“Government needs to promote greater diversity in the financing and delivery of health services. … Regulation can strengthen private insurance markets by improving Incentives for wide coverage and Cost control…. Spending on health should be redirected to more cost-effective programs that do more to help the poor.”
The message sounds familiar, the medium, however, is not Hillary Rodham Clinton but the World Bank’s latest World Development Report, published recently. And the subject is not the $800 billion lavished on the care Of 250 million Americans, but the frugal $170 billion worth of services doled out to the 4.1 billion citizens of the globe’s low and middle Income countries.
The World Bank’s focus is nec P:ssarily on who gets access to penicillin and clean drinking water father than who is eligible for the fruits of modem medical technology like MRI scans and bone marrow transplants. Yet the core economic problems in rationing health Services efficiently without much help from free markets (or moral philosophers) seem remarkably similar.
While very little is spent on health in the poorest two thirds of the world, the report suggests that a little goes a long way. Child mortality has plummeted and life expectancy risen sharply over the last two decades, even in places that are testing humans’ lower limits Of subsistence.
This is modest comfort, however. The probability of a child dying before the age of 51s still 30 times higher in Mozambique than in Singapore. By the World Bank’s broadest measure of health— the portion of the average life lost to disabling illness or premature death—the rich industrial economics are five times healthier than sub-Saharan Africa and three times healthier than India.
Economic growth and education remain the fixes of choice, the main chance for people who are weakened by malnutrition and lacking Knowledge of the rules of Survival in a world seething with disease. But the banks economists also point to the failure of poor countries to squeeze the biggest possible bang from a buck spent on health.
For example, basic treatment of leukemia typically adds just one tenth of a year to an adult’s life at a cost of about $5,000. Shifting the $5,000 to the provision of vitamin A supplements for children could generate 10,000 additional years of healthy life, Or it could mean an extra 1,500 10 5,000 years of life if invested in measles immunization.
By the same token, the payoff from relatively cheap improvements in the environment could be awesome. Keeping human and animal waste out of drinking water would reduce the total burden of disease in poor countries by 10 percent. More surprising, eliminating the smoke inside dwellings from cooking and heating could cut childhood pneumonia by half and reduce the burden of disease by 5 percent.
The World Bank staff estimates that a barebones package of public health services plus clinical care might cost as little as $12 a person in the neediest countries, yet reduce the burden of disease by 25 percent. Total cost: an extra $15 billion a year, a barely noticeable sum in a global economy with purchasing power that exceeds $20 trillion.
All this may seem frustrating, like one of those public service ads that promise to transform your pocket change into enough powdered milk to nourish a thousand Starving infants for a year. If lifesaving is so cheap, what are govemments doing with the billions from charity and foreign aid?
An easy answer is that a good chunk of the money sent to poor Counties is spent on toys for the ruling classes, weapons in particular. The answer emphasized in the World Bank report, one that links the healthcare problems of the richest countries to the poorest, is that it is very hard to deliver any service efficiently without a lot of help from free markets. Third parties that only incidentally benefit from cost-effective outcomes—insurance companies, governments, health delivery bureaucrats —are not likely to make the right decisions.
For example, poor countries generally spend far too much of their healthcare budgets on urban hospitals that offer sophisticated services to a tiny fraction of the population, By no coincidence, much of the subsidies for medical care go to middle and upper income families who have the least moral claim to public resources.
A part of the solution, the World Bank report argues, is to decentralize delivery and force deliverers to compete on cost and health outcomes—in a phrase, lo manage competition, But just as there is no panacea for healthcare reform in America, there is none for the third world. Someone has to make basic choices about who gets what quality of medical care, and that someone is probably government.
Efficient healthcare systems, it seems, may not be able to live with big government. But as a practical matter, they probably cannot live without it.
Article extracted from this publication >> September 17, 1993
