Does Efficiency Matter in Getting to Universal Health Coverage?

This is a joint post with Robert Marten at the Rockefeller Foundation How do we get to universal health coverage? This was the focus of a panel with William Hsiao, David de Ferranti and Yanzhong Huang at the Council for Foreign Relations in Washington yesterday. Of the many salient points discussed, including defining “universal health coverage”, Hsiao emphasized the importance of improving efficiency. He noted that 20-40% of money in health-care is “wasted” due to inefficient processes, as cited in the World Health Report 2010 (see p. 79) and Hsiao’s own research in China.  Other studies have found similar results.  In the Philippines, Paul Gertler found that providers (i.e. hospitals and doctors) capture rents from social insurance.But why does efficiency matter for achieving universal health coverage?

• Ideally, increasing efficiency makes more resources available to the health sector, which is especially important in today’s constrained economic environment.
• Universal health coverage is an ideal - a “true north” for which health systems should aim. But in practical terms, as a country pushes to “universalize” health care access, coverage and service, it will inevitably face financial constraints and need to prioritize. In many developing countries this priority-setting and allocation process is often conducted on an ad-hoc basis, rather than being based on explicit principles and trade-offs between equity and efficiency (see the CGD working groups on priority-setting institutions and value for money).
• As economies continue to grow and transform, health spending is rising. In terms of financing systems aimed towards universal health coverage, some policymakers believe that “If you build it, the money will come”. Yet one participant noted, “The money is coming, so you better build it right”. One way to help get it "right" is by getting “value for money” and increasing efficiency, by being explicit about who will benefit from any expansion of health coverage and by how much they will each benefit. Or as another participant put it, “getting to” universal health coverage in a country without careful design, though socially popular, may end up as a substantial cash transfer to health-care providers, more so than the intended beneficiaries – the patients and the people.

These technical questions can be esoteric to politicians and bureaucrats who push for health-care reform through political processes. Instead of focusing on health financing reform, will the concept of ‘universal health coverage’ help to overcome such political challenges? This will be the topic of the annual Prince Mahidol Award Conference in Bangkok at the end of January.A previous version of this blog cited provider rents from an insurance scheme in India; this data was incorrect and has since been deleted.