Health financing and social protection in Latin America and the Caribbean

Felicia Knaul Rebecca Wong Hctor Arreola Ornelas Oscar Mndez and the Research in Health Financing Latin American Network (RHF-LANET) July, 2011

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Outline
1. Context,

Origin, Motivation 2. Comparative Analysis 3. Mexico 4. Conclusions

Origin of LAnet
The Impact of Health Financing and Household Health Spending on Financial Equity and Impoverishment: A comparative analysis of 7 Latin American countries (2007)

Mexican Health Foundation Founding funder: International Development Research Center of Canada To study household health spending in a group of Latin American countries and establish a connection between out of pocket spending and health system organization and health financing `07: Mexico, Colombia, Chile, Brazil, Argentina, Peru, Costa Rica `08+: Bolivia, Dominican Republic, Guatemala, Ecuador and Nicaragua thru the LAC Health Observatory with support from the Carlos Slim Health Institute

LANET in financial protection: Participating Countries (11) and Institutions (18+)

Mexico FUNSALUD, Instituto National de Salud Pblica and the LA Health Observatory (OS-LAC). Felicia Knaul, Hector Arreola, Gustavo Nigenda

Argentina - Centro de Estudios de Estado y Sociedad (CEDES). Daniel Maceira

Bolivia - Unidad de Anlisis de Polticas Sociales y Econmicas (UDAPE).
Cecilia Vidal and Werner Valdes

Brazil Fundacin Instituto de Investigaciones Econmicas (FIPE) and University of Sao Paulo (USP). Roberto Iunes and Antonio Campino

Chile -Ibero American Health Economics Foundation, and the University of Chile. Ricardo Bitran and Vito Sciaraffia
Colombia PROESA, Ramiro Guererro, Centro de Estudios sobre Desarrollo Econmico (CEDE) - Los Andes University. Carmn Elisa Flrez and Ursula Giedion Costa Rica - Costa Rica University.
Juan Rafael Vargas, Jorine Muiser

Dominican Republic - Fundacion Plenitud. Magdalena Rathe

Ecuador - Fundacin Accion Social. Ecuador Ruth Lucio and NildhaVillacres Guatemala - Ministerio de Planeacion Social. Guatemala Ricardo Valladares Peru - Grupo de Anlisis para el Desarrollo (GRADE). Martn Valdivia and Universidad del Pacifico, Janice Natalie Seinfeld
Center on Aging and Health, University of Texas.
Rebeca Wong

Atlas of Health Systems in Latin America and the Caribbean

Countries: 17
Argentina, Bolivia, Brazil, Colombia, Costa Rica, Cuba, Chile, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Peru, Dominican Republic, Uruguay and Venezuela

Contents in design:
1. 2. 3. 4. 5. 6. 7. Context Structure and coverage Financing Resources Stewardship Responsiveness Innovations

Global Network for Health Equity: GHNE

EQUITAP, Lanet, SHIELD: a triple South alliance flagship project of IDRC Equity + UHC + Health financing 35 countries, 113+ researchers, 60+ institutions Initiated work at the First Global Symposium on Health Systems Research (Nov 15th) with IDRC catalytic support 3S agenda and proposal to IDRC focussing on:

A second-third generation research agenda Capacity building: students, researchers and PMs Policy translation: evidence-for-advocacy, for decision making and for-action

Financial vulnerability and shocks in health as a global problem

EQUITAP: van Doorslaer E, ODonnell O, RannanEliya RP, Somanathan A, et al., TheLancet, 2006.

The total estimated increase in the poverty headcount was 78 million people, which is almost 3% of the population under study in 11 low to middle-income countries in Asia.

Each year worldwide - the figure is unknown and grossly underestimated:

??WHO: 150 million people suffer financial catastrophe annually while 100 million are pushed below the poverty line as a result of health spending.

12-country Analysis: Challenges

Heterogeneity of the data Different surveys: living conditions; health surveys; surveys of income and expenditure

Recall period of health expenditures Questions concerning health expenditures Measurement of income and total expenditure

Homogenization of key indicators

Definition of the ability to pay (generally for the poor) Comparability of poverty lines Threshold levels for catastrophic Connecting catastrophic health expenditures (CHE) and impoverishing health expenditures (IHE).

Comparative Analysis (Wong et al): Research Strategies

Indicators of catastrophic health expenditures

Poverty line of 1 dollar PPP Threshold: 30% of capacity to pay Any health expenditure greater than zero for poor households is considered CHE (Wagstaff-van Doorslaer, World Bank) Multiple indicatos

Sub-groups to measure the relative risks

Residence (urban/rural) Quintile (Poorest/Richest) Household size (Large/Small) Household composition (with children under 5, with adults over 60, with no children, and with no elderly adults) Insurance status for the household (Insured/Uninsured)

Data from approximately 2006 and is nationally representative other than Chile (urban)

Prevalence of catastrophic health expenditure

(% of household per quarter)
16 12 I1: simple: (OOP/Total exp food)>=30%

8
4 Dom. Rep.. Guatemala Nicaragua Argentina Colombia Ecuador

Mexico

Bolivia

20 15 Indicator WD: OOP/Total exp food>=30% Or PL>Total exp `&` OOP>0

10
5 Guatemala Dom. Rep. Ecuador Bolivia Nicaragua Argentina

Colombia

Mexico

C. Rica

Chile

Peru

Brazil

C. Rica

Chile

Peru

Brazil

Results: Relative Risks of

Catastrophic Health Expenditure (I2)
5

4
3 2 1 0
30 25 20 15 10

Rural/Urban

Poorest quintile/ Richest quintile

5
0

Note: WD indicator

Relative Risks, Catastrophic HE Robustness of the Analysis:

Relative Risks
Rural/ Urban NA

Poor/Rich

Children in the household Adults > 60 years in the household More than 4 members Uninsured households

: ratio is significantly LESS than 1

: 1 < ratio <=3

3 < ratio <=5

ratio >5

Note: WD indicator

Conclusions: regional analysis

5-6 million households encounter CHE each period of analysis (year?) in the 12 countries
(Wagstaff style indicator, with 30%)

Range: <1% in Costa Rica to 21% in Nicaragua The main risks faced by households suffering CHE are: Presence of adults >60 years Lack of health insurance Poverty Residence in rural area Large households with >60 &<5

ALL HEALTH SYSTEM FINANCING COMES FROM HOUSEHOLDS, BUT THERE ARE THREE PAYMENT METHODS: GENERAL TAXES, SOCIAL SECURITY, AND OUT-OF-POCKET (OOP). AS A MEANS OF FINANCING HEALTH, OOP IS INEQUITABLE AND INEFFICIENT. OOP LEADS TO FRAGMENTED RISK, HIGHER COSTS, IMPOVERISHING SPENDING, AND INEQUITY. PAYMENTS ARE AT POINT OF SERVICE, THERE IS NO PREPAYMENT OR RISK-POOLING, AND ABILITY TO PAY IS THE CIELING ON PRICE.
India

80

GDP per capita vs. OOP as a % of health system finance

China El Salvador

Vietnam

60

Congo
Ethiopia

Mexico
LAC

% OOP

40

ParaguayThailand Malaysia Brazil Korea PeruVenezuela Chile Argentina Costa Rica Bolivia Spain Colombia Italy Uruguay Panama

20
France Germany

GDP per capita

OECD

HENCE, MEXICOS POOR RANK IN FAIRNESS OF FINANCING IN THE W.H.O. (2000) EVALUATION OF HEALTH SYSTEM PERFORMANCE.
144

Overall performance Level of health Responsiveness

61 55 53

Fair financing

WHY? : BEFORE THE 2003 REFORM, ACCESS TO INSURANCE AND HEALTH CARE WAS SEVERELY SEGMENTED BY Source: WHO, POPULATION GROUP 2000.

The incidence of absolute and relative impoverishment from health spending is higher among the uninsured and the poor, 2000.
Relative (more than 30% of disposable income): 3.4% Absolute (pushed below the poverty 3.8% line or deeper into poverty): Absolute and/or relative:
1.5 million families per trimester

6.3% 2.2% 9.6% 19.6%

910,000 families

Insured: Uninsured:
Poorest quintile: Quintiles 2,3,4 and 5:

3.1%

In the poorest quintile, 2/3 of families are below the poverty line and spend less than 30% of disposable income, and 22% cross the poverty line due to health spending.

Before the reform, public insurance coverage in Mexico was limited to social security which was highly inequitable and regressive: by state, health needs, and by income.
Epidemiological backlog (mortality rate)
48 a 68 69 a 95

Insurance coverage by quintile

100%

96 a 195
rate X 10,000

60%

55% uninsured
20%

% Covered by Social Security

51 a 70 35 a 50 18 a 49

II

III

IV

TOTAL

Uninsured

Insured

Distribution of federal funds:

2.4 times more for the insured

Source: Authors own estimation using data from the 2000 Census; ENIGH, 2000; and Salud: Mxico 2002, Ssa (2003).

Mexico: Research Questions

1. What is the prevalence of catastrophic and impoverishing health spending? 2. What are the determinants of catastrophic and impoverishing health spending? Population groups in need of protection, policy levers

Endogeneity

Evolution of Catastrophic and Impoverishing Health Spending. Mxico, 1992 to 2008

6 6.0
% of households

4.2 2.8

2.4 3.1

1.0 1992
Impoverishing spending in health: Newly poor + poor from health expenditures>0 (LP one dollar PPP)

2008
Catastrophic and/or impoverishing expenditure: Wagstaff et al. indicator

Catastrophic spending in health: Simple indicator (Den. Spending total-food) at 30%

Determinants: HH catastrophic or impoverishing health expenditure (Mexico, 1992-2008)

marginal effect; bold=significance<10% Control for wealth, SP coverage in the state of residence, HH size, sex and education of HH head.

Catastrophic expenditure k=30%

Impoverishing expenditure 1992-2008

1992-2008

Household insurance Social Security Seguro Popular Composition of Household With >65 years With <5 years With <5 and >65 years Residence rural=1 Household receives remittances n

-0.749 -0.118 0.625 0.799 0.879 0.645 0.182 171,190

0.413 0.352 0.209 0.254 0.369 0.349 0.027 171,190

The incidence of catastrophic spending decreased by >20% among HH w/ Seguro Popular; also overall out of pocket spending especially among the poorest. HHs. King, Gakidou et al. Lancet 2006.

Next Steps: LaNET + GHNE

Analyze financial protection through tracer diseases: cancer (breast), diabetes, HIV/AIDs Link financial and non-financial dimensions of equity and interventions Explore other dimensions of financial vulnerability to shocks in health (Access to care, Loss of income)

GHNE:

Cross-country and regional comparative analysis of impact of financial reforms and UHC Cross-country and cross-region capacity building Advocacy through evidence to contribute to the UN work on UHC

Health financing and social protection in Latin America and the Caribbean
Felicia Knaul and the Research in Health Financing Latin American Network (RHF-LANET)

July, 2011

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Econometric Analysis:
Variables in the model
Residence zone Rural QuintileI Level of poverty QuintileII QuintileIII QuintileIV With seniors

Argentina -0.007 0.033 0.030 0.021 0.014

Brazil 0.009 0.027 0.024 0.018 0.015

Chile Colombia Costa Rica Guatemala 0.030 -0.081 -0.061 -0.006 -0.006 -0.003 -0.003 0.038 -0.117 -0.082 -0.064 -0.029 0.026

Mexico 0.010 -0.013 -0.010 -0.005 -0.004 0.012 0.040 0.050 0.011

Peru 0.028 -0.035 -0.023 -0.016

Ecuador Nicaragua 0.051 -0.015 0.083 -0.059 -0.026 0.016

0.035 0.048

0.016 0.099 0.054 0.032 0.126 0.086

Household composition

With children With seniors and children

0.079 0.039 0.010

0.043 -0.007 0.010 -0.004

0.150 0.209

0.021

0.013

0.125 0.108

Household Size Insurance

1-2 people with 5 + With insurance

LLR Pseudo R2 N

0.026 -0.019 -0.055 -112.6 0.0976 3779 -4787.4 0.0496 13686 -0.016

-0.006 -0.023

-0.018 -0.020

0.025 -0.049 -2347.424 263.77 6882

0.021 -5352 0.0967 29031

-5434.7 -1823.9 -1642.2 0.0686 0.0504 0.0579 48470 4539 16442

-2953.13 -3980.7 -3556.1 0.0731 0.0394 540.06 29468 20577 13581