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% GDP spending in UK, G5 countries and OECD upper middle income countries. Why it is important to have adequate % spending.

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This presentation looks at rates of GDP spend on health care, distinguishing between categories of country (i.e. levels of GDP pre capita). It looks at the relationship between rates of spending and moves to universal health coverage, and explores alternative ways of increasing expenditure and making decisions about which services to provide with the money available.

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% GDP spending in UK, G5 countries and OECD upper middle income countries. Why it is important to have adequate % spending.

  1. 1. #OHEMasterclass Adrian Towse Emeritus Director OHE Visiting Professor LSE % GDP spending in UK, G5 countries and OECD upper middle income countries. Why it is important to have adequate % spending. Monash Health Economics Forum 2019 An efficient and sustainable healthcare system in Malaysia : The challenges, lessons and future
  2. 2. Agenda ●Malaysian health care spending relative to other countries ●Drivers for higher health care spending ●Will investment pay off? ●Funding additional public expenditure on health care ●Current landscape in Malaysia – the public private divide ●Options for moving towards more comprehensive UHC? ●Concluding thoughts
  3. 3. Agenda ●Malaysian health care spending relative to other countries ●Drivers for higher health care spending ●Will investment pay off? ●Funding additional public expenditure on health care ●Current landscape in Malaysia – the public private divide ●Options for moving towards more comprehensive UHC?
  4. 4. Source: Solidiance, 2018
  5. 5. Source: Solidiance, 2018
  6. 6. Source: Solidiance, 2018
  7. 7. Source: Solidiance, 2018
  8. 8. Pressures for health spending ●Demand side ●Ageing of the population ●Changing epidemiology as shift to chronic non-communicable disease ●Population preferences for health gain as they get better off: - Income elasticity greater than 1 ●Supply side ●Relative price effects – labour intensive services with a lower underlying productivity growth than that of the economy ●Technological innovation – moving the health production possibility function outwards (or improving efficiency – product or process innovation) ●A mix effect – existing technologies are used on an expanded group of patients
  9. 9. Agenda ●Malaysian health care spending relative to other countries ●Drivers for higher health care spending ●Will investment pay off? ●Funding additional public expenditure on health care ●Current landscape in Malaysia – the public private divide ●Options for moving towards more comprehensive UHC?
  10. 10. New investment in health has a high payback ● There are two effects: ● Impact on economic growth - Human capital - Labour market flexibility - Reduce precautionary savings and health debt - Medical tourism ● The value people attach to being healthy ● Between 2000 and 2011, 24% of full income growth in MLICs resulted from VLYs gained. ● Progressive universalism would yield high health gains per dollar spent. Poor people gain the most in health and financial protection ● Use of WHO “best buy” clinical interventions and other evidence based approaches to priority setting
  11. 11. Making the case for investment ●An understandable degree of scepticism on the part of Ministries of Economy and Finance about the returns on investment in health ●Health policy makers need to understand the perspectives of national economic policy makers, and to frame evidence and structure arguments in a way that is likely to resonate with them. ●Emphasis on the role of evidence e.g. ●Efficiency of the health care system ●Impact on productivity of the economy ●Morbidity and non-market activity
  12. 12. Agenda ●Malaysian health care spending relative to other countries ●Drivers for higher health care spending ●Will investment pay off? ●Funding additional public expenditure on health care ●Current landscape in Malaysia – the public private divide ●Options for moving towards more comprehensive UHC?
  13. 13. Source: Solidiance, 2018
  14. 14. WHO (2018). Public Spending on Health: A Closer Look at Global Trends. WHO/HIS/HFWorking Paper/18.3
  15. 15. Increasing revenues ●Lancet Commission: National governments can curb NCDs and raise significant revenue by ● heavily taxing tobacco and other harmful substances, ●reducing subsidies on items such as fossil fuels. ●World Bank: increase overall government revenue as a share of GDP ●Expand the tax base ●Remove fossil fuel subsidies ●Raise taxes on health damaging products ●Earmarked taxes on non-wage products / activities
  16. 16. Source: Solidiance, 2018 Sugar tax now in Malaysia
  17. 17. Agenda ●Malaysian health care spending relative to other countries ●Drivers for higher health care spending ●Will investment pay off? ●Funding additional public expenditure on health care ●Current landscape in Malaysia – the public private divide ●Options for moving towards more comprehensive UHC?
  18. 18. Making sense of Malaysian public private divide ●Around 4% of GDP split almost 50:50 public and private ●Two separate systems, very little overlap ●Private system is predominantly OOP, no community rated insurance ●Public services more important in the rural areas and amongst poorer families ●One potential way forward is for the government to buy services both from public and private providers – a revamped mySalam B40 insurance scheme? ●Strategic purchasing of this kind allows a shift to debate investment in additional services and priority setting ●Changes in funding flows and payment mechanisms can incentivise provision of priority services
  19. 19. mySalam B40 insurance scheme and related initiatives ●Two new health protection schemes came into effect from 1 March for B40 patients: ●PeKa B40 addressed at B40 patients aged 50 and above, to reduce the burden of NCD by providing free health screenings, medical equipment aid, transport aid and incentives to complete cancer treatment ●mySalam provides lump sum payments for B40 patients 18-55 for 36 critical diseases ●The Selangor state introduced Skim Peduli Sihat, in 2017, which funds provision of basic care for B40 families at private clinics. Providers reimbursed to an annual value of M$700 per family. ●Recipients of mySalam receive one-off payments up to RM8,000, and daily payments as (income replacement in the event of hospitalisation) for up to 14 days at RM50 per day or RM700 per year. ●Insurance and tawakal penetration rate of 30.2 per cent among low-income earners, with the 50.4 per cent rate of Malaysians in higher income categories in 2017 ●This will involve de facto allowing public money to be used to buy services in the private sector ●However, this is (limited) financial protection ●The government has no influence on the services that are provided
  20. 20. Agenda ●Malaysian health care spending relative to other countries ●Drivers for higher health care spending ●Will investment pay off? ●Funding additional public expenditure on health care ●Current landscape in Malaysia – the public private divide ●Options for moving towards more comprehensive UHC?
  21. 21. Making sense of this: Moving to expanded UHC ●South Korea has a single payer UHC scheme with high OOP spending ●Thailand has a multi-payer UHC scheme with low OOP spending ●Employer based social insurance ●Civil service scheme ●Universal coverage (ex “30 Baht”) scheme for everyone else ●India is finally moving towards a federally supported publicly funded UHC scheme ●The challenges in Malaysia are: ●Total separation of public and private provision and use ●No significant pooled private insurance e.g. employer-based ●Need to raise taxes to fund an expansion of publicly funded health care
  22. 22. Concluding thoughts ●Pressure to spend on health care will increase ●And it can be a productive investment with a high economic pay off ●Real terms Government health expenditure needs to rise at a higher rate ●Malaysia is lagging behind other upper MICs in public spending on health ●Raising additional revenues – “sin” taxes are not earmarked taxes for health ● The public – private divide, high dependence on OOP spending needs to change ●The public sector should buy from the private sector ●Moves to national health financing need to be incremental and progressive ●But financial protection should lead to strategic purchasing of services ●Need for an overall strategic vision for national health financing implementation
  23. 23. References ●Cylus et al. (2018). Making the economic case for investing in health systems. What is the evidence that health systems advance economic and fiscal objectives? WHO Observatory ●Malaysia National Health Accounts (MNHA) 2018 ●Report of the WISH Investing in Health Forum (2016). Investing In Health The Economic Case ●Smith (2019) Can a Strong Economic Case Be Made for Investing in the NHS? Office of Health Economics https://www.ohe.org/publications/can-strong-economic-case-be-made-investing-nhs ●Solidiance (2018) The ~USD 320 billion. healthcare challenge in ASEAN ●The Lancet Commission (2013). Global health 2035: a world converging within a generation. Lancet 2013; 382: 1898– 955 ●World Bank Group (2019). High-Performance Health Financing for Universal Health Coverage ●WHO (2018). Public Spending on Health: A Closer Look at Global Trends. WHO/HIS/HFWorking Paper/18.3
  24. 24. To keep up with the latest news and research, subscribe to our blog. OHE’s publications may be downloaded free of charge from our website. ohe.or g OHE Southside 105 Victoria Street London SW1E 6QT United Kingdom Telephone +44 (0)20 77478850 FOLLOW US Toenquire about additional information and analyses, please contact: Adrian Towse atowse@ohe.org

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