GTZ-ILO-WHO-Consortium on Social Health Protection in Developing Countries

Social Protection in Health

It is estimated, that every year, more than 150 million individuals in 44 million households face financial catastrophe as a direct result of having to pay for health care. About 25 million households or more than 100 million individuals are pushed into poverty by the need to pay for services.

A country’s health financing system is a key determinant of population health and well-being. The question that remains of utmost importance is, therefore, how national health systems can ensure universal coverage that is defined as access to key promotive, preventive, curative and rehabilitative health interventions for all at an affordable cost.

What is meant by social protection in health?

Extension of social protection in health is the key strategy to reduce financial barriers to access health care and moving towards universal coverage (i.e. universal health protection). Social protection in health comprises a variety of financing mechanisms. Besides tax-funded health financing, social health insurance in a broad sense is one important option for countries to ensure social protection in health thereby contributing to universal coverage. Community-based and employer schemes are complementing options. Within each of these broad categories identified in terms of financing sources lies a range of options for organizing arrangements for pooling funds and purchasing services. Further options lie in mixed arrangements that use these different sources of funds in an explicitly complementary manner.

Irrespective of the financing mechanisms employed, social protection in health involves a shift towards enhanced risk-sharing and risk-pooling, i.e. increasing the share of prepayment in total health expenditure and reducing the reliance on out-of-pocket payments. The strategy also involves subsidies and cross subsidies within or between risk-pools.

What are the biggest payoffs?

Social protection in health not only improves the health status of people, but also directly contributes to the ambitious goal of halving poverty by 2015 as it protects people from the impoverishing effects of the direct and most of the indirect financial costs of illness. Better health of the population increases the productivity of the labour force, thus protecting and promoting their income generation. At a macroeconomic level social protection in health bears a potential to foster economic growth via three channels: Firstly, by reducing inequalities and promoting a better overall health status, it enhances human capital formation, thereby increasing overall economic productivity. Secondly, by preventing sickness-related income variations, social protection in health stabilizes internal demand and may subsequently lead to higher consumption levels and accumulation of assets. Thirdly, it contributes to social cohesion and social peace, which are prerequisites for sustainable economic growth.

Can developing countries invest in social protection in health?

Some basic social protection in health is possible and affordable in any country, but it requires a strong political will. Combining contribution-based financing with tax-financed subsidies enables the coverage of population groups or specific epidemiological necessities. A mix of financing methods could share the burden of health care expenditures among a broader tax base while also promoting a greater potential for cross-subsidy by having contributors and non-contributors in the same pool.

However, specifically in low-income countries, domestic financial resources might not be sufficient to finance approaches to include the poor. Depending on country-specific needs, external funds can assist in financing measures of social protection in health. All external funds should be provided in a predictable way and ensure longer term support.

What is needed for a viable social protection in health strategy?

Realistic options and scenarios have to be developed within the particular macroeconomic, socio-cultural and political context of a country. A number of factors determine the speed and form of transition: the political will, the effectiveness of government stewardship, the institutional and legal framework, the relative acceptance of the values and concepts of equity and solidarity in society, the population’s confidence in government and its institutions, the health care infrastructure as well as the availability of skilled administrative, medical and nursing personnel to facilitate the effective implementation of a nationwide system of social health protection.