WHO urges all countries to strengthen health financing so more people can use services

News release

MANILA, 22 November 2010 —Governments worldwide are struggling to pay for health care. As populations get older, as more people suffer chronic diseases, and as new and more expensive treatments appear, health costs soar.

Even in countries where health services have traditionally been accessible and affordable, financing mechanisms are increasingly stretched. In countries that depend heavily on people paying directly for services at the point of delivery, health bills push 100 million people into poverty each year.

This year's World Health Report [1] gives governments practical guidance on ways to finance health care. Taking evidence from all over the world, it shows how all countries, rich and poor, can adjust their health financing mechanisms so more people get the health care they need. It encourages the international community to support low and middle-income countries' efforts to increase health coverage.

"No one in need of health care should have to risk financial ruin as a result," said Dr Margaret Chan, Director General of WHO. "The report sets out a stepwise approach. We encourage every country to act on this and do at least one thing to improve health financing and increase health coverage over the coming year."

"While we all recognise the value of health, sadly there are still millions of people in the Western Pacific Region who are unable to access or afford even the most basic of health care,” said Dr Shin Young-soo, WHO's Regional Director for the Western Pacific. “With the report and guidance provided, we will continue to work with member states on improvements in health accessibility and affordability for our people."

WHO highlights three key areas where change can happen: 1) by raising more funds for health; 2) by raising money more fairly; 3) by spending money more efficiently. These are consistent with the Health Financing Strategy for the Asia Pacific Region (2010-2015), which has universal coverage as its ultimate objective.

Raise more funds for health

In many cases, there is scope for governments to allocate more money for health. Governments in the Western Pacific Region are increasing their commitment to health. Average budget allocations have increased from approximately 10.5% in 2000 to 12.4% in 2007. When endorsing the Regional Health Financing Strategy in 2009, the Member States agreed to allocate at least 4%-5% of GDP on health, predominantly through public funding sources.

Evidence also suggests that more money can be generated through more efficient and effective tax collection. One possible source of additional funding is through tobacco taxation. It is estimated that for countries like the Lao PDR and Viet Nam, a 50% increase in excise tax would represent a 10% increase in total funding for health and a more than 25% increase in government's health budget.

The international community has a key role to play. An average of $44 per capita is required to ensure access to even a small set of quality health services in low income countries. Many struggle to do this. Today, 31 countries spend less than US$ 35 per person on health. Nordic countries are allocating 0.7% of gross domestic product (GDP) to official development assistance, and many other countries are following this model. As long as these countries remain committed to their pledges, three million additional lives could be saved in lower income countries by 2015.

Raise money more fairly

This means removing the key financial barriers to obtaining care. In 2009, countries in the WHO South-East Asia and Western Pacific regions set themselves a target to reduce direct payments to 30%-40% of total health expenditure in order to attain universal health care coverage.

In countries like Japan and Korea, both have managed to ensure universal coverage of health services through a risk-pooling mechanism through prepayment via insurance schemes or taxes or a mix of the two.

In China, two schemes were in place with the aim of providing affordable health services to urban and rural residents by 2020. Through these schemes, the government aims to reduce dependence on direct payments and increase population coverage by formal insurance from 15% in 2003 to 90% by 2011. Policymakers in China are well aware that effective coverage and access is feasible only with substantial reductions of direct payments.

In Cambodia, a health equity fund was introduced to grant fee exemptions to the poor and encourage them to make use of health facilities in both urban and rural settings. It has positive impacts on improving financial access to healthcare. Currently, the Cambodian government is updating its health financing policies to ensure the health system can more rapidly approach universal coverage.

Spend money more effectively.

Smarter spending could increase global health coverage by anything between 20%-40%. The report identifies 10 areas where greater efficiencies are possible. One of these is the purchasing of generic drugs where possible. Another area on effective spending is at the hospitals. Hospital care often absorbs from half to two thirds of total government spending on health. More efficient spending on hospitals can boost productivity by up to 15%.

Member States in WHO’s Western Pacific Region have also pledged to improve their health financing schemes not only by increased investments in health, but also by improving efficiency by rationalizing health expenditure and aid effectiveness for health.

Looking ahead

On 22 November, WHO presents the report to a ministerial conference on health financing [2], hosted by the Government of Germany in Berlin. The organization and its partners will then embark on a programme to help countries review their health financing systems and strategies alongside their national health policies and plans. It will encourage and facilitate exchanges of experiences between countries, and help countries adjust financing systems so that more people get to access the health services they need.

By the end of this year, the WHO Western Pacific Regional Office will organize country-level launches of the World Health Report in China, Lao PDR, Mongolia, the Philippines, and Viet Nam. The launches will kick-start country-specific discussions on health financing to support universal healthcare coverage.

[1] Health Systems Financing: The path to universal coverage, http://www.who.int/whr/2010/en/index.html

[2] Health Systems Financing: Key to Universal Coverage

For more information, please contact: Dr Henk Bekedam, Director, Health Sector Development at tel: +632 5289951 or email: bekedamh@wpro.who.int Dr Dorjsuren Bayarsaikhan, Team Leader, Health Care Financing, at tel: +632 5289808 or email: bayarsaikhand@wpro.who.int

Health Topic