Since the Brazilian Regulatory Agency for Supplementary Health’s (ANS) creation in 2000, health insurance inflation has grown at a much greater pace than general inflation. Indeed, after eighteen years the private health insurance price index was close to double the official inflation index, with its 382% (see here).
The upward course of prices can be interpreted as a response to the problems arising from the escalating costs. Baumol (2012) calls this phenomenon “cost disease”, designating that labor relates differently to production: in the case of the goods, work would be incorporated into the product; in the case of services, labor would be the product being exchanged, making difficult to substitute factors.
The covid-19 pandemic is showing how important universal health systems are. As the virus continues to devastate communities and economies, many governments have started to look at them with different lens. Investing in public health systems should be mandatory, but austerity policies in peripheral countries are still the priority. Moreover, the increasing financialisation of the health sector produces conflicts that constraint the achievement of a truly universal and comprehensive public healthcare. This is what we address in our recent paper, where we argue that lead firms in the provision of healthcare plans seem to have become platforms for the accumulation of wealth by financial investors, a process that is making shareholder value the main guiding principle of firm behaviour.
A good example of such contradictions is Brazil. A universal health system called the Unified Health System (Sistema Único de Saúde, or SUS) was established in the 1988 Constitution. However, it would be misleading to affirm it has provided universal access and comprehensive care: since its inception, SUS faced an inadequate low level of public spending that jeopardized its mission. In the 2000s, the Brazilian government eventually increased public spending in healthcare, but a kind of paradox emerged as it also set up many policies to foster private healthcare and private accumulation in that sector (e.g., health-related tax expenditures).
COVID-19 has exacerbated the gendered impact of care work globally, but lessons can be learned from countries like China that have relied on community organizations for solutions.
The COVID-19 pandemic has revealed a severe care crisis throughout the world. The measures to contain the infection – lockdown, social distancing, quarantine – severely disrupted activities crucial to the basic functioning of society from cooking to cleaning, childcare, elder care and more. The experience of China shows the critical role of the community in providing essential services.
Like in many other countries, women in China assume disproportionately more care responsibilities than men. With the care crisis intensified by the pandemic, women from different socioeconomic backgrounds were all significantly affected. Urban women mostly saw themselves shouldering more household chores when hiring domestic workers or seeking extra help from family members became impossible or difficult during the lockdown. As most female migrant workers are employed in the precarious informal sector, they had to endure job losses and economic hardship, in addition to extra childcare and household chores. Female healthcare professionals risked their health working on the frontline while having to bear the added mental stress of possibly carrying the virus and spreading it to family members.
By May 2020, every African nation had registered cases of COVID-19. By late July, cases had exceeded 844,000. A key factor in Africa’s struggle to mount a response to the pandemic (although not the only one) is that years of debt servicing have eroded states’ capacities to build strong health systems.
Research on crisis and pandemics in different parts of the world, particularly in sub-Saharan Africa (SSA), shows that countries will respond to COVID-19 in two phases – the fiscal expansion phase, which involves a series of stimulus packages, and the fiscal contraction phase, which is characterised by austerity. In the case of COVID-19, these phases will require significant levels of financing. In a region with predominantly low and narrow tax bases, debt and donor aid have become an alternative way for governments to finance state obligations. Currently average African debt-to-GDP is below the 60% (danger) threshold, which is way below the crisis levels of the 1980s and 1990s.
However, the cost of debt has exponentially increased due to low credit ratings translating into poor interest rates. By 2018, 18 SSA countries were at high risk of debt distress and governments made austerity cuts to public services to service their debt obligations. In 2018, 46 low-income countries — most of which are in SSA— were spending more on debt servicing than on healthcare. Annually, SSA countries were spending an average of $70 per capita on healthcare (supplemented with $10 external assistance), in contrast to $442 in China and an average of $3,040 in the EU.Read More »
Unlike other epidemics or pandemics – such as tuberculosis, SARS, MERS or HIV/AIDS – COVID-19 has hit hardest at the world’s wealthiest countries. As of early June 2020, the 37 industrialized countries of the OECD accounted for 59% of all cases and 78% of deaths, even though they constitute less than 18% of the total population affected.
Looking at the pandemic’s effects in another way – using cases and deaths per million population – paints an even starker picture. OECD countries have a prevalence ratio of 2,890 cases per million and a mortality rate of 225 per million, compared with 869 cases and 51 deaths per million in the rest of the world. Furthermore, the case fatality ratio (CFR) – the ratio of deaths to cases – is also higher in the OECD (7.8%) than in the rest of the world (5.9%).
What can explain this phenomenon, the world’s richest countries impacted more than middle-income and poor countries? One explanation is that COVID-19 spreads faster in countries that are more integrated to the globalized economy, as the OECD members certainly are. A recent study found that globalized countries have indeed experienced more cases per population, but less mortality.Read More »
Conventional economics is notorious for having created a highly persuasive analytical toolbox. The challenge of this stream of the profession until the 1960s was to prove the logical possibility that the market could not only coordinate the entire economy, but also keep it stable at that single point of optimum equilibrium. In order to boast the wonders of decentralized market exchange, the theory paradoxically invoked the metaphor of a “benevolent social planner”.
A growing list of circumstances in which markets fail to generate the optimal societal outcome (externalities, coordination failures, and so on) raised the academic premium for sound justifications for avoiding State interventions in the economy. Government failures – it was, and still is, claimed – could be even worse than those of the market.
The theoretical vilification of the State’s performance matched the emerging political philosophy in the early 1980s. Despite the enormous State apparatus created after the Second World War, from 1980s onwards, government functions were gradually reduced to the subordinate role of supporting the private sector. To paraphrase Keynes: neoliberalism won over the West as the Holy Inquisition conquered Spain. Western society surrendered to market dominance, shrinking State capacity despite the achievements of the three decades of postwar Keynesian policies, which generated the highest world growth rates in modern history.
One of the blindsides of the drastic downsizing of the State observed after 1980s is severely limiting its capacity to respond whenever needed. The COVID-19 epidemic made this very clear. Countries that fell for the neoliberal spell faced a flagrant difficulty in organizing an efficient response to a looming healthcare crisis, thus rekindling a debate about the way in which the State operates in society. Read More »
As COVID-19 threatens rice imports from Asia, West Africa has an opportunity to reignite its ambitions of a regional value chain. But this would require coherence in policies and collective action.
As the COVID-19 pandemic reaches African shores, countries are grappling with questions of food security. This seems to confirm a longstanding concern among many countries to reduce their reliance on food imports. Take the example of rice in West Africa. In the Economic Community of West African States (ECOWAS) up to half of the regional rice consumption needs is met through imports. This external reliance is what led ECOWAS countries to agree to a ‘Rice Offensive’ in 2014, to boost production in the region. It is also behind the Nigerian border closures seen last year.
Regional value chains have often failed to take off because national interests trump regional agendas. But at extraordinary times like these, there is a case to give precedence to regional strategies rather than narrowly focusing on national responses.Read More »
Covid-19 has reached the community spread phase. Developed or underdeveloped, rich or poor, all countries are affected by this today. However, they are facing these challenges – shortages in medical supplies and difficulty stopping its spread – in different magnitudes. In an attempt to stop the spread to save lives, Prime Minister Narendra Modi announced a 21-day lockdown, starting from 25th of March. Developing countries across the globe are looking down quickly, after witnessing the helplessness of the US, UK and the rest of Europe – though these are the countries with much stronger healthcare systems and much better availability of doctors. In Italy, doctors are forcedto prioritize whom to save and whom to leave untreated.
India’s healthcare infrastructure is incapable of dealing with this crisis today. Shortages in medical supplies and an inability to provide adequate testing are the major issues. However, the Prime Minister’s announcement to allocate 15,000 crore rupees (USD 2 billion) for building infrastructure can strengthen the fight against coronavirus. Also, state governments are trying to expand facilities to deal with this situation.
The majority of Indians finance their healthcare themselves. About 62 percent of households’ expenditure on healthcare in 2017 was made through out-of-pocket payments. In comparison, the equivalent figures for the European Union (excluding UK) is 22.29 percent and for the USA and UK it is 11 percent and 16 percent, respectively (Table 1). While many patients diagnosed with Covid-19 will need Intensive Care Unit (ICU), there is no clarity from the government regarding who will pay these expenses. Read More »