Tuesday, 09 February 2021 / Published in Blogs

SDG 3: Achieving Equitable Health

It has been a little over five years into the Sustainable Development Goals (SDG) era and we find ourselves in the middle of a global pandemic.

Surely, progress towards achieving the SDGs must have slowed down. However, the pandemic has thrown light on many questions regarding the healthcare infrastructure across the globe. One of the SDG – Goal 3 – promotes healthy lives and well-being for all. Are we close to achieving this goal?

Over these years, global spending on health continues to rise and has contributed to about 10% of GDP in 2018. Such health expenditures are critical for reaching universal health coverage (UHC). But do people have access to quality health services they need without suffering financial hardship? Anyone who is keeping up with the news about COVID-19 knows that this is far from the truth. So, the question is whether global expenditure on healthcare, alone, is a good indicator for measuring progress towards the SDGs or UHC?

Source: https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS

Also Read: Sustainable Financing and The Economics of Sustainability

The global spending on health includes several categories – government expenditure, out-of-pocket payments (OOPs) and sources such as voluntary health insurance, employer-provided health programs, and activities by non-governmental organizations. When access to quality healthcare was deemed as a human right, public healthcare which largely includes government funding, became an important source for achieving UHC. As of today, governments provide an average of 51% of a country’s health spending, while an average of 35% of health spending comes from out-of-pocket expenses. Therefore, the data on out-of-pocket spending is a key indicator towards UHC. But is it a progressive or a regressive indicator? That is to say, does higher percentage of OOPs means equitable or non-equitable access to healthcare? Before we get into this, let’s understand what exactly is OOP?

What is Out-of-Pocket expenditure?

Out-of-pocket payments (OOPs) are defined as direct payments made by individuals to health care providers at the time of health service use. When an individual goes to a clinic for cough and cold, the consultation fee and the medicines, is often paid from the individual’s pocket. One might wonder, what is new about this? Is not spending one’s money normal?

As healthcare systems are developing, costs of healthcare are also rising. This is creating a barrier for many who are unable to afford high-cost healthcare. This is where UHC plays a role – where the aim is to provide affordable, quality healthcare for all. One of the ways it is doing this is funding through taxes, providing social insurance and influencing policies. This is important because at least half of the world’s population is still unable to obtain essential health services, according to Global Monitoring Report from the World Bank and WHO.

Why is OOP controversial?

Each year, large numbers of households are being pushed into poverty because they must pay for health care out of their own pockets. Currently, over 930 million people (around 12% of the world’s population) spend at least 10% of their household budgets on health expenses for themselves, a sick child or other family member. For almost 100 million people these expenses are high enough to push them into extreme poverty, forcing them to survive on just $1.90 or less a day. Economically, if one is not able to pay for healthcare services, their ability to work also diminishes leading to further catastrophic conditions. A high proportion of households experienced catastrophic expenditure and impoverishment following an injury, highlighting need for programs to prevent injuries. Such high expenditure can mean that people must cut down on necessities such as food and clothing or are unable to pay for their children’s education.

To combat such issues, “free healthcare” is introduced to support those who face financial hardships. However, it is argued that free healthcare will create more demand and put pressure on healthcare providers. In poor resource-settings in particular, where health care providers tend to be inadequately paid, user fees constitute a major source of revenue for health workers. This helps to sustain the provision of health services. If health workers are not paid adequately, this can hinder access to healthcare for those who rely on free healthcare.

Source: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lchs-dig-deep-hidden-costs-112414.pdf

Global status on OOP

Health services are improving around the world. However, the lack of financial protection means increasing financial distress for families as they pay for these services out of their own pockets.

Reliance on out-of-pocket payments varies considerably across the globe but there is a very strong correlation between the level of OOPs and catastrophic and impoverishing health expenditures. In the US, Senator Elizabeth Warren stated that, “If we make no changes over the next 10 years, Americans will reach into their pockets and pay out about $11 trillion on insurance premiums, copays, deductibles and uncovered medical expenses.”

However, the situation is very different in middle- and low-income countries, where OOP is 15-25% more than high income countries. Meaning, in these countries, people are spending more on healthcare out of their own pockets. Inequalities in health services are seen not just between, but also within countries: For example, only 17 percent of mothers and children in the poor households in low- and lower-middle income countries received at least six of seven basic maternal and child health interventions, compared to 74 percent for the well to do households.

Why Sustainable Finance in Health Important?

Such high levels of OOPs are leading to catastrophic and impoverishing health expenditures, impacting not just access to health but also food and education. To address this issue, several individuals and organization have introduced innovative mechanisms to make quality healthcare affordable for all. But to truly make an impact, we need to provide greater financing for consumers and greater incentives for healthcare providers to achieve SDG 3.

To know more about sustainable finance and health, join experts in these fields in our webinar series on sustainable finance here.

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