IDB warns of financial burden from demand for health care services in Latin America

Washington, June 3, 2014.- Demand for health care services in Latin America will overwhelm the financial capacity of the region’s governments to provide coverage and services in an equitable and effective manner over the next decade, according to a study released by the Inter-American Development Bank (IDB).

Rapid epidemiological transition, marked by a greater prevalence of chronic illnesses and the aging of populations, as well as new health care technologies, are raising medical costs and creating more pressure on public health care spending in Latin American countries.

In 2010, 68 percent of deaths in the region were caused by chronic diseases, which are increasingly affecting productivity in the workplace. A study carried out in Brazil, Mexico, Colombia and Argentina concluded that heart attacks, strokes and diabetes caused accumulated losses of more than $13.5 billion in the period 2006-2015.

However, growth in resources for health care have not kept pace with demand. In the region, spending on health care as a proportion of GDP rose moderately from 3.4 percent to 4.1 percent in the past 15 years. Looking ahead to the fiscal scenarios of the future, it is projected that public health care spending will rise between 1 and 1.5 percentage points of GDP in the next 20 years.

Public resources earmarked for health, as a percentage of GDP, are on average double in the countries of the OECD (7.9 percent of output) compared to Latin America and the Caribbean. “The growing gaps between available financial resources and what it would cost governments to ensure health care services that benefit people the most, and how to do so, is one of the biggest challenges of public policy,” said Ferdinando Regalia, head of the IDB’s Division of Social Protection and Health.

The IDB analyzed Health Benefit Plans in seven countries: Argentina, Chile, Colombia, Honduras, Mexico, Peru and Uruguay. The plans spell out explicitly what services are covered and they feature the advantage that people know their rights. They also allow better financial planning and greater efficiency in management of the system by determining which services will be sought from providers and the human resources and infrastructure required to close inequality gaps.

“The study analyzes what motivated these countries to adopt them, the criteria and processes they used to define and adjust these plans and the challenges they faced in implementing them,” said Úrsula Giedion, the study’s main author.

For the first time, the plans were studied in terms of target population, scope, financial coverage and the public resources earmarked for financing those plans. For instance, Uruguay offers a plan that covers nearly its entire population and covers all levels of services for an average annual cost of $650 per beneficiary, while Honduras has a maternal-infant health care plan for poor, rural people that costs around $25.

The study found that there is a great variety of plans, but concluded that a country’s having a health benefits plan is an important step toward narrowing inequality gaps and advancing toward universal health care coverage, which is a major goal for all the countries of the region.