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Social health insurance in developing countries: breaking the poverty - health care link

Every year, some 100 million people worldwide are forced into poverty by health care costs. Last week, more than 200 participants from 40 countries attending the "International Conference on Social Health Insurance in Developing Countries" in Berlin discussed how people can best be protected against financial shocks deriving from illness. It was the first international meeting organized by the ILO, the World Health Organization (WHO) and the German development agency, Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ), following a 2004 agreement on common activities in the field of social protection. German journalist Anne Sieger reports from Berlin.

Article | 13 December 2005

BERLIN (ILO Online) - A few months ago, Amos and Gloria Chinwuba from Abakpa in Kenya still had a rather comfortable life. The couple was working hard, running their own small shop for building supplies. They did not have much money, but they were able to make a living and send their five children to school. Nobody in the family had to go to bed hungry.

Then Gloria had to undergo an emergency Cesarean section. The costs amounted to US$200, more than their usual income over a four month period. Their small savings were eaten up instantly. Since friends and relatives could not lend them enough money, Amos had to give his motorbike as a deposit to the hospital. Without the bike, however, he was unable to collect material from the wholesaler. His business collapsed, and shortly afterwards, their children could not attend school anymore, because there was no money to pay the fees. Today the family is living on one meal a day.

The story of Amos and Gloria Chinwuba is the story of many people in developing countries. Four out of five people in this world do not have access to affordable health care. The need for urgent medical treatment can ruin a family without notice.

In most developing countries, the statutory health care system covers exclusively formal sector workers and their families. Even though governments may provide basic health care services for informal economy workers and the poor, medication and treatment typically require out-of-pocket payments. It is those payments that push families into poverty: according to the WHO, one third of total health care spending in most low-income countries accounts for out-of-pocket payments.

"Globally, 150 million people are forced to spend nearly half of their income on medical care. They are also the most likely to fall in the illness-poverty trap", explains Assane Diop, Executive Director of the ILO's Social Protection Sector.

A comparative study on the impact of social health protection in South Africa, Senegal and Kenya, undertaken jointly by the ILO, WHO and Organisation for Economic Co-operation and Development (OECD) and presented at the Berlin conference, illustrates the link between social health protection and poverty (Note 1). In all three countries, the social health protection deficit concerns particularly households with low or no income, informal economy workers, women and rural households. Many of these people are pushed below the poverty line or into deepened poverty due to health care costs.

Conference participants in Berlin noted, however, a growing awareness that universal health protection is of national interest. "The world is waking up", confirms Diop. "Mentalities change, but unfortunately there are still governments that consider health and even education as a non-productive investment. The link between access to health care and economic development is undeniable". While a healthy workforce will stimulate economic growth, illness or even premature death caused by epidemics like tuberculosis, malaria and HIV/AIDS have devastating effects on the economy.

Social health insurance for all

In their fight against social exclusion and poverty, the ILO and its partners focus on social health insurance. Besides tax-funded health care as it exists for formal economy workers and their families, social health insurance is the other major concept when it comes to health protection. The latter include informal economy workers and their families as well as the poor. Members of such a scheme contribute according to their financial ability, rather than according to their current health condition. Financial resources are pooled and benefit all members of the system in case of illness.

"There is no universal approach", says Diop. "But we have to make sure that whatever the system, it is built on solidarity. The poorest of the poor need to have access to health care, too. A purely market-oriented approach will not be sufficient. Of course, the decision has to be taken by the government. It will have to subsidize the system." But Diop, former Minister of Health in his home country Senegal, also sees the main constraints: "The general problem in most African countries is that first we have to teach people how to empower themselves. Unfortunately, they often do not trust some of the existing governmental infrastructures".

The potential effect of social health insurance on the UN Millennium Development Goals (MDGs) cannot be overestimated. Universal access to health care services would not only affect the MDGs directly related to health, including goal 4 (reducing child mortality), goal 5 (improving maternal health) and goal 6 (combating HIV/AIDS, malaria and other diseases), but also have a major impact on achieving the first goal of halving poverty by 2015.

"Unfortunately, we will not reach the Millennium Development Goals by 2015. It is too late. But we can stand up to make sure that we will realize them after 2015", comments Diop. "What we need now is action. We need simple, basic, but operational and efficient health systems and implementation strategies. We have analysed everything. We know what the problem is. Now everybody has to understand that health is the primary problem of human beings. And it's a human right", he adds.

Note 1 - Xenia Scheil-Adlung, Johannes Jütting, Guy Carrin, et al., Geneva, What is the impact of social health protection on access to health care, health expenditure and impoverishment? A comparative study of three African countries, a forthcoming ILO EES Extension of Social Security Paper (2006) and Health Systems Financing Discussion Paper, WHO (No.2, 2006).