HD Update Quarterly Q3 2009 September 2009

Human Development Quarterly Update Q3 2009 Latest research findings

New articles and books

Research in the news

And on the blogs

Linking research and operations

References

Future issues

Latest research findings

Conditional cash transfer programs—new angles

nsurprisingly, given the recent research effort that underpinned the Policy Research Report on conditional cash transfers (CCTs) [1], three of this quarter’s new working papers address different

aspects of CCTs. Why promoting school enrollment may not result in learning: Cambodia's experience Deon Filmer and Norbert Schady [2] find that although Cambodia’s scholarship program increased attendance by approximately 25 percentage points among the target population (poor households), there was no evidence—18 months after the scholarships were awarded—that recipient children did any better on mathematics and vocabulary tests than they would have in the absence of the program. Self-selection by lower-ability students into school as a result of the program appears to be an important part of the explanation of the lack of the program’s impact on test scores. CCT programs may hit diminishing returns even at quite low levels of cash benefit Deon Filmer and Norbert Schady [3] look at how the size of the transfer in a CCT program affects household behavior. In the same program in Cambodia, they find that larger transfers have a greater impact but that transfers are subject to diminishing returns—even though the large transfers in

the program are equivalent on average to only 3 percent of the consumption of the median recipient household. CCT programs may have limited effects on school attendance of ineligible siblings despite the income effects of the program Chico Ferreira, Deon Filmer and Norbert Schady [4] look at the effects of the Cambodia scholarship program on siblings of the child whose attendance at school is rewarded with a cash payment. They find no effect on school attendance, despite the positive effect on household income of the scholarship program.

The impacts of policies and events on health outcomes Paying hospitals through fee-for-service or diagnosis-related groups rather than through historical budgets has no perceptible impact on mortality amenable to medical care Rodrigo Moreno-Serra and Adam Wagstaff [5] look at the effects of changes to hospital payment systems in the ECA region during the 1990s and early 2000s. They study impacts on a variety of outcomes, including mortality amenable to medical care, health spending, and use of hospital services. They find that—compared to historical budgets—fee-for-service and patient-based-payment methods (mostly variants of diagnosis-related groups) increased national health spending, but had different effects on inpatient admissions and on average length of stay. Of the two methods, only patient-based-payments had any beneficial effect on "amenable mortality", but the effects were not robust. An estimated 30,000-50-000 more infants will die in Africa as a result of the global financial crisis Updated estimates using IMF growth forecasts and microdata from multiple Demographic and Health Surveys led Jed Friedman and Norbert Schady [6] to estimates that are considerably smaller figure than previously reported figures. Most of the additional deaths are likely to be poorer children (born to women in rural areas and lower education levels) and are overwhelmingly female.

U

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

2

HD Update Quarterly Q3 2009 September 2009

Increased exposure to Agent Orange in the Vietnam War led to higher cancer incidence 30 years later Quy-Toan Do [7] finds no significant difference in the prevalence of reported cancer between communes with some degree of exposure and those with none. However, among communes that were exposed, increasing exposure to past military spraying is associated with increasing prevalence of reported cancer in 2001-2002.

Miscellaneous The long-run effects of adult deaths from HIV/AIDS on households in Tanzania are mixed Achyuta Adhvaryu and Kathleen Beegle [8] find prime-age deaths are weakly associated with increases in working hours of older women when the deceased adult was resident in the household. Holding more assets seems to buffer older adults from having to work more after these shocks. Most health indicators are not worse for older adults when a prime-age household member died, although more distant adult deaths are associated with an increased probability of acute illness for the surviving elderly. When do donors trust country systems to manage their aid? Stephen Knack and Nicholas Eubank [9] measure donor trust in country systems in three ways: use of the recipient's public financial management systems, use of direct budget support, and use of program-based approaches. Trust is positively related to: (1) trustworthiness or quality of those systems, (2) tolerance for risk on the part of the donor's constituents, as measured by public support for providing aid, and (3) the donor’s ability to internalize more of the benefits of investing in country systems, as measured by the donor’s share of all aid provided to a recipient.

New articles and books

HIV/AIDS epidemic in Africa—new angles

Education increases knowledge of HIV/AIDS and protective behaviors, but also reduces fidelity and abstinence

amien de Walque [10] looks at the effect of education on HIV status in five African countries. He finds that education is not in fact positively associated with HIV status. Schooling does predict

protective behaviors such as condom use, use of counseling and testing, discussion of AIDS between spouses, and knowledge about HIV/AIDS. But on the negative side, education also predicts a higher level of infidelity and a lower level of abstinence.

The educational attainment of orphans is higher if they are adopted by better-educated households

Damien de Walque [11] uses household survey data from Rwanda, a country where a large proportion of children live in households without their biological parents. His results suggest that the education of the adoptive parents has a positive impact on the children’s schooling. Mothers’ education matters more for girls, while fathers’ education is more important for boys. The results also indicate that placing orphans with their relatives has a positive impact on their schooling.

Schooling and nutrition outcomes of children improve if parents with HIV/AIDS receive antiretroviral therapy

Joshua Graff Zivin, Harsha Thirumurthy and Markus Goldstein [12] examine in Kenya the effects of adult receipt of antiretroviral therapy on the schooling and nutrition outcomes of children in same household. They find that weekly hours of school attendance increase by over 20% within 6 months after treatment is initiated. They also find some weak evidence that young children's short-term nutritional status improves.

Reforming China’s health system

China’s health reforms in the 2000s were a step in the right direction, but further reforms are required

In their new book [13], Adam Wagstaff, Magnus Lindelow, Shiyong Wang, and Shuo Zhang trace the origins of the recent spate of health reforms in China to the unraveling of the health system and the subsequent deterioration in its performance to the market liberalization policies of the early 1980s where the entire economy—including the social sectors—was reorganized on market principles. The book examines and where possible assesses the impacts of recent reforms, and goes on to set out some options for further reforms that build on those already rolled out.

China’s health reforms require more aggressive action on provider payments and intergovernmental fiscal relations

In their review article for a special issue of Health Economics on China’s health system, Adam Wagstaff, Winnie Yip,

D

3

HD Update Quarterly Q3 2009 September 2009

Magnus Lindelow and William Hsiao [14] provide a survey of the empirical research on China’s health system distinguishing between the period before and after the 2003 reforms. They argue that while the recently announced further reforms are a step in the right direction, the hoped-for improvements in China's health system will need more aggressive steps on provider payments and intergovernmental fiscal relations.

Research in the news

New York Times Magazine article on August 19 by Tina Rosenburg entitled “The Daughter Deficit” featured research undertaken by Monica Das Gupta which began when she was a PhD student. Das

Gupta’s latest article on the subject ("Evidence for an Incipient Decline in Numbers of Missing Girls in China and India", published earlier this year in Population and Development Review) concluded that in both countries, child sex ratios are peaking, and in many subnational regions are beginning to trend toward lower, more normal values. A Financial Times article by “Undercover Economist” Tim Harford on August 22 2009 entitled “Why millions of the world's poor still choose to go private” featured research by Jishnu Das and Jeff Hammer on Delhi’s market for primary health care. Das and Hammer devised ingenious ways to test doctors’ knowledge through the use of vignettes, and also had observers watch the same doctors during patient consultations. They conclude that many poor households choose private providers because although private-sector doctors know less, they work harder during the patient consultation; on average, despite their more limited competence, they provide better care than their better-qualified counterparts in the public sector. Das and Hammer’s work was also mentioned in an op-ed by Abhijit Banerjee in the Hindustan Times on September 25. In his September 18 op-ed column in the Canadian online journal Healthcare Policy, “Undisciplined Economist” Robert G. Evans featured Adam Wagstaff’s research on tax-based versus social health insurance (SHI) systems, specifically his latest working paper showing that adoption of the Bismarkian SHI model in the OECD countries results in higher spending but not fewer deaths from causes amenable to medical care. The same paper was featured earlier in the summer in a post on the Italian blog Salute Internazionale. In his article in Foreign Policy on July 31 entitled “Think Again: Africa's Crisis”, Charles Kenny cited research by Deon Filmer

showing the limited impact of school construction on school attendance. A New York Times article by Alan Wheatley on August 3 entitled “The link between health costs and national savings rates” referred to the recently published book “Reforming China's Rural Health System” by Adam Wagstaff and colleagues from the East Asia region, drawing parallels with the US reforms. The book was also mentioned in China Daily and The Irish Times, as well as on Phoenix TV.

And on the blogs

osting on the Marginal Revolution blog, Alex Tabarrok cited research by Halsey Rogers and others on teacher absenteeism. “The problem is not low salaries”, Tabarrok writes. … “The problem is political power,

teacher unions, and poor incentives.” Guest blogger Norbert Schady, in a post on the Bank’s Africa Can End Poverty blog, noted that his recent research with Jed Friedman led to much smaller estimates of the effects of the global financial crisis on infant deaths in Africa than previously circulating. The main reason for the discrepancy is the use by Schady and Friedman of more recent and less pessimistic GDP forecasts published by the IMF. Schady also noted that he and Friedman found larger effects of economic downturns on girls than boys. In another posting on the Africa Can End Poverty blog, chief blogger Shanta Deverajan picked up on larger effect of income on girls’ survival prospects and on the New York Times coverage of Monica Das Gupta’s research on the daughter deficit. He speculated that “son preference” might emerge in Africa. Readers of a post on New York’s conditional cash transfer program on Chris Blattman’s blog were pointed to the Bank’s Policy Research Report on the subject by Norbert Schady and Ariel Fiszbein. Mead Over, writing about the US health reform debate on the Center for Global Development’s Global Health Policy blog, refers to the book “Reforming China's Rural Health System” by Adam Wagstaff and colleagues from the East Asia region. Over notes that both China and the US have dug themselves “into a gridlock on health care policy by encouraging the proliferation of for-profit, fee-for-service medical practice.”

A P

4

HD Update Quarterly Q3 2009 September 2009

Linking research and operations: health reform in China

orld Bank researchers spend between a third and a half of their time directly supporting colleagues elsewhere in the Bank. Their ‘cross-support’ is

varied. It can entail collaborating on a Poverty Assessment or a Public Expenditure Review (PER). It can involve helping prepare a new project, or evaluating an ongoing one. Sometimes the work is a one-off—a chapter in a PER, for example. Often, though, the work involves a sustained engagement over months if not years and the researcher works on multiple activities in a particular sector in a particular country. Cross-support allows Bank researchers to bring their knowledge and skills to Bank operations. But it also enables them to see at first hand the challenges that governments and the Bank face on the ground; this often gives them ideas for research they might not otherwise have had. Adam Wagstaff reflects below on his experience working with the East Asia Human Development (HD) group on health reform in China.

hen in 2003 China’s government asked the World Bank to study its rural health system and propose ideas for reforming it, the request probably seemed much like similar requests the Bank had

received before, and which had resulted in two previous reports. As my Operations colleagues and I got into the assignment, however, it became clear that because China was eager to shift toward policies based on “balanced development”, and because the Bank was being looked to for ideas rather than its money, China was not looking for “just another report”.

China’s health system challenges and the government’s initial response

As we took stock of China’s health sector in late 2003, it was clear that challenges abounded. While economic growth had continued apace, classic indicators like child mortality had improved only marginally—far more slowly than in slower-growing neighboring countries. Health inequalities were apparent, and according to some studies were growing. Out-of-pocket spending on health was large—both as a share of health spending, and relative to per capita income. China’s English-language newspaper was full of stories of financial hardship caused by illness and injury, and of people not getting care who needed it because of the cost.

The collapse of the rural health insurance scheme after the de-collectivization of agriculture was widely blamed for these problems, and the vice-premier’s first task was to set up and pilot a new scheme. Initially, the scheme was limited in scope in terms of both numbers covered and generosity of coverage. Quickly, though, it expanded along both dimensions. The program marked a departure from the past in that central government injected increasingly large earmarked subsidies for the program, with local governments being required to find matching amounts. These subsidies worked to offset the inequalities in fiscal capacity across China’s local governments—inequalities that persist despite a fairly redistributive system of intergovernmental fiscal transfers and revenue-sharing.

Research papers prompted by unanswered policy questions Nobody expected health insurance to fix all China’s health system’s problems. One thing it didn’t do was to reduce the high-powered and perverse financial incentives that China’s health care providers have faced since the 1980s when dwindling revenues forced local governments to allow them to earn revenues from charging patients. The need for providers to generate revenues was exacerbated by the way the government regulated prices—setting the price of basic care below cost and the price of drugs and tests above cost. Providers inevitably tried to shift demand from basic care to drugs and tests, and were apparently quite successful in doing so—the share of health spending accounted for by drugs is higher in China than anywhere else in the world. With such an incentive structure in place, it seemed possible that insurance might not actually reduce out-of-pocket payments. Providers might be encouraged to induce demand for more costly services, and patients might end up receiving care further up the provider ladder—an urban hospital instead of a rural health center. By contrast, policy interventions that blunted the incentives of providers to deliver unnecessary care might do a better job at containing costs and lowering out-of-pocket spending. Two research papers (coauthored with Operations colleagues) tried to test these hypotheses. One looked at the impacts of China’s urban health insurance scheme—that had emerged more or less unscathed from the economic reforms of the 1980s—on the risk of large out-of-pocket spending; it found that insurance coverage did indeed do little to reduce financial risk [15]. A second looked at the impacts of a World Bank project in rural China that focused at the time on reducing the strength of financial incentives facing health

W

W

5

HD Update Quarterly Q3 2009 September 2009

providers at village and township level; this project did indeed seem to dampen out-of-pocket spending [16].

Analytic and advisory activities (AAA) in a fast-moving policy environment As we developed our AAA, the policy landscape was forever changing. The government began rapidly rolling out other new programs: a safety net scheme to help poor households with their health expenses; some limited reorganization and regulation of health providers; and some initiatives and extra spending for the public health system whose weaknesses were exposed by the SARS epidemic of 2003. While these changes were widely welcomed, it was clear that further—and more radical—reforms were needed. We contracted six multinational teams of academics to review different aspects of China’s health system and its reforms in the light of international experience. Each reported at a workshop with an audience from several ministries at national and local level; their reports were transformed into briefing notes. We set up an informal interministerial working group to brainstorm and share ideas about health reform. We collaborated with statisticians from the health ministry on an impact evaluation of the new rural health insurance program; this work resulted in a report in Chinese to the government whose conclusions were accepted and helped shape subsequent modifications to the scheme, as well in as a journal article [17]. Our report—Reforming China's Rural Health System—set out the background to the reforms that started in 2003, reviewing their impacts, and setting out ideas for future reforms that build on the reforms to date. Watching the government assemble ideas was perhaps the most fascinating part of the AAA process. In 2006, the State Council (China’s cabinet) set up a formal interministerial health reform commission (with 16 ministries represented) to draft the government’s health reform plans. In 2007, to help it identify options, it convened an off-the-record consultation at which six organizations—including the World Bank—were invited to present ideas. In 2008, the government published its reform proposal, and invited members of the public to comment online; over 30,000 people took the trouble to do so. I learned subsequently there were two separate teams working around the clock to read through and classify the comments, and pass the promising ones on the drafters of the reform document. The government has now set up an interministerial health reform commission—nationally and locally—that has the task of turning the broad principles of the reform document into practical policies.

References 1. Fiszbein, A., et al., Conditional Cash Transfers: Reducing Present and

Future Poverty. 2009, Washington, D.C.: World Bank. 2. Filmer, D. and N. Schady, School Enrollment, Selection and Test Scores.

2009, Washington, DC: World Bank, Policy Research Working Paper #4998.

3. Filmer, D. and N. Schady, Are there diminishing returns to transfer size in conditional cash transfers ? 2009, Washington, DC: World Bank, Policy Research Working Paper #4999.

4. Ferreira, F.H.G., D. Filmer, and N. Schady, Own and sibling effects of conditional cash transfer programs : theory and evidence from Cambodia. 2009, Washington, DC: World Bank, Policy Research Working Paper #5001.

5. Moreno-Serra, R. and A. Wagstaff, System-wide impacts of hospital payment reforms: evidence from central and eastern Europe and central Asia. 2009, Washington, DC: The World Bank, Policy Research Working Paper #4987.

6. Friedman, J. and N. Schady, How many more infants are likely to die in Africa as a result of the global financial crisis? 2009, Washington, DC: The World Bank, Policy Research Working Paper #5023.

7. Do, Q.-T., Agent orange and the prevalence of cancer among the Vietnamese population 30 years after the end of the Vietnam war. 2009, Washington, DC: The World Bank, Policy Research Working Paper #5041.

8. Adhvaryu, A.R. and K. Beegle, The long-run impacts of adult deaths on older household members in Tanzania. 2009, Washington, DC: The World Bank, Policy Research Working Paper #5037.

9. Knack, S. and N. Eubank, Aid and Trust in Country Systems. 2009, Washington, D.C.: World Bank, Policy Research Working Paper #5005.

10. De Walque, D., Does Education Affect HIV Status? Evidence from five African Countries. World Bank Economic Review, 2009. 23(2): p. 209-233.

11. De Walque, D., Parental Education and Children's Schooling Outcomes: Evidence from Recomposed Families in Rwanda. Economic Development and Cultural Change, 2009. 57(4): p. 723-746.

12. Zivin, J., H. Thirumurthy, and M. Goldstein, AIDS treatment and intrahousehold resource allocation: Children's nutrition and schooling in Kenya. Journal of Public Economics, 2009. 93(7-8): p. 1008-1015.

13. Wagstaff, A., et al., Reforming China's Rural Health System. 2009, Washington, DC: World Bank.

14. Wagstaff, A., et al., China's Health System and Its Reform: A Review of Recent Studies. Health Economics, 2009. 18: p. S7-S23.

15. Wagstaff, A. and M. Lindelow, Can insurance increase financial risk? The curious case of health insurance in China. Journal of Health Economics, 2008. 27(4): p. 990-1005.

16. Wagstaff, A. and S. Yu, Do Health Sector Reforms Have Their Intended Impacts? The World Bank's Health VIII Project in Gansu Province, China. Journal of Health Economics, 2007. 26 3: p. 505-35.

17. Wagstaff, A., et al., Extending health insurance to the rural population : an impact evaluation of China ' s new cooperative medical scheme. Journal of Health Economics, 2009. 28(1): p. 1-19.

Future issues: HD Quarterly Future Issues