The impact of the economic crisis on health and health care in Latin America and the Caribbean.
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Biomedical subjects
Publications and source records attributed to P Musgrove.
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Household budget data from surveys in six Latin American countries, 1966-75, are used to estimate income elasticities of private health care spending. For ten cities in five countries the elasticity is constant at 1.5; for metropolitan, other urban, and rural areas of Brazil it is constant at 1.17. The Brazilian data also show 30 percent higher spending in small than in large cities, and 50 percent higher in the countryside. These results are consistent with supposing that private care is a luxury compared to public care, and that more is spent on the former when the latter is not available. Geographic differences may be exaggerated by differences in payment mechanisms, since reported out-of-pocket expenditure is not net of public reimbursement. Different components of spending such as drugs and hospitalization show very different behavior from the total.
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The more health care is socialized, the more cost-effectiveness is an appropriate criterion for expenditure. Utility-maximizing individuals, facing divisibility of health care purchases and declining marginal health gains, and complete information about probable health improvements, should buy health care according to its cost-effectiveness. Absent these features, individual health spending will not be cost-effective; and in any case, differences in personal utilities and risk aversion will not lead to the same ranking of health care interventions for everyone. Private insurance frees consumers from concern for cost, which undermines cost-effectiveness, but lets them emphasize effectiveness, which favors value for money. This is most important for costly and cost-effective interventions, especially for poor people. Cost-effectiveness is more appropriate and easier to achieve under second-party insurance. More complete socialization of health care, via public finance, can yield greater efficiency by making insurance compulsory. Cost-effectiveness is also more attractive when taxpayers subsidize others' care: needs (effectiveness) take precedence over wants (utility). The gain in effectiveness may be greater, and the welfare loss from Pareto non-optimality smaller, in poor countries than in rich ones.
This article compares the challenges of health systems in Latin America and the experience in Europe. The framework is the analysis of four functions: a) to generate resources; b) to produce activities; c) to finance, and d) to exercise stewardship. It is at this level where actors can influence health system responsiveness. Five challenges are identified in Latin America: a) to extend (prepayment and solidarity) financial protection; b) to stabilise that protection for crisis times; c) to equilibrate resources in accordance to capacity for financing services; d) to increase efficiency (technical and of placement) to produce services, and e) to improve the stewardship function in public and private sectors (the most important and difficult challenge Latin-American systems have nowadays). The experience of reform in Europe is analysed, showing: a) experiences about financial protection in Beveridge and Bismarck systems; b) stability in crisis times, recently confirm (West) and with important obstacles (East); c) efforts to equilibrate hospital beds and health care professionals, combining regulation and incentives; d) increase of efficiency in services production, with more express prioritisation, empowering patients, decentralising management and with market incentives, and e) improvement of stewardship with better (not less, sometimes even more) regulation. Three areas of European experience stand out: a) to combine solidarity with financial sustainability; b) to introduce market incentives in a measured way, but maintaining a clear stewardship role for the state, and c) to adopt innovations in organising and producing services. In spite of methodological difficulties, convergence of challenges and adopted solutions justify this analysis, but learning must be seen in each national context. A future article will analyse lessons offered by reform in Latin-American systems for European reforms.
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The cost-effectiveness of a health intervention is an estimate of the relation between what it costs to be provided, and the improvement in health which results from such intervention. Health may improve because the incidence of illness or injury is reduced, because death is avoided or delayed, or because the duration or severity of disability is limited. The calculation of this health benefit combines objective factors, such as the age at incidence and whether or not the outcome is death, with subjective factors such as the severity of disability, the judgement as to the value of life lived at different ages, and the rate at which the future is discounted. The construction and interpretation of the estimate are explained. Also, the paper examines whether the concept of cost-effectiveness is consistent with ethical norms such as equity, and concludes that they are not in conflict. Finally, it addresses the question of how to incorporate cost-effectiveness into a health sector reform, and possible ways to implement it.