PHM-Exch> Government Health Financing for All, Not Insurance
Claudio Schuftan
cschuftan at phmovement.org
Wed Aug 2 03:44:31 PDT 2023
From: Jomo from Challenging Development+ <jomodevplus at substack.com>
To achieve universal health coverage, all people need access to public
healthcare. This should be an entitlement for all, regardless of means,
requiring adequate long term sustainable financing.
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Government Health Financing for All, Not Insurance
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achieve universal health coverage, all people need access to public
healthcare. This should be an entitlement for all, regardless of means,
requiring adequate long term sustainable financing.
Jomo
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Aug 2
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*Government Health Financing for All, Not Insurance*
By Jomo Kwame Sundaram
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and Nazihah Noor
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KUALA LUMPUR and BERN, Aug 2 2023 (IPS) - To achieve universal health
coverage, people need public healthcare systems providing fair access to
decent health care. This should be an entitlement for all, regardless of
means, requiring adequate, appropriate and sustainable financing over the
long term.
Appropriate arrangements can help ensure a financially sustainable,
effective and equitable healthcare system. However, insurance-based systems
– both private and social – not only incur unnecessary costs, but also
undermine ensuring health for all.
*Private health insurance*
Voluntary private health insurance (PHI) is not an acceptable option for
both equity and efficiency reasons. Those with lower health risks are less
likely to buy insurance. Paying the same rate will be seen as benefiting
those deemed greater risks, especially the less healthy, often also those
less well off.
Hence, PHI premiums are often ‘risk-rated’. This means those considered
greater risks – e.g., the elderly or those with pre-existing conditions –
face higher premiums. As these are often un-affordable, many cannot afford
coverage.
This is clearly neither cost-effective nor equitable, but also socially
risky, especially with communicable diseases. This typically means poorer
health outcomes compared to spending. Also, various insurance premium rate
arrangements have different distributional consequences.
‘Fee-for-service’ reimbursement encourages unnecessary investigations and
over-treatment. This escalates costs, raising premiums, without
correspondingly improving health. But limiting such ‘abuse’ requires
monitoring, always costly.
Unsurprisingly, many PHI companies use costly ‘managed healthcare’ services
to try to limit rising costs due to such abuses. Thus, Americans spend much
more on health than others, but with surprisingly modest, unequal and
hardly cost-effective health outcomes.
With PHI, much public expenditure is needed to cover the poor and others
who cannot afford the premiums, often also deemed to be at greater risk.
Hence, achieving ‘health-for-all’ in such circumstances would require
costly public subsidization of PHI.
*Social health insurance*
Unlike typically ‘voluntary’ PHI, social health insurance (SHI) is usually
mandatory for entire national populations. Although often espoused with the
best of intentions, SHI is invariably costlier due to its limitations and
problems.
SHI incurs additional costs of health insurance administration to enrol,
collect premiums, ascertain eligibility and benefits, make payments and
minimize abuses. Revenue financed universal coverage need not incur such
costs.
Compared to PHI, SHI seems like a step forward for countries with weak or
non-existent public healthcare arrangements. But like PHI, SHI encourages
over-treatment and cost escalation, as well as costly bureaucratic
insurance administration.
Instead of such abuses inherent to insurance systems, a revenue financed
health systems would incentivize prioritizing the health and wellbeing of
those it is responsible for, thus emphasizing preventive health.
Such a health system contrasts with insurance systems’ emphasis on
minimizing costs for the often unnecessary medical services it
incentivizes, instead of improving the population’s health and wellbeing.
Government subsidies for health insurance, private or social, would
inevitably go to the transnational giants which dominate health insurance
internationally.
*Financing SHI complications*
Hence, SHI involves much more per capita health spending, raising it by
3-4%! But despite being much more costly than revenue-financed systems,
there is no evidence health outcomes are improved by switching to SHI from
government funding.
Germany’s SHI has been more cost-effective than the US with its PHI. But it
is less cost effective than most other economies with revenue-financed
healthcare. Nevertheless, healthcare financing consultants, continue to
recommend versions of SHI, although it is clearly not cost-effective,
appropriate, efficient or equitable.
SHI schemes remain in some rich countries for specific historical reasons,
e.g., Germany’s evolved from its long history of union-provided health
insurance. But more recently, even these economies rely increasingly on
supplementary revenue financing. But again, such hybrid financing does not
improve cost-effectiveness.
As SHI typically involves imposing a flat payroll tax, it discourages
employers from providing proper employment contracts to staff. SHI is
estimated to have reduced formal employment by 8-10% worldwide, and total
employment in rich countries by 5-6%!
It is also difficult and costly to collect SHI premiums from the
self-employed, or from casual, temporary and informal workers not on
regular payrolls. Also, most working people in developing countries are not
in formal employment, with far fewer unionized.
SHI schemes are always difficult to introduce as they would reduce
take-home incomes. In most developing countries, most families cannot
afford such pay-cuts. Hence, government revenue would still be needed to
cover the uncovered to achieve health for all.
Many SHI proposals also recommend earmarking revenue from new ‘health’
taxes collected. Such earmarking creates likely conflicts of interest
reminiscent of justifications for ‘sin taxes’ on addictive narcotics,
smoking, alcohol consumption and gambling.
Will governments perpetuate unhealthy practices and behaviours to secure
more tax revenue? Is there an optimum level of smoking or sugar consumption
to be allowed, even encouraged, to get such earmarked funding?
*Revenue financing*
International evidence shows progressive revenue-funded public health
financing to be much more equitable, cost-effective and beneficial than
SHI. Hence, moving from revenue-financing to SHI would be a step backwards
in terms of both equity and efficiency, or cost-effectiveness.
The late World Bank economist Adam Wagstaff and others have long advocated
tax- or revenue-financed health provisioning due to the significant
additional costs of managing health insurance systems, both private and
social.
Revenue-financed public healthcare financing avoids the many insurance
administration expenses incurred by both PHI and SHI. There will be no more
need for such costly payments for unnecessary medical tests, procedures and
treatments, and bureaucratic processes to manage insurance procedures and
curb abuses, e.g., those associated with ‘moral hazard’.
Better financing and reorganization of preventive health efforts are
needed. Public health programmes requiring mass participation, e.g., breast
or cervical cancer screening, generally have much better outcomes with
revenue-financing compared to SHI.
Better results can be achieved by improving tax-funded healthcare. More
resources need to be deployed to improve preventive and primary healthcare.
Strengthening public health services must include improving staff service
conditions, morale and retention rates.
There is nothing inherently wrong with revenue-financed healthcare.
Underfunding is largely due to political choices and fiscal constraints.
These are typically due to externally imposed political limits.
Instead of dogmatically insisting on SHI, as is typical of health financing
consultants, revenue financing of public healthcare should be reformed,
strengthened and improved by:
* increasing and improving budget allocations.
* eliminating waste and corruption with competitive bidding, etc.
* increasing government revenue with fairer taxation, including wealth,
‘windfall’ and deterrent ‘sin’ taxes, e.g., of tobacco and sugar
consumption.
https://www.ipsnews.net/2023/08/government-health-financing-not-insurance/
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*Related IPS Articles*
· Improving Healthcare for All
<https://link.sbstck.com/redirect/77c5f662-0bea-4df1-955d-2effefe1efef?j=eyJ1IjoiZTQ3OW4ifQ.2kHaht-7g7CvlUMAfaqiWU6MvInhPFIobM-6EK-Q5b0>
· Prioritising Profits Reversed Health Progress
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· Privatised Health Services Worsen Pandemic
<https://link.sbstck.com/redirect/b6b862ff-15b6-4dd3-8fa2-1eb67a70cb94?j=eyJ1IjoiZTQ3OW4ifQ.2kHaht-7g7CvlUMAfaqiWU6MvInhPFIobM-6EK-Q5b0>
· How to Sustainably Finance Universal Health Care
<https://link.sbstck.com/redirect/26b8306d-2794-4f10-96e0-87d2039e3f89?j=eyJ1IjoiZTQ3OW4ifQ.2kHaht-7g7CvlUMAfaqiWU6MvInhPFIobM-6EK-Q5b0>
· Why Some National Health Care Systems Do Better than Others
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· Hospital PPPs Undermine Healthcare
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· PPPs Likely to Undermine Public Health Commitments
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· Build Healthy, Sustainable Food Systems to Fight
Malnutrition
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