Monday, 13 July 2015

Health-Spending-and-Inequality: India, China, Russia, and Indonesia in Comparative Perspective

Health-Spending-and-Inequality: India, China, Russia, and Indonesia in Comparative Perspective

In recent years, the emerging economies of China, India, Russia, and Indonesia have sought to increase healthcare spending and introduce legislation that improves both access to and the overall quality of healthcare. In each of these nations, political leaders have come to realize an imminent link between improved healthcare and sustainable economic growth, peace, and prosperity. Increased healthcare spending is also believed to be associated with an overall reduction in inequality, such as in the areas of income, consumption, gender, geography, and health. This is due to the additional income gained from improved access to public health services, better health, longer working hours, and in some instances financial protection through national health insurance programs. Testing the empirical validity of these linkages has received scant attention in the emerging nations, both within governments as well as the policy and scholarly community.

This report seeks to fill in this lacuna by exploring the extent to which increased healthcare spending in India, China, Russia, and Indonesia is associated with a reduction in inequality. In this report, inequality is defined as the broader differences between the rich and poor in social, economic, and educational wellbeing; differences between the rich and poor in the areas of income and consumption; differences between women and men in access to healthcare; inter-state and within-state differences in economic development, healthcare infrastructure and human resources (e.g., doctors and nurses); and differences between the rich and poor in financial protection from out-of-pocket (OOP) expenditures (i.e., periodic individual expenses for health prevention and treatment services, such as co- payment fees, fees for exams and medical procedures) and catastrophic expenses (e.g., a high amount of personal expenses for - often sudden - healthcare treatments) through targeted health insurance programs for the poor.

This report finds that government spending for public health and publically-funded national health insurance, though different in the level and sources of financing, has been a positive factor associated with a gradual reduction in inequality. While government spending for health insurance has helped to reduce inequality, it is important to emphasize that health insurance spending has been limited in its ability to ensure complete coverage for the poor, in turn requiring a reform of insurance programs in order to ensure that the poor do not have to contribute financially to the system. Indeed, because national health insurance programs often entail contractual coverage through private insurers and co-payments, the poor often experience ongoing out-of-pocket expenses and/or catastrophic expenses that in many instances forces them into greater poverty, or essentially costs them out of insurance coverage and healthcare altogether.

However, it is important to emphasize that India, China, Russia, and Indonesia have varied in the timing and extent of reductions in inequality. In India and China, evidence suggests that increased spending for the public health system and publically-funded national health insurance programs has improved income and consumption among the poor, thus closing the gap between the rich and poor in income and consumption levels, especially in rural areas. In Indonesia, despite low levels of central government spending and increased inequality throughout the 1990s up through the mid-2000s, recently spending for the public health system as well as a 100% publically funded national health insurance program targeting the poor has increased considerably and has revealed a positive association with improved income and consumption patterns among the poor. In Russia, this positive association between spending and inequality has yet to arise, due mainly to insufficient financial commitments. Furthermore, the government has recently planned to reduce healthcare spending, which could widen general inequality patterns all the more. These differences in outcomes are attributed to differences in political interests and incentives, where India, China, and Indonesia’s governments have realized that public health and publically-funded national health insurance spending is vital for individual prosperity, productivity, and economic growth, even more so in the case of Indonesia with the emergence of direct presidential elections, effective social health movements, pressures and incentives for continued spending. In Russia, in contrast, the political leadership has not held the same view and political incentives, in turn leading to a decline in financial and political commitment to public spending in health.

Several challenges nevertheless remain. First, with respect to publically-funded national health insurance programs providing financial protection for the poor, out-of- pocket (OOP) and catastrophic expenses continue to increase in India, China, and Russia. This is mainly the result of these governments’ lack of attention to the monitoring and regulation of corrupt medical practices, such as the prescription of unnecessary medication and examinations, lack of outreach to the poor who are eligible for insurance benefits, as well as these programs’ incomplete coverage of all inpatient and outpatient services. Conversely, Indonesia’s government has achieved these endeavors, in turn resulting in a reduction in OOP and catastrophic expenses among the poor. Second, this study suggests that not only the amount of funding matters but also the institutional modalities through which this funding is located, with some geographic areas doing better than others, such as urban governments versus rural. Finally, while women’s access to health has improved due to the increased availability of public health services and publically-funded national health insurance programs, ongoing discrimination and lack of attention to women’s healthcare needs has impeded their ability to benefit from these programs.

Because of these challenges, this study concludes that while increased central government spending for public health systems and publically-funded national health insurance programs is necessary for helping reduce inequality, more funding needs to be allocated for improved inter-governmental coordination for policy implementation, investments into infrastructure and human resources, government regulation of hospital practices, and government outreach to the poor and women to ensure that they receive the healthcare benefits they are entitled to.

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