Cross-cutting view on health spending

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Cross-cutting View on Health Spending

Motivational examplesforcountries classified as “poor”

Michel ODIKA

With regard to the impact of health spending on health outcomes, countless people areliable to error, while most of them are, in many points, by passion or interest, undertemptation to it. Nevertheless, what we commonly call “truth” emerges more readilyfrom error than from confusion. What is the matter?Disparities and inequalities in terms of health care spending are large across the world.For instance, the world’s richest countries spend more than 16 times the amount spent bythe world’s poorest countries-after adjusting the per capita spendingrates tointernational dollars

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.On the whole, the relation between health and wealth is strongcertainly. But this well-documented relation also needs to be qualified, mainly becausethe link between health spending and health outcomes calls for two preliminarycomments.Firstly, an income per capita of I$ 1,000 in 1975 was associated with a life expectancy of nearly 49 years. Three decades later, life expectancy was almost four years higher atcomparable levels of spending. Clearly this suggests that improved access to prevention,education and expanded health-service networks –among others -, allows for betterhealth outcomes for the same level of wealth.Secondly, there are stillconsiderable disparities in government expenditure on healthacross countries with the same life expectancy at birth. For example, the total amountspent on health is 7 times higher in Norway than in Singapore, although citizens inNorway live as long as those in Singapore (79 years). Most importantly, Namibia spendson health 16 times more than Congo-Brazzaville, whereas inhabitants of both countriesexperience a life expectancy of 54 years. Similarly, Lesotho spends on health far morethan Jamaica, yet its people live 34 years shorter.

Money is like manures, of very little use except it be spread

(Francis BACON, philosopher)

Despite the wide gaps, higher spending on healthcare does not necessarily prolong lives.In 2006, the United States government spent more on health care than many othercountriesin the world: an average of more than $2,500 per person. However, average

1. International dollars are derived by dividing local currency units by an estimate of theirpurchasing power parity compared to the US dollar.

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US life expectancy is 78 years. It should also be noted that many countries achievehigher life expectancy rates with significantly lower spending.With the same life expectancy as the United States, 78 years, the Cuban governmentspending per person on health care is one of the lowest in the world, at $220 in 2006.There are other cases where high life expectancies are achieved with low spending onhealth care. Overall, countries with higher spending generally have longer lifeexpectancy rates, but there are also many countries that perform nearly as well withmuch lower spending.

The first wealth is health

(Ralph Waldo EMERSON,philosopher)

One reason for the discrepancy between spending and longevity is that these numbersare

average

life expectancies and

per-capita

spending rates, which mask inequalities.For example, the US Health and Human Services department found that people withlower incomes and less education tended to die younger. Life expectancy also varied byethnicity. In 1998 life expectancy among white Americans was 76.8 years, while AfricanAmericans lived an average of 70.2 years. Another reason some countries achievehigherlife expectancy with lowerhealth spending is that clean drinking water andpreventive health care can be provided with little spending. If there is near universal safewater and preventive care, life expectancy rates can be the highest possible. In the US,however, approximately 40 million Americans lack basic health insurance, and aretherefore less likely to receive preventive care.In contrast, Cuba has universal healthcare and one of the highest doctor-to-patient ratios in the world.Although Cuba haslimited resources and experience many economic problems, it has made health care apriority. It is not alone. Sri Lanka, China and the Indian State of Kerala arelabelled as"

low-income, high well-being

" countries, which have adopted policies that not onlyreduce inequality but also increase overall health and well-being. The results of thisspecific approach are predominantly translated on the ground into increased lifeexpectancy at birth.

The real tragedy of the poor is the poverty of their aspirations

(Adam SMITH, economist)

When dealing with health issues, much money does not necessarily extend human lives.The biggest challenges, then, lies not so much inmobilizing large amounts of cash as infocusing the flows of financial resources on what is known to be cost-effective. In otherwords, the question is not how much, but how, for what and for whom money is spent.Particularly in countries where the envelope for health is small, every dollar allocated

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