Dr. Daniel Lopez-Acuna.Director.Division of Health Systems and Services Development

1. MAJOR TRENDS INHEALTH SECTOR REFORM IN LATIN AMERICA AND THE CARIBBEAN Dr. Daniel Lopez-Acuna.Director.Division of Health Systems and Services Development Pan American Health Organization Regional Office for the Americas of the World Health Organization

2. HEALTH SECTOR REFORM

3. By the mid-1990’s, virtually every Latin American and Caribbean country had either embarked upon health sector reform or was considering doing so.

4. THE NATURE OF HEALTH SECTOR REFORM • Agenda for change in the organization and financing of the health sector operations and its institutional set up • Country specific (no magic bullet, no prescription) • Window of opportunity for health sector development • Axis of health systems development efforts

5. WHY HEALTH SECTOR REFORM IN THE REGION? • Opportunities exist to improve health status • Changing demographic and epidemiological patterns and evolution of technology make necessary to reorient health care delivery models • Inequitable access to basic health services • Segmentation of the health care system • Inefficient allocation of scarce resources • Health Sector insufficiently financed in some countries • Lack of financial sustainability of sectoral operations

6. THE CONTEXT OF HEALTH SECTOR REFORM IN THE REGION OF THE AMERICAS • Macroeconomic reorganization • Redefinition of the role of the State • Democratization and evolution towards more pluralistic societies • Governance hindered by lack of sufficient improvements in social development • Reorientation of Public Expenditure • Modernization of public management

7. MAJOR COMPONENTS OF HEALTH SECTOR REFORM PROCESSES • Strengthening the leadership and regulatory roles of health authorities • Extend coverage of health services • Target disadvantaged population groups • Redefine health care delivery models • Decentralization • Separation of functions of the health system (financing, insurance and services provision)

8. MAJOR COMPONENTS OF HEALTH SECTOR REFORM PROCESSES • Introduction of new forms of payment to health care providers • Diversification in number and nature of public and private health care providers • Redefinition of the benefits package of both social (public) and private insurance schemes • Rationalization of health expenditure • New modalities of health care financing

9. FRAMEWORK FOR MONITORING AND EVALUATION OF HEALTH SECTOR REFORMS

10. THE MANDATE • Item 17 of the Plan of Action of the First Summit of the Americas of Heads of State and Government (Miami 1994) called for: • advancing health sector reform efforts for attaining equitable access to basic health services, and • monitoring progress of health sector reforms in the countries of the Hemisphere asking PAHO/WHO to coordinate efforts to that end.

11. BACKGROUND • Special meeting on Health Sector Reform held in September 1995 in Washington D.C. as part of the Directing Council of PAHO/WHO jointly sponsored with IDB, World Bank, USAID, OAS, ECLAC, UNICEF, UNFPA and Health Canada

12. GUIDING PRINCIPLES OF HEALTH SECTOR REFORM Equity Social Participation Effectiveness and Quality Categories Efficiency Sustainability

13. Public Demand Transformations Description of National Processes System Organization Sectoral Financing Health Sector Reforms External Motivation Provision of Services Impact Evaluation Government Decision Compiled and harmonized data that allow for comparative analyses Monitoring of the Processes Evaluation of the Results HEALTH SECTOR REFORM ANALYSES

14. LAC HEALTH SECTOR REFORM INITIATIVE • Joint USAID and PAHO undertaking of 10.2 million dollars over a period of 5 years for developing regional support mechanisms to Health Sector Reform processes in the countries of the Americas. • Partnership of PAHO, PHR, DDM and FPMD for executing the activities of the initiative

16. MEASURIG REFORM PROGRESS • Monitoring of the processes: • a) Dynamics • b) Contents • Evaluation of results

17. MEASURING REFORM PROGRESS • Dynamics • 1. Design • 2. Negotiation • 3. Implementation • 4. Evaluation

18. MEASURING REFORM PROGRESS • Contents • 1. Legal framework • 2. Right to health (insurance mechanisms) • 3. Steering Role • 4. Separation of functions • 5. Redefinition of roles and decentralization • 6. Social participation and control

19. MEASURING REFORM PROGRESS • Contents (continued) • 7. Finance and expenditure • 8. Services delivery • 9. Vulnerable groups • 10. Health care models • 11. Management models • 12. Human resources • 13. Quality of care

20. DIFFERENCES IN THE DEGREE OF DECENTRALIZATION OF THE VARIOUS FUNCTIONS OF THE HEALTH SYSTEM SYSTEM’S FUNCTIONS LEVELS OF GOVERNMENT Health Authority Financing Insurance and Purchasing Public Health Services Personal Care Delivery Central Governments Intermediate Governments Local Governments

21. MEASURING REFORM PROGRESS • Evaluation of results • 1. Equity • 2. Quality • 3. Efficiency • 4. Financial sustainability • 5. Social participation

22. Preliminary assessment of the impact of Health Sector Reforms • Equity: Only a few health sector reforms seem to be contributing to the reduction of gaps in the coverage of some basic services and programs. In most countries they are not contributing to the reduction of gaps in the distribution of resources.

23. Preliminary assessment of the impact of Health Sector Reforms • Effectiveness and quality: Relatively little progress has been attained in improving the global effectiveness of the system, or in improving adherence to normative aspects of quality of care or user satisfaction with quality. This may be a critical element of the “second generation” of reforms in coming years.

24. Preliminary assessment of the impact of Health Sector Reforms • Efficiency: Analysis suggests that there have been greater gains in productivity and development of purchasing practices than in reorienting resource allocation. For example, there have been no major shifts of resources in terms of channeling of resources to address problems with high externalities, or to increasing the degree of social protection in health.

25. Preliminary assessment of the impact of Health Sector Reforms • Sustainability: There is an attempt to adjust expenditures to the revenues of the system, but very few countries are improving the medium or long term horizons of resource generation for expanding or sustaining the current level of service provision. This situation is aggravated by the high dependency observed in many countries on external financing, and the lack of mechanisms for substituting these flows of resources when they cease.

26. Shortcomings of the reform processes • Driving motivations of reform have been centered on economic factors. • Equity considerations and public health concerns have been relegated to a secondary level. • Quality of care and redefinition of health care delivery models have been marginal.

27. Towards a New Generation of Health Sector Reforms

28. Key Issues • Strengthening the Steering Role of Health Authorities specially the discharge of the Essential Public Health Functions. • Extension of social protection in health. • Reorienting health systems and services with health promotion criteria for increasing the effectiveness of health interventions, promoting quality of care and improving public health practice.

29. EXTENSION OF SOCIAL PROTECTION IN HEALTH

30. Magnitude of the problem: Total population: 475 million 25% of the population lack permanent access to basic health services 120 million people are in this situation at the end of the Century Some figures of importance: Average per capita G.N.P. for LAC: 3289 U.S. Average National Health Expenditure as % of G.N.P.: 7.3% Average per capita N.H.E.: 240 U.S. THE CHALLENGE

31. Poverty in Latin America, 1970-95 (Number of persons, in millions) 160 150 140 130 120 110 100 90 80 60 55 50 45 40 35 30 25 20 Percent of population 1970 1975 1980 1985 1990 1995 Proportion of poor Number of poor Source: IDB, “Latin America after a decade of reforms,” Londoño and Székely (1997).

32. Urban versus Rural Poverty Millions of poor Rural Urban Source: ECLAC, “Panorama Social 1997.”

33. Inequality in Latin America, 1970-95 (Gini coefficient) 57 56 55 54 53 52 51 50 24 22 20 18 16 14 1970 1975 1980 1985 1990 1995 Gini Ratio of incomes, richest/poorest quintiles Source: IDB, “Latin America after a decade of reforms,” Londoño and Székely (1997).

34. COMPOSITION OF NHE BY SUBSECTOR IN LAC COUNTRIES

35. PUBLIC EXPENDITURE IN HEALTH AS % OF GNP

36. PUBLIC EXPENDITURE IN HEALTH AS % OF NHE

37. PER CAPITA PUBLIC EXPENDITURE IN HEALTH (in US Dollars)

38. PER CAPITA SPENDING BY PUBLIC INSTITUTIONS OF HEALTH CARE IN MEXICO 1995, National average = 100 Per capita spending Per capita spending 300 250 200 150 100 50 0 300 250 200 150 100 50 0 533.3 PEMEX IMSS-Solidaridad* IMSS* National average DDF No coverage 99.4 ISSSTE SSA 0 9.3 18.7 22.2 52.8 63.0 100 Percentage of population covered * As the administrative support of IMSS-Solidaridad is provided by IMSS, its cost is recorded in IMSS and excluded from IMSS-Solidaridad. Source: Ministry of Health

39. LESSONS LEARNED • The problem calls for solutions that combine social policy reengineering, health services delivery redesigning, health care financing reforms, and reorganization of the segmented health care systems. • There are investment and or transitional costs that ought to be taken into account given the existing constraints in resources and institutional organization

40. LESSONS LEARNED (continued) • A careful design of the “separation of functions” is necessary, so the primary goal becomes universal coverage rather than insurance and/or services providers market creation or expansion. • A single insurer seems to be more efficient than multiple insurers for pooling risks and avoiding adverse selection

41. LESSONS LEARNED (continued) • The segmented model has to be overhauled, and a “separation of functions” has to take place within a framework of solidarity, so the universal coverage can be attained.

42. LESSONS LEARNED • It will be difficult to make progress without increasing the relatively low levels of public expenditure in health care. • There is a need for finding innovative mechanisms for expanding social insurance schemes that counterbalance the increase in poverty levels, the expanding informal sector and the low levels of taxation as % of the G.N.P.

43. LESSONS LEARNED (continued) • There is little room for extending social protection in health to the excluded at the expense of privates sources of financing • Neither the pure Bismarckian nor the pure Beveridgean models will work: there is a need of a third way that combines elements of both and apply them to the country specific institutional set up

44. LESSONS LEARNED (continued) • The solution to the problem is quite distant and more complex than the notion of a “basic package of interventions” defined with cost-effectiveness criteria.