SOCIO-ECONOMIC DETERMINANTS OF THE FUTURE OF HEALTH & HEALTH

FINANCING IN THE CARIBBEAN

HEU, Centre for Health Economics, UWI

Presented at10th Caribbean Conference on Health Financing Initiatives

Turks and Caicos Is.

October 28—30, 2015

KEY MESSAGES

• Demand for and supply management of health care (in relation to changing trends – disease, social & economic)

• Efficiency – how to spend better vs finding more money

• Optimal financing mix – public & private

• Political management of all changes becomes more critical for sustainability

• Find creative ways for enhancing personal responsibility

MAIN ISSUES TO CONSIDER

A. Social & Demographic

a) Population Changesb) Poverty and Inequalityc) Knowledge and Social Rights—culture of free cared) Alternative Care

B. Economic & Fiscal

a) Open Economies/Dependenceb) Economic Growth/Capacityc) Fiscal Space and Debt d) Social Security

C. Political a) International and Regional Pledges on Healthb) Policy prioritisation process vs Health in All policiesc) Managing Change

A. Social & Demographic (1)—Pop. Changes

Issue Key Aspects Health Implications

Aging Population

• Chronic diseases and disability• Support in paying for care

• Mixed care arrangements• Mixed financing arrangements• Emphasise ‘healthy ageing’

Youth Population

• Chronic diseases and trauma• STIs• Affinity to violence

• Specific health programs for this group re: prevention and control

Urbanisa-tion

• Overcrowding• Traffic congestion• Ghettoes and gangs

• Location and spread of health facilities

A. Social & Demographic (2)—Poverty, Rights, Alternative Care

Issue Key Aspects Health ImplicationsPoverty and Inequality

• Poor have all the diseases of ‘rich’ as well as are more prone to infectious diseases.

• Most affected by social and economic constraints

• Health issues have Inter-generational aspects

• Ability to access and pay for care• Solidarity mechanisms in health

financing such as social insurance or tax-funded health services

Knowledge and Social Rights

• Increasing access to health information

• Political awareness of right to health

• Entrenched culture of ‘free care’

• More demanding in access to health services

• Scope to build on ‘knowledge’ thru’ targeted health information and empowerment

• Difficulties in imposing ‘pay for care’

Alternative Care

• Competing even displacing conventional medicine

• Balancing health effectiveness and safety issues

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Aging Demographics: Caribbean Scenario• The Caribbean has one of the fastest growing older populations in the

developing world.

• In the early 1950s:- Persons 0-14 years (35% population) outnumbered 60 years++ (5%) very few people in the Caribbean reached their eightieth birthday

• In 2000:- 10% of the population in some countries was 60 years++ with 2% being 80

years++ highest % found in Puerto Rico (14%), Cuba (14%), Barbados (13%), Neth.

Antilles (10%) lowest found in Haiti and Belize (6%) and the Dominican Republic (7%) Gender Disparity-The majority of older persons are women

Aging Demographics: Caribbean Scenario

• By 2050:- 23% of population will be 60 years ++ with 5% being 80 years++ 33% will be 60 years++ in Barbados, Cuba, Trinidad and Tobago,

Guyana and Surinam with 10% or more being 80++ in Cuba and Barbados

More persons (23.9%) in the 80++ group than other elderly groups (60-64, 65-69 etc).

Persons 60 years++ (23% population) will outnumber those 0-14 years (15%)

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Ageing—Health and Caring

• For persons 60 years++ - Leading causes of morbidity, disability and premature death (DALYs) are CNCDs mostly:-

cardio-vascular diseases diabetes and complications (e.g. renal, neurological, opthalmic) respiratory conditions cancers

• For persons 75 years ++ - Major additional concerns are:- physiological/mobility (stroke, arthritis, disability) sense impairment mental illness (depression, dementia, Parkinson’s disease)

• Model of care in Caribbean is too hospital based and doctor-centred (‘come to us vs coming to you’) with inadequate attention to healthy ageing, primary care, caregiving and caregivers at home

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Aging and Health Financing MechanismsMechanism Main Features Comments

1. Private (market)

i) Self-financing

* Individual and family pay for care from cash or property assets e.g. reverse mortgage

• More responsibility for one’s health and care• But inequitable—variable access to care

depending on one’s asset base

ii) Insurance * Pooling of risks with risk rating to determine package and premiums

• Actuarially fair• But risk levels lead to exclusions from coverage

2. Public

i) Gov’t funds * Tax resources cover spectrum of health care services

• Potential access for all • But fiscal space constraints so variable access

to range and quality of services

ii) Social Security

* Pooling of risks with graduated contributions based on earnings during work years

• Equitable with financial protection in access• But enforcement issues with self-employed

and informal workers

3. Hybrid of 1 and 2

3. Public-private mix

* Gov’t or social security covers essential package of care with private ‘top-up’

• Cost sharing is established • But issues in defining essential package to be

available to all

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NEEDS AND CAPABILITIES OF ELDERLY (‘x’ s indicate magnitude)

Age Category(years)

Health /Medical Social Financial

Needs Capabilities Needs Capabilities Needs Capabilities

Pre-elderly> 50--59

x xxxx x xxxx x xxxx

Young Old>> 60-74

xx xxx xx xxx xx xxx

Middle Old>> 75-84

xxx xx xxx xx xxx xx

Oldest Old> 85++

xxxx x xxxx x xxxx x

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Implications for Organization and Management of Care for Aging Populations

• Emphasis on more appropriate mix of preventive, primary care and community/home-based care with acute (hospitalisation) and other institutional (residential) care.

• More collaboration needed with other sectors to address social, economic and environmental determinants of healthy aging.

• Given resource constraints, countries should seek to establish guidelines for ‘health rights’ and access to essential package of care by elderly including the right to refuse care for terminal conditions.

• Policies should recognise differential needs of elderly males and females, as well as elderly in urban and rural areas.

• With the private sector as a key player in the healthcare arena, Government should seek to establish and monitor quality standards for care, as well as to develop public-private financing options.

B. Economic and Fiscal(1)—Open Economies and Economic Capacity

Issue Key Aspects Health ImplicationsOpen Economies & Globalisation

• Dependence on trade, tourism• Dependence on financial

inflows (grants and loans)• Partners in global trade

agreements

• Susceptible to global market changes which affect revenue for development incl. health

• Graduation so less eligibility for concessionary funds incl. health

• Openness to travel-borne and food-borne infections

Economic Capacity

• Slow economic growth • Constrained foreign exchange

earnings• Persistent double-digit

unemployment

• Negative effects on health financing thru’ limited revenue inflows to governments, as well as earnings by businesses and workers

B. Economic and Fiscal(2)—Fiscal Space and Social Security

Issue Key Aspects Health Implications

Fiscal Space * See next slide for data on Fiscal balance, taxes, external aid, external debt obligations

• Constraints in generating new revenues for health so efficiency in spending must be vital

Social Security • Has some financial and social responsibility for majority of population—workers, dependents, elderly

• Already, deductions range from 5%-22% of earnings (average 12%)

• Best suited to offer/manage health benefits in addition to current social benefits

• New deduction implications for health coverage need consensual actions

Macro, Fiscal & Social Security Space Key Fiscal Space Factors General Trends

i) Real GDP growth Low to moderate growth over last 10 years. Similar outlook for future.

ii) Fiscal balance Negative balances in most countries. Similar outlook for future.

iii) Unemployment/Poverty Range of 4%—25% in most countries. Continuing double digit rates forecasted.

iv) Direct taxes Range 0%—55%. Trend towards stabilization vs new taxes in future. Efficient collections needed.

v) VAT/Sales taxes Range 0%—40%. Some scope for increase in future. Efficient collections needed.

vi) Import duties Range 0%—30%. Trend to stabilisation re: international obligations (CSME,WTO).

vii) Other taxes eg property; sin taxes (0—10%)

Range 0%—15%. Some scope for increases in future. Efficient collections needed.

viii) External Aid (0-10% THE) Range 0%—10% of health funds. Limited scope in future given graduation.

ix) Debt (5-135% GDP) Range 10%—140% GDP. Already heavily indebted so cautious approach to new debt in future.

x) Social security-payroll taxes (8.00—12.00%)

Range 5%—22%. Some scope for increase in some countries in future but business viability concerns.

• Aging Population• Disease Burden--NCDs, Trauma•Technology Upgrades• Inefficiencies• Workers’ Demands• Rising Expectations

Demand for & Cost of Health Services

• Slow Growing Economy• Demand from Other Sectors• Less External Support

Availability of Resources

Health Financing Concerns (1) $

Time Period

Health Financing Concerns (2)

a) Accessibility to necessary services by all Gaps in availability, adequacy and quality of services…so

unmet needs

b) Equity in access and payments Gaps in ease of access and affordability by certain groups

(i.e. unmet needs)...so avoidable inequities in health c) Efficiency and cost control in spending

Some persistent inefficiencies in purchasing, inventory management.. ..so excess costs creating gaps above

* EFFICIENCY IS IMPERATIVE IN SMALL COUNTRIES WITH HIGH UNIT COSTS, LIMITED RESOURCES AND CONTINGENT-DEPENDENT ECONOMIC GROWTH PROSPECTS

LIKELY FISCAL SPACE OPTIONSOPTIONS LIKELIHOOD

a) Raising more revenue from taxes

Depends on whether new sources can be generated e.g. higher taxes on telecoms; banks; travel; remittances; property; ‘sinners’—alcohol; tobacco; fast foods; gambling Emphasis on more efficient collection

b) Reallocation of budget within sectors

Limited scope given debt repayments as priority; education; national security

c) Debt-health swaps (as done for environment)

Some scope on case-by-case basis e.g. Jamaica, Belize, St. Kitts, Grenada

d) More efficient spending Main area for direct health activism

e) Increase role of Social security

Some scope to raise contribution rate and/or ceiling to accommodate NHI or health activities

EFFICIENCY STRATEGIES (1)

DEMAND SIDE:-• More illness prevention, screening, early detection, health

promotion

• Role of primary care team as gatekeepers

• More integrated/coordinated care networks

• Selective use of copayments/user fees

• Coalitions to confront social determinants of poor health—education; police; environment, sports and culture, food and nutrition

EFFICIENCY STRATEGIES (2) SUPPLY SIDE:• Definition and delivery of essential package of services for all incl. early detection, right

diagnosis, timely treatment, evidence-based medicine

• Less hospitalisation, more day surgery and step-down care facilities

• Purchasing efficiencies by financing agencies (MOH’s, insurers)--equipment, supplies, clinical services, pre-authorised specialist care

• Targeted ICT solutions—purchasing, EMR’s, telemedicine

• Regional collaboration in sharing services, centres of excellence, purchasing overseas inputs e.g. care, equipment, pharmaceuticals

• Explore other overseas care options e.g. Costa Rica, Cuba, Caribbean

• Pay health professionals for performance and innovation not capacity

• Rethink the Caribbean Model of Care (e.g. Focus more on home care vs institutional care)

C. Political Influences (1)—International and Regional Pledges

Issue Key Aspects Health Implications

International Pledges

• Universal Access to Health and Universal Health Coverage (WHO)

• UN’s Sustainable Development Goals (2015—2030)

• International Health Regulations• Trade related aspects of

intellectual property rights (TRIPS)

• Need for better mechanisms to implement and monitor pledges

Regional Commitments

• Caribbean Cooperation in Health • Public health cooperation thru’

CARPHA• Port of Spain Declaration on NCDs

• Need for better mechanisms to implement and monitor commitments

C. Political Influences (2)—Policy Prioritisation and Managing Change

Issue Key Aspects Health Implications

Policy Process

• Policy decision making focus on perceived priorities vs attention to health in all policies

• Need for internal consensus among Cabinet members

Managing Change

• Political management of change (esp. stakeholder interests) in move to UAH/UHC, new financing mechanisms, public-private partnerships etc.

• Need for consensus from stakeholders

KEY MESSAGES

• Demand for and supply management of health care (in relation to changing trends – disease, social & economic)

• Efficiency – how to spend better vs finding more money

• Optimal financing mix – public & private

• Political management of all changes becomes more critical for sustainability

• Find creative ways for enhancing personal responsibility

Thank You