will grow, increasing polarisation in access to quality health care between haves and have-nots.

Health care financing

Financing arrangements are key to developing an equitable healthcare system that is financially sustainable in the long run. For universal coverage and equitable access, health financing should be based on social solidarity through cross-subsidisation, with the healthy financing the ill, and the rich subsidising the poor.

Experience the world over shows health markets functioning poorly, both in financing and providing healthcare. Furthermore, heavy reliance on market solutions has contributed to spiralling costs and constrained healthcare access.

Private health insurance

A voluntary private health insurance (PHI) scheme cannot be financially viable in the long term as individuals with lower health risks are less likely to buy insurance from a scheme which they see as primarily benefiting others less healthy.

Since voluntary schemes are usually based on PHI, government support for such schemes would strengthen these companies. There are good reasons to be wary of the growing influence of PHI interests in healthcare financing discussions.

Premiums for PHI are risk-rated, meaning that individuals with pre-existing conditions and higher risks – such as the elderly, or those with family histories of illness – will face un-affordably high premiums or be denied coverage.

‘Moral hazard’ and ‘supplier-induced demand’ in a ‘fee-for-service’ reimbursement system encourage unnecessary investigations and over-treatment, or costly monitoring to limit such abuse. Hence, PHI companies use ‘managed healthcare’ services to contain costs by limiting investigations and treatments.

Voluntary PHI schemes charge high premiums while fee-for-service payments escalate costs which inevitably raise premiums. Thus, the US spends the most on health in the world, but with surprisingly modest health outcomes to show for it.

Much public expenditure is needed to insure the poor, especially those with prior health conditions. Achieving UHC would require costly public subsidisation of such profitable arrangements. This would not be cost-effective, let alone equitable.

Government support for PHI companies would strengthen their growing presence and influence, typically involving transnational insurance conglomerates. PHI companies are likely to try to undermine others threatening their interests.

Social health insurance

Unlike VHI, social health insurance (SHI) is usually mandatory to cover the entire population. Although often proposed and promoted with the best of intentions, the limitations and problems of SHI are also important to consider.

SHI would effectively require collecting an additional ‘payroll tax’ from the public. This could be designed with various distributional consequences, e.g., if flat, it would be regressive. As an additional tax would reduce take-home incomes, SHI schemes have been difficult to introduce.

Like PHI, SHI also has inherent tendencies for over-treatment and cost escalation due to ‘moral hazard’ and ‘supply-induced demand’. These require costly, strong and typically bureaucratic administrative controls.

Surviving SHI schemes owe their ‘success’ to specific reasons, e.g., Germany’s evolved from its long history of union-provided health insurance. But most working people in developing countries are not in formal employment, let alone unionised. Hence, SHI would have difficulty gaining broad acceptance.

In any case, Germany and other countries with successful SHI in the past have been moving to greater revenue funding of healthcare as formal employment and unionisation decline with changing labour arrangements.

With SHI, government revenue would still have to cover the indigent and poor. It is difficult to collect premiums from the self-employed, or the casual and informal workers not on regular payrolls. But universal coverage would not be achieved without including them.

Revenue financed healthcare

Inherited revenue-based healthcare financing is basically sound and should not be replaced due to other healthcare system problems. In most societies, revenue-sourced healthcare financing can be retained, reinforced and improved by:

o increasing government health care allocations.

o reducing ‘leakages’ by eliminating waste, corruption, ‘cronyism’, etc.

o promoting ‘developmental governance’, competitive bidding, etc.

o raising government revenue, especially from more progressive taxation, e.g., wealth, ‘windfall’ and ‘sin’ taxes, especially on activities worsening health risks such as tobacco and sugar consumption.

Revenue financing better

Revenue-financing avoids many administrative costs incurred by PHI and SHI. It has no need for an elaborate parallel system, costly mechanisms and more staff to register, track and pay SHI contributors and beneficiaries, and to deter selfish opportunistic behaviour.

Compared to PHI, SHI seems like a step forward for countries with weak or non-existent public healthcare systems. But moving from revenue-financing to SHI would be a step backwards in terms of both equity and cost-effectiveness.

SHI requires additional layers of health care system administration – to enrol, collect, ascertain coverage, determine benefits and make payments – which incurs unnecessary costs compared to revenue-financing.

Hence, such insurance systems involve much more per capita health spending, raising it by 3-4%. Despite being much more costly than revenue financed systems, they do not have better health outcomes.

As SHI effectively imposes a payroll tax, it discourages employers from hiring employees with ‘proper’ labour contracts. Hence, SHI was estimated to reduce formal contracts by 8-10% and total employment by 5-6% in rich countries.

International evidence clearly shows progressive tax-funded public health systems are more equitable, cost-effective and beneficial than SHI. Public health programmes needing popular participation, e.g., breast or cervical cancer screening, have worse outcomes with SHI compared to revenue-financing.

This can be best achieved by improving or developing a revenue-funded healthcare system, with additional resources deployed to expand and enhance primary health care, and better service conditions for medical personnel.

Strengthening public healthcare services can do much, not only to improve staff work conditions, but also morale and pride in their work.

Mary Suma CARDOSA is a medical doctor specializing in pain management and past President of the Malaysian Medical Association. CHAN Chee Khoon, ScD, is a health systems and health policy analyst with postgraduate training in epidemiology. CHEE Heng Leng, PhD, is an academic researcher working in the area of health and health care policy. All are members of the Citizens Health Initiative.