A Strategic Approach to Financing Health Expenditure in Grenada in A
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2020 A strategic Approach to Financing Health Expenditure in Grenada in a Post Covid-19 Environment By: Curlan Gilchrist ID: UD63980BEC73037 Final Thesis Presented to the Academic Department In fulfilment of Doctorate(PhD) in Economics School of Business and Economic Atlantic International University August 16, 2020 Contents Acknowledgement ................................................................................................................. 3 Abstract................................................................................................................................. 4 Chapter 1: Introduction and Problem Statement .................................................................... 5 Chapter 2: Literature Review ................................................................................................. 6 Chapter 3: Methodology and Approach ................................................................................. 7 Chapter 4: Findings and Analysis .......................................................................................... 8 Economic Performance and Covid-19 Impact ...............................................................................8 Grenada Health System .............................................................................................................. 12 Health Infrastructure .................................................................................................................. 14 Public Private Partnership .......................................................................................................... 15 Legal and Regulatory framework ............................................................................................... 15 Challenges with the health system ............................................................................................... 16 Demographic and Health Situation Analysis ............................................................................... 17 Financing Health Expenditure .................................................................................................... 20 Chapter 5: The way forward to Financing Health Expenditure in Grenada in a Post Covid-19 Environment ....................................................................................................................... 24 Recommendation 1: Farmers’ Cooperative Health Insurance Scheme ........................................ 25 Recommendation 2: Increase the Ministry of Health’s Budget to 12% of Government total recurrent expenditure by raising the Value Added Tax (VAT) by 2% ........................................ 27 Recommendation 3: Introduction of National Health Insurance ................................................. 28 Chapter 6: Conclusion......................................................................................................... 29 Bibliography ....................................................................................................................... 30 2 Acknowledgement I give God thanks and praise for helping me to achieve this important milestone. I will like to express sincere thanks and appreciation to my wife Sharon, and my children: Kurt, Kelsha and Kesia, for their invaluable support throughout the writing of this final thesis. I will also like to say thanks to Afyia Regis who provided excellent service in editing and formatting this document. 3 Abstract This research discovered Out-of-Pocket spending by households in Grenada for health care services peaked to 57% of total health care spending in 2019, the highest among Caribbean islands. The living conditions, especially in the rural communities or parishes were acute with unemployment above 30% for women and young persons. Public Sector wages were sticky with little growth due to a wage freeze insisted and instituted by the Government of Grenada as part of a three-year International Monetary Fund (IMF) Structural Adjustment Program instituted in 2014. This very high level of out-of-pocket spending was deemed unsustainable and considered a factor attributing to poverty. Policies and programs designed to alleviate poverty must embrace measures to reduce high out-of-pocket spending by households for health services. An examination of the macroeconomic framework revealed an economy prior to Covid-19 declared strong by the Government and the IMF with a fiscal primary balance of 6%, Gross Domestic Product (GDP) growth estimated around 3 %, and public debt on a downward trajectory. However, the health system continued to be historically underfunded. The Government of Grenada was spending 8.3% of its budget on the health system, the equivalent to 5 % of GDP. In fact, the Government in its National Sustainable Development Plan (NSDP) 2020 to 2035, admitted that it should be spending in excess of 12 % of its budget if the objective of a healthy population is to be achieved. The underfunding of the health system by the Government of Grenada with an aging population, death rate associated with non-communicable diseases in excess of 80 % which is very high compared to Latin American & Caribbean countries, created a situation where health services provided were inadequate to meet health needs. The health system exhibited several challenges, most of these challenges were exacerbated by the impact of Covid-19 in 2020. There were shortages of skilled and specialized health personnel, stock out of medicine, minimal costing of health services at public facilities, the perception that all services in the public health facilities are free, and no proper and appropriate billing and admissions system established for public health facilities. Based on the findings and analysis of the economy and the health system, the strategy proposed to address the high out-of-pocket spending by households for health care and the underfunding of the health system by the Government of Grenada involved a three prong approach. The Government of Grenada must increase its budget for health by increasing the VAT by 2 %, apply the principles of cooperatives to health insurance by promoting the establishment of farmers health insurance scheme. This should be initiated by the only two current major cooperatives, the Grenada Nutmeg Cooperative Association and the Grenada Cooperative Cocoa Association. Finally, the Government should continue its effort to establish a National Health Insurance Scheme, albeit to begin at the first stage with a set of basic health care services. These three recommendations, if implemented together, will significantly increase Government ability to fund the health system and simultaneously reduce household’s dependency on out-of-pocket money to take care of their health needs. 4 Chapter 1: Introduction and Problem Statement Grenada is 344 square kilometers developing island with a population of 110,000. It is located at Latitude 12.07 degrees north, and longitude 61.40 degrees west makes it the most southern of the Figure 1: Map of Grenada windward islands. The State of Grenada comprise three islands: Grenada, Carriacou, and Petite Martinique. Its topography is characterized by mountainous rainforest, coastal mangroves, lowlands, and oceanic coral rings, and a periodically active volcano. Grenada is a member of the Organization of Eastern Caribbean States (OECS)1 whose main goal is to foster and develop economic and social integration among its members. Over the last 20 years the goal expanded to include the creation of a single financial and economic space where goods, services, people, and capital move freely among its members. Likewise, all OECS countries adopt a common approach to health, the environment, and other critical sectors such as agriculture and tourism. As a member of the OECS, Grenada benefits from the regional procurement of a list of drugs and medication in ways that keep prices stable and supply reliable. All OECS countries are members of a bigger group called the Caribbean Community (CARICOM).2 CARICOM’s mandate is “to contribute, in support of Member States, to the improvement of the quality of life of the People of the Community and the development of an innovative and productive society in partnership with institutions and groups working towards 1 The OECS was created in 1981 and comprise Antigua and Barbuda, St. Kitts and Nevis, Montserrat, Anguilla, British Virgin Islands, Dominica, St. Lucia, St. Vincent and the Grenadines and Grenada. 2 CARICOM was created on 4 July 1973 with the signing of the Treaty of Chaguaramas. The Treaty was later revised in 2002 to allow for the eventual establishment of a single market and a single economy. Members are OECS countries plus Jamaica, Barbados, Guyana, Trinidad &Tobago, Belize, Suriname, Haiti, Bahamas. 5 attaining a people-centered, sustainable and internationally competitive Community” (www.caricom.org/Caricom-Secretariat) . More recently, July 2011, Grenada and other CARICOM members created the Caribbean Public Health Agency (CARPHA).3 Through this Agency, Grenada receives technical assistance to manage communicable and noncommunicable diseases, to be compliant with global health agreements and international health regulations, and the services of its laboratory. Grenada also benefited from the use of CARPHA’s laboratory to conduct all PR-Test for the Corona virus during the first two months of the pandemic impacting the island. Notwithstanding the benefits to health care provided by the OECS and CARICOM, Grenada’s health system remains underfunded resulting in occasional