Health is wealth. That’s something we were taught when we were kids. But as we grow up and are confronted with harsh realities of life around us, we learn an uncomfortable truth. Wealth is health. If you do not have wealth, you cannot afford to have access to good healthcare. While this is true in many developing countries around the world, the situation is particularly acute for Bangladesh.

The health sector in Bangladesh is plagued with layers of problems. On the one hand, we have serious quality of care issues. In many cases we cannot rely on seeing a doctor with the hope of being correctly diagnosed the first time around. We seek second opinions and third opinions. On the other hand, we have a dysfunctional resource allocation system. It is next to impossible to find a reasonably good healthcare facility beyond Dhaka. We have more doctors than nurses. But the most unfortunate part is that for most of us healthcare is just not affordable. 

A predominant flaw in our healthcare system is inadequate budget allocation. The government spends only 3.6 percent of its GDP on health. Our total health expenditure as a percentage of GDP is in fact less than the average total expenditure on health of countries in similar economic conditions. It is also less than the percentage that WHO recommends. Furthermore, the health sector budget is about 6 percent of our total budget, which too is lower than our peers. Consequently, our out-of-pocket expenditure is exceptionally high: 64 percent of the total expenditure on health. Because out-of-pocket spending can be regressive, the system we have does not allow for adequate financial risk or cost sharing mechanisms, and therefore, could lead to extreme financial burdens for many in cases of catastrophic illness and health expenses.

Health costs are a heavy burden for the poor. Most of our reasonably good health facilities are concentrated in Dhaka. An overwhelming majority of the poor live outside Dhaka. They do not have access to good health facilities where they live. It is, moreover, difficult for them to arrange funds for treatment in Dhaka. Even when they manage the funds somehow (often by selling assets or borrowing under unfavourable terms), they face a higher time-cost-visits factor than their wealthier counterparts. In effect, they pay a poverty penalty.

Bangladesh is not, however, sitting idle. Vision 2021 promises a future where all citizens enjoy a quality of life that includes basic health care and adequate nutrition. The National Health Financing Strategy (NHFS) 2012-2032 has been put in place to move the country toward Universal Health Coverage (UHC), setting some aggressive targets, such as halving the out-of-pocket expenditure to 32 percent by 2032.

Shasthyo Suroksha Karmashuchi (SSK) is a government designed health insurance scheme targeting people below the poverty line. However, SSK had a delayed start a year ago and only covers 7,500 households in the first pilot sub-district. Furthermore, early experience indicates difficulties in adoption and utilisation. Since health insurance requires a sufficiently large population base and risk pooling mechanisms, it is unclear if, how or when SSK might succeed.

There are some existing health financing mechanisms that target organisations with large employee bases using a business-to-business (B2B) model. These collectively cover less than 1 percent of the population today. A few new similar schemes are currently in development, but these too rely on the B2B model, some targeting the large RMG sector. However, the incentive for a RMG factory to cover its workers with health insurance is untested at scale. Given the global pressure to continually reduce costs to remain competitive, as well as incurring additional costs for safety compliance measures in the wake of Rana Plaza, it is not clear whether RMG factory owners will be able to justify yet another cost component.

The Nakshikantha Approach

pi STRATEGY has conducted studies in the health financing domain over the last few years. The firm believes that a multi-faceted approach could potentially lead to a sustainable model for innovative health financing – the firm calls this the Nakshikantha approach. This approach weaves several distinct facets into a single product offering – much like the various palettes of a classic Nakshikantha. Two of the most important facets are described below:

The first facet is the introduction of a business-to-consumer (B2C) model. While there is a risk of adverse selection in a B2C model, that risk can be judiciously mitigated if this is implemented at scale using the household as the unit of analysis. There may be some people in a household that require more health care services than others, but it is unlikely that this will be the case for everyone in a household. The poor and the wealthy alike will have the option to choose from the same menu of packages, priced the same, and offering them the same core services (e.g. access to same health facilities, same doctors). The key difference offered for premium packages will be the ‘hoteling’ components of health services. The wealthy would pay for their packages themselves, while the poor would receive subsidies to cover a large part of the cost of their packages.

The second facet of the Nakshikantha approach will take advantage of increased government funding (expected to meet NHFS 2032 goals) using an innovative strategic purchasing mechanism. This would allow paying for a service based on outputs (connected directly to treatment outcome factors and patient satisfaction factors) rather than inputs, as is currently done today. The price for a medical interaction/intervention will be determined in advance for partner health facilities. A patient will choose which facility they visit. Strategic purchasing mechanisms can thus better align the incentives for improved quality of care.

Furthermore, the Nakshikantha approach will incorporate many other facets. An intricately woven IT platform could incorporate electronic health records, digital payments and other technologies.

As Bangladesh continues its journey toward a middle-income country status, diminishing donor support will need to be offset by increasing government and private spending. There are few sectors better placed to provide a higher dividend than investments in health.Within the health sector, solving the health financing conundrum is a critical pre-requisite. The Nakshikantha approach represents a path forward. Perhaps one day we too will be able to tell our grandchildren’health is wealth’ with the same conviction that our grandparents had when they taught us that mantra.

Note: This article was also published in The Daily Star on April 8, 2017.

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