Finance for health care: part of a broad canvas

Abstract

The economic crisis of the 1980s led to cuts in both government and household expenditure on health in the Third World. In order to address these issues it is necessary to adopt a macroeconomic approach to the analysis of the health sector; this allows its relationship to the whole economy to be understood. The efficient and equitable utilization of resources is particularly important in times of severe financial constraint.

PIP: Economic conditions in developing countries during the 1980s at the macroeconomic level deteriorated. The effects on health services funding are described. the improvement in economic conditions and whether economic progress can be speeded up are discussed. Management of resources and the challenges for nongovernmental organizations (NGOs) are also given attention. Governments have been encouraged to increase the resources for primary health care. The economic crisis after Alma Ata in 1978 increased external debt and interest payments. The International Monetary Fund and the World Bank imposed financial stabilization and structural adjustment restraints, which meant cuts to the social and health sectors. The issues are whether health has received its fair share and to what extend the economic crisis has decreased household health expenditures. The macroeconomic picture is that in 20 african countries publicly financed health expenditure declined from US $9.50/capita in 1982 to US $8.70 adjusted in 1985. Increases were made in 1987 to US $9.90. Health indicators improved during the 1980s in spite of the government reduction in expenditures because households contributed to the costs of health care. Expenditures on health are beneficial to other sectors. Improvements have been made in the balance of payments and current account deficits have declined. Recovery is evidenced and it is expected that health budgets will be increased to reflect these changes. Immunization of 1-year olds is expected to increase. Most of the 34 countries ranked low on an index of life expectancy, literacy, and gross domestic product/capita will reach 1005 immunization by the year 2000. Access to safe water is also expected to improve. Child mortality rates of 70/1000 live births will be much harder to reach by 2000. AIDS is expected to impact on child mortality. Growth in the health sector should be matched with growth in the economy as a whole. Reallocation of resources should be accomplished only when resources do not contribute to health objectives. Waste needs to be eliminated. Preventive care should be a priority. NGOs should integrate their strategies into overall development aims, share know-how, and continue creative work. More efficient and equitable financing is needed.