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How can the economic crisis affect health spending and MDG achievement?
ISPHC ConferenceMarch 23, 2010
Maureen LewisEconomic Advisor, World Bank [email protected]
Outline of presentationMillennium Development Goals
and healthRegional health spending
patternsThe current economic crisis and
impacts on health spendingImplications of crisis on health
status and household wellbeingCoping, compensation and
opportunities of economic crisis
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Millennium Development Goals:progress between 1990-2015
End poverty and hungerUniversal educationGender equalityChild healthMaternal healthCombat HIV/AIDSEnvironmental sustainabilityGlobal partnerships
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Achievement of MDGs and improvements in health status
MDG achievement requires:◦Good policies◦Adequate funding◦Adequate targeting◦Effective programs ◦Reaching the vulnerable
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2001 2002 2003 2004 2005 2006 20070
1
2
3
4
5
6
7
8
Total health expenditure (percent of GDP)
East Asia & Pacific Europe & Central AsiaLatin America & Caribbean Middle East & North AfricaSouth Asia Sub-Saharan Africa
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2001 2002 2003 2004 2005 2006 20070
0.1
0.2
0.3
0.4
0.5
0.6
0.7
General government/total health spending
East Asia & Pacific Europe & Central AsiaLatin America & Caribbean Middle East & North AfricaSouth Asia Sub-Saharan Africa
7
2001 2002 2003 2004 2005 2006 20070
100
200
300
400
500
600
700
800
Per capita government health spending (PPP int. $)
East Asia & Pacific Europe & Central AsiaLatin America & Caribbean Middle East & North AfricaSouth Asia Sub-Saharan Africa
8
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20070%
1%
2%
3%
4%
5%
6%
7%
8%
Latin America & Caribbean - Total Health Expenditure as % of GDP and Average GDP Growth
Avgerage GDP Growth Total Health Expenditure as % of GDP
Year
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Impact of the current crisis on health spending
Eastern Europe has fared the worst and spending has been cut
Latin America has fared relatively well:◦Mexico, Caribbean, El Salvador were hard
hit because of ties to the US but health (and education) spending protected
◦More insulated from global crash and better prepared
◦Counter cyclical household transfers: government spending rose on conditional cash transfers
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Why the crisis affects health
Household income declines making health care, food and other goods less affordable
Public health spending potentially at risk
Spending on HIV/AIDS and access to services at risk
Safety nets jeopardizedMomentum of health reform can be
jettisoned
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Dynamics of growth and health spending
Education spending more volatile than health spending, but health spending is more affected by crises
Trends in health spending are consistently positive but growth in spending is highly volatile
Post-crisis response is rapid
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
0
2
4
6
8
10
12
14
0
50
100
150
200
250
Changes in Growth Rates of Government Health Expenditure and GDP and Projections, 1996-2011
GDP growth (right axis)
Government Health Expendi-ture Growth (right axis)
Government Health Expendi-ture per Capita in PPP Dollars (left axis)
Perc
ent
Change
Govern
ment H
ealth
Expenditu
re p
er C
apita
(PP
P)
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
0
1
2
3
4
5
6
7
8
9
0
20
40
60
80
100
120
140
160
Changes in Growth Rates of Private Health Ex-penditure and GDP with Projected Trends for
Developing and Transition Countries, 1996-2011
GDP growth (right axis)
Private Health Expenditure Growth (right axis)
Private Health Expenditure per Capita in PPP Dollars (left axis)
Perc
ent
Change
Priv
ate
Health
Exp
en
ditu
re p
er C
ap
ita (P
PP
)
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Marker for declines in health spending: pharmaceuticals
Pharmaceutical purchases good indicator of overall health spending as it follows downturns
WHO data show decline in Europe due to downturn in the Baltics, Romania and Ukraine
Little decline in pharmaceutical purchases elsewhere
(Note: data excludes poorest countries due to data deficiencies)
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0,84
1,24
0,90
1,20
1,10
0,92
1,00
1,28
0,80
0,85
0,90
0,95
1,00
1,05
1,10
1,15
1,20
1,25
1,30
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Average pharmaceutical expenditure indexGlobal and WHO regions
(Evolution on Q1 08)
GLOBAL AFRO AMRO EMRO EURO SEARO WPRO
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UNDISBURSED FUNDS CUSHION HIV/AIDS
•HIV/AIDS funding has increased rapidly since 2000• Overall funding is continuing to grow but at a slower rate• Countries have had difficulty absorbing Global Fund grants• Overhang of undisbursed funds at country level can cushion HIV/AIDS funding
East Asia & Pacific
Eastern Europe & Central
Asia
Latin America & Car-ibbean
North Africa & Middle East
South Asia
SSA: East Africa
SSA: Southern
Africa
SSA: West & Central Africa
World0%
10%
20%
30%
40%
50%
60%
29%
24%
35%37%
39%41%
49%
37%38%
Undisbursed GFATM HIV/AIDS Grants as Percentage
of Total Active Grants (Rounds 1-7)
% Active Rnd 1-7 Grants Not Yet Disbursed
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Household impacts of crisis
Among hard hit countries household coping important
Complements (or substitutes for) public safety net spending
Suggests trade offs households are forced to make
In Africa overhang of food crisis affecting nutrition and other household spending
Qualitative evidence suggests impacts on low income households in some less affected countries
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Impact on Armenia’s Households
1 2 3 4 50.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Stopped visiting health centersStopped buying medicineDecreased food conumption
Income quintiles
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Impact on Turkey’s Households
Poorest 20% Middle 20% Richest 20%0%
20%
40%
60%
80%75%
32%29%
14%14%
5%
Decreased the amount of food consumption Reduced the use of health services
Reduced education expenditures
Asset Quintile
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Crises and Implications for Health Status
Over the period 1980-2004, one million excess infant deaths in Africa due to 1% or greater decline in GDP
Effects vary across income groupsThe poor and near-poor are the
most vulnerableThe wealthier the country the
better they are able to copeDuring the Depression of the 1930s
US health status improved
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Coping and compensating for economic crises in health
Factors that protect health status in an economic crisis: ◦counter cyclical government spending◦continued spending on public health ◦Targeted spending on sound programs
Government role critical for households
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Lessons from Previous Crises: Argentina 2001-2002
The Argentina 2001-2002 Crisis◦Health spending halved between 2001 and
2002, however: share of health in government expenditures
rose, public health programs spending increased 70%
◦13% of households cancelled their health insurance and 57% reported reduction in utilization of preventive services
◦National cash transfer program expanded to support the poorest households
◦Lessons reflected in current crisis
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Crisis as Opportunity
Difficult changes can often only be addressed during a crisis
Political decisions are more feasible during crises
Crisis requires rethinking how programs function and what they cost
Some reforms are long overdue
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The BahamasThe Bahamas has taken the
opportunity to rethink and streamline its HIV/AIDS program:◦Closer oversight of drug
procurement◦Better forecasting of ART needs◦Substitution of generics for brand
drugs◦Increased focus on adherence to
keep people on first line drugs longer
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LatviaNational income declined by 15
percentage points Crisis response relied almost
exclusively on contraction in public spending
the government has implemented long pending reforms:◦ eliminated unused hospital beds◦ invigorated outpatient care◦ prioritized effective health care
procedures by adjusting the list of ineligible health services
ConclusionsCrisis effects are strongest in Middle and
Low Income Countries of Eastern EuropeCrises have strong effects on
government and household spending on health
Lowest income households are most likely to curtail spending
Foreign assistance levels and crisis in developing and transition countries unrelated so government role key for coping
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ConclusionsCountries have become more
sophisticated at crisis managementCombination of lower deficits and
higher priority of social spending have contributed to protecting education and health spending in most countries this time
Most reforms are not being derailed by the crisis
Projected recovery expected to be rapid, but will take longer in hardest hit countries
