World Health Forum World Health Forum A quarterly record of ideas, arguments, and experiences contributed by health professionals the world over. Individual issues, which may feature as many as 30 communications, are edited to reflect the latest and best thinking about public health policy and practice around the world. Priority is given to practical information that can bring the processes of health thinking and planning closer to real conditions in the field. Published since 1980, the Forum is now firmly established as a leading source of advice and stimulation. Quarterly, with four issues of approximately 1 00 pages each; separate editions in Arabic, Chinese, English, French, Russian, and Spanish 1987 subscription (Vol. 8): Sw.fr. 50.- I US $27.50 For further information, write to Distribution and Sales, World Health Organization, 1211 Geneva 27, Switzerland. ISBN 92 4 156103 3 © World Health Organization, Geneva, 1987 Health care - lNho pays? Reprinted from World Health Forum Foreword H. Mahler . 3 Introduction 4 Part 1 : Economic perspectives and principles 5 Improving cost-effectiveness in health care Brian Abel-Smith . 6 An economist looks at health strategy J. Brunet-Jailly ....... 9 Doctors must learn economics Paul Beeson . 10 Making the most of scarce resources B. Abel-Smith & A. Leiserson ..... 12 Part 2: Issues in the financing of health services 23 Good intentions are not enough E. Tarimo ...................... 24 What are the financial resources for "Health 2000" 7 Lee M. Howard . 30 Paying for health services in developing countries: a call for realism David de Ferranti . 37 Sharing the costs of health care . 44 Funding health for all- is insurance the answer? Brian Abel-Smith . 55 Discussion: D. Banerji; Ramsis A. Gomaa; Beatrice Majnoni d'lntignano; James Midgley; Guido Miranda Gutierrez; Gerd Muhr; Milton I. Roemer; W. Cezary Wlodarczyk . 64 Part 3: · 'Em~i~ic•l eviden~e on the economics of Health for All 85 Counting the cost of primary health care Rotlert N. Grosse & Demetrius J. Pless~s . 86 PrH:nary health care for less than a dollar a year Kai;ong'o Project Team ............. 91 Pot~tia! and limitations of community financing Wayn~Stinson ................ 96 Rural heaith"~!tvices: towards a new strategy? U.N. Jajoo, 0. P. Gupta, & A. P. Jain ......... 99 Primary health care in a Senegalese town: how the local people took part M. Jancloes, B. Seck, L. Van de Velden, & B. Ndiaye . 102 Health care costs out of control : the experience of Switzerland JOrg H. Sommer . 106 Discussion: Brian Abel-Smith; Jan E. Blanpain; Pierre Gilliand; Bengt Jonsson; Frans F. H. Rutten; Detlef Schwefel .................... 112 Health care - who pays? This collection of reprints from World Health Forum is reproduced in support of the Technical Discussions, Fortieth World Health Assembly, May 1987, at the request of the office for Health-for-All Strategy Coordination. The contribution of Mr Andrew Crease, Division of Strengthening of Health Services, is gratefully acknowledged. The World Health Organization is grateful to the following for permitting World Health Forum to draw on material published by them : International Social Security Association, Geneva, Switzerland; Perspectives in biology and medicine; National Center for Health Services Research, USA; American Public Health Association; Medecine tropicale. Forevvord Ten years ago the World Health Assembly launched a new initiative for worldwide health development, popularly known as Health for All by the Year 2000. To reach that target a new approach to health and health care is required, in order to ensure a more equitable distribution of health resources and to lessen the gap between the health "haves" and "have-nots". At the outset. the need was recognized to rationalize the use of existing resources and to generate and mobilize additional ones. Improving people's health is both a sound economic investment and a highly justified ethical goal. It can be achieved even with financial limitations, provided that clearly defined lines of action are pursued with determination by communities and all levels of government. To make progress towards the attainment of health for all, certain critical issues regarding the financing of health plans and the best deployment of resources have to be clarified. This selection of articles from World Health Forum presents a number of views and experiences concerned with financial support to national health-for-all strategies. The articles illustrate the points to be considered as well as the difficulties in finding solutions and making appropriate decisions. They indicate that the collective commitment of all concerned is required in order to expand economic support for achieving greater equity in health. Individuals, families, communities, the private sector, and nongovernmental organizations in addition to governments must all be fully involved. Economic partnership in health has to be reinforced and applied to meet the challenge of health for all. The task is huge, but the potential rewards for humanity are even greater. H. Mahler, M.D. Director-General Introduction This collection of articles from World Health Forum, 1980-86, reflects the growing concern with economic and financial aspects of health care. Rising costs, combined with limited government budgets for health, have compelled policy-makers to focus on resource issues. Progress towards health for all will depend, in most countries, on the generation of new sources of financing, on some reallocation of existing resources, and on an increase in cost-consciousness at all levels. The perspective common to all these articles is the recognition of scarcity of funds and resources, and the consequent need to make careful choices in order to avoid waste. A number of analytical tools, of which cost-benefit analysis and cost-effectiveness analysis are perhaps the best known in the health field, have been developed so that choices can be made in a consistent and explicit fashion. These methods do not make the choices. Policy-makers, managers, providers and users of health care must make the choices on the basis of several factors including economic considerations. This approach to decision-making promotes realistic housekeeping since health economics is not simply a set of tools, or a collection of jargon, or even a language: it is a way of coping rationally with scarcity-of making the best use of scarce resources. The articles are grouped into three broad themes. First, articles dealing with the perspective and principles of economics as applied to health and health care; second, those concerned with financing and cost control issues; and last, those presenting empirical analysis based on a variety of country experiences. A brief introductory comment precedes each section. The articles are diverse in subject matter, country focus, and in length, and should not be taken as representative of the balance of concerns in health economics more generally. Health economics is predominantly an empirical activity. There is little treatment in these contributions of budget management, the determinants of demand for health care, resource allocation mechanisms, manpower mix, and health status measurement in relation to economics. Nevertheless, this selection of articles illustrates that many alternative ways of achieving health for all exist; although documentation and analysis of the economics of health for all are still in infancy, well-conceived primary health care strategies can satisfy both the requirements of economic efficiency and the needs for greater social equity. Part 1 : Economic perspectives and principles The impact of medical decision-making on health sector costs is a theme common to each of the four articles in this section. Abel-Smith's article on cost-effectiveness offers several examples of cost pressures resulting from health care providers' control over resources, and the author makes a strong argument for greater cost awareness by both consumers and providers. Beeson's "Point of View" is essentially similar, making the argument that economic principles have a place in the medical curriculum. Brunet-Jailly challenges complacency about the linkages between health spending and health status, arguing that expansion of medical services will, on existing evidence, only benefit physicians and the medical industry-a point echoed in Beeson's note. The importance to economists, as well as to epidemiologists, of establishing firmer measures of the effects of health care on health status is made clear. The condensed book by Abel-Smith & Leiserson offers a synoptic account of the role of health in the process of economic development and provides an illustrative example of health sector expenditure analysis and its role in planning. It also identifies the major alternative mechanisms for financing health services and introduces cost-benefit and cost-effectiveness analysis as means of identifying economically rational policies. Perhaps the message that is most apparent from these readings is that economic decisions are most commonly made in the health sector by clinicians, who frequently have little knowledge of their cost consequences and little incentive to avoid expensive diagnostic and therapeutic options. In such circumstances, and with health service users in a weak position to assess their needs for care, waste is inevitable. Articles in Parts 2 and 3 outline strategies to control and improve the situation. World Health Forum, 5: 88-90 (1984) Health Economics Brian Abel-Smith