Health care financing in Bangladesh perspective

Photo: Zobaer Hossain Sikder

Global spending on health totalled about $2.3 trillion in 1994, or about 9 percent of total global income. High-income countries, those with per capita income above $8,500 in 1994 spent just over $2 trillion, amounting to 89 per cent of total health expenditure, while their populations accounted for 16 per cent of the global population. In USA, for every $7 spent, $1 goes for financing the health sector. Developing countries, with 84 per cent o the world's population, accounted for only 11 per cent of all health spending (Health affair, 1999).

Government's limitations in capacity
Limited resources and administrative capacity coupled with strong underlying needs for services pose serious challenges to governments in the developing world. Even the richest countries of the world are facing limitations in financing the health sector because of the rising medical costs, and are gradually shifting towards alternative financing mechanisms.
WHO recommends that countries should adopt an essential set of interventions with an average cost of $ 30-40 per person. South East Asian countries, on an average, had total health expenditure (THE) of only $12 per person (WHR, 2001).
There is evidence to show that health systems, which spend less than approximately $ 60 per capita find it difficult to deliver a reasonable, minimum range of services.

Health care financing in different countries
Nowadays, different countries are adopting health care delivery systems in which the state does both the financing and provisioning, or shares with the private sector in diverse combinations.
At present, there are several systems of payment in vogue in USA: Medicare, Medicaid, Fee for Service (FFS), Deductibles, Indemnity, Co-payments, Insurance, various combinations of the above, and others.
All these systems are cost sharing and cost pooling methods among the consumer, government, insurance companies and other third party payers, so that treatment expense does not become any single party's burden, thereby maintaining the right quality of the care.
Other systems, like NHS in UK, "National health accounts" in the Philippines, Egypt, Mexico, Colombia, Zambia, and BAMAKO Initiative (Community financing) of Thailand, are measures of cost pooling in health sector that have emerged with success.

Health care financing in developing countries
Low-income countries can only raise revenue equivalent to 20 per cent of their GDP, less than half of the 42 per cent figure in high-income countries. If a basic package of primary care and preventive services were to cost somewhere around $15-20, then a low-income country must devote one-quarter to one-third of its government budget to the health sector.
They are sometimes supplemented by user fees, but these constitute a very small percentage of public revenue. External assistance continues to be a significant revenue source. Thus, ironically, the poorest countries have the highest out-of-pocket spending as a percentage of income.

Bangladesh perspective
In Bangladesh, approximately 35% of the health sector funding of the government is coordinated through a large consortium of donors and aid agencies, headed by the World Bank. The Bank heads a consortium of 10 donors that funds around a third of the health ministry's budget, with over 30 multilateral and bilateral organisations supporting the ministry of health.
Some 500 NGOs operate in the health, nutrition, and population sectors in Bangladesh. Among the best known is the Bangladesh Rural Advancement Committee (BRAC), which reaches around 17 million people.
The Bank's fourth population and health project in Bangladesh, which has disbursed around $780m over six years -- with $190m from the bank, $282m from other donors, and $310m from the Bangladeshi government.
Bangladesh today spends almost $12 per capita in the health sector, of which $4 comes from the public sector. Of the 63% spending from out of pocket, 46% is on drugs from private pharmacies, much of this spending is on partly or wholly ineffective or inappropriate medicines.

Out of pocket payment (OOP) and information payment
A less apparent but important source of private spending is under-the-table, or informal, payments by patients to public-sector providers. The analysis of WHR, 2002, indicated that most countries in South East Asia have more than 50 per cent of the revenue coming from OOP.
Recent studies in thana and district facilities in Bangladesh have found between 20-30 per cent of users reporting payments (CIET, Canada 2000). Payments vary between Taka 40-140 (Taka 10-27 on avervage for all patients). For large medical procedures payment can be considerably higher, Taka 1275 for normal delivery and Taka 4700 for caesarean section (Nahar, 1998).

Concept of resource
pooling in Bangladesh
"Pooling of resources" refers to "the accumulation of health assets on behalf of a population." By pooling of resources, the financial and health risks are spread and transferred among the population. The essence of "health insurance" is the pooling of funds and spreading the risk for illness and financing.
A significant bulk of health care financing in Bangladesh is coming from OOP and informal payment, which indicates that people are willing to pay for better care to supplement the resource-starved and ineffective public health sector.
An implication is that households are forced to pay for health care when their ability to pay is at its lowest limit. Channelling this money into an organised health insurance scheme would reduce payment at time of illness and spread the cost of care across time and individuals.
A limited resource means that much of the allocation is spent on building and staff, with little left over to purchase medicines and other supplies. Based on an income related contribution (average premium of Taka 500 per person annually, or Taka2000-2500 per household), social insurance could contribute up to 8 per cent additional revenue for the sector, and community insurance would extend funding by at least another 4 per cent (HEU, 2001).
A good financing system must envisage contributions based on ability to pay, distribution based on need, reduction of the burden of unexpected catastrophic risks, and must be managed in a way that is accepted as transparent and trustworthy.
There should be progressive taxation for the higher income groups, and universalisation of access to health services by subsidising the poor using both local and outside funds coming both from inside and outside the health sector (in Vietnam, it has been proposed that, in rural areas: The government should end up paying 75 per cent of all health care costs; the community 10 per cent; foreign aid 10 per cent; and user fees 5 per cent. In urban areas: taxes should cover 50-60 per cent of the costs; health insurance 20-25 per cent; fees 10 per cent; and foreign aid 5 per cent).
There is no escape. In one way or another, the government has to increase its health spending. The main challenge will ultimately be to convince people that what is proposed is for them to reduce their "envelope payments," and, instead, pay a clearly identified local health tax with safety net for the poor.
If a strong argument is to be made for these resources to be channelled into the public sector, or other forms of organised financing, society must be convinced that the resources will be used effectively. Without this assurance, it is likely to prove impossible for the policy makers to convince the public that health service resource mobilisation is not "just another tax," and evade it accordingly.

Dr. Zulfiquer Ahmed Amin, a physician, is specialist in Public Health Administration and Health Economics.