The economics of universal health coverage

Universal Health Coverage

Dr Katharina Hauck, a Health Economist, explains how economics can help to implement universal health coverage in the real world.

Millions of people still have no access at all to health care. Millions more are forced to choose between health care and other daily expenses such as food, clothing and even a home. Globally, over 800 million people incur catastrophic out-of-pocket spending every year, with health care costs consuming at least 10% of their household budgets.

Therefore, this year’s World Health Day focuses on universal health coverage (UHC). The World Health Organization defines UHC as “ensuring that all people can use the promotive, preventive, curative, rehabilitative and palliative health services they need, of sufficient quality to be effective, while also ensuring that the use of these services does not expose the user to financial hardship.”  Many countries have declared their commitment to UHC. But after the political declarations are made, policymakers are left to grapple with a central issue: what services should be made available?

Universal health coverage: from rhetoric to reality

In practice, UHC aims to assure the delivery of a basic package of health services and products free of charge, or at a subsidized fee, to the entire population. Crucial for turning UHC into reality is to define a health benefits package that can be feasibly financed and provided for everyone, given a country’s actual circumstances. The simple accounting requirement that the total cost of the package must not exceed the available funds may seem obvious, but the discrepancy between aspirational health plans and actual financial and other resources is the single most common failing of existing UHC initiatives. The key question therefore is: how can countries define a realistic health benefits package?

What’s in and what’s out?

The first important feature of a health benefits package is that it is explicit: citizens need to be aware of what services are (and, equally important, are not) available, and payers what year-to-year funds are required. The second important feature is consistency and rigour in selecting the health services included in the package, and those that are excluded: a decision on what’s in and what’s out is unavoidable. To ensure that this decision is widely accepted, selection of the package should be based on consistently applied and explicit inclusion criteria. This calls for robust decision-making methodologies, and a comprehensive and consistent assessment of the available evidence.

Cost-effectiveness analysis for defining health benefit packages

Cost-effectiveness analysis (CEA) lies at the centre of most health benefit packages. The principle of CEA is that (subject to a number of important assumptions) healthcare interventions can be ranked on the basis of their incremental costs relative to their incremental benefits, usually measured in terms of expected health gain. This approach prioritizes interventions that generate greatest benefits and includes them in the package in order of decreasing cost-effectiveness until the available budget is exhausted. The CEA principle seeks to maximize ‘value’ secured by the available funds.

Progress towards UHC: success stories

Focusing on value for money of health interventions is an extremely powerful tool for selecting the benefit package. In Sub-Saharan Africa today, of the $16 per capita spent on health by governments themselves, less than a third goes to the most cost-effective interventions. But allocating funds towards the most cost-effective services can make a big difference to population health. India, for example, could reduce deaths by almost 30%, just by choosing the most cost-effective interventions in the benefits package, even without increasing the overall budget for health. There are encouraging success stories.

Japan was one of the first countries to move towards a UHC system in 1961. Individuals who are uninsured are able to participate in a national health insurance programme, which is administered through local governments. In Mexico, Seguro Popular is a landmark government program that was established in 2004 and aimed to guarantee universal access to health services, especially for the most vulnerable populations. By 2012, the program had provided access to a package of comprehensive health services to more than 50 million Mexicans who were previously uninsured. Rwanda has established a national insurance system known as Mutuelle de Santé (Mutual Health), building on previously fragmented community insurance systems. It offers comprehensive preventive, primary, hospital and medicine benefits. In the last decade, coverage has increased to over 90% of the population.

Transparent decision processes informed by robust evidence on cost-effectiveness can help us achieve more with scarce funds and make UHC a reality for all people around the world.

Dr Katharina Hauck (@kdhauck) is a Reader in Health Economics at the Department of Infectious Disease Epidemiology, School of Public Health. 

Further reading: What’s in, What’s out: Designing Benefits for Universal Health Coverage. Amanda Glassman, Ursula Giedion, Peter C. Smith (editors). Center for Global Development, Washington (D.C.), 2017.

Image credit: World Health Organization

2 comments for “The economics of universal health coverage

  1. Very articulate analysis. It is high time we started discussing the technicalities and economics of UHC as part of moving from rhetoric to realties if we must get traction on UHC. African leaders needs to wake-up and smell the coffee!

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