Health Care in Developing Nations

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Effect of delayed reimbursement on utilization of medical services

December 19, 2011 in Health Care in Developing Nations, Health Insurance, Optimal Ins (Theory) | No comments

A recent paper by Hai Zhong (2011) finds that health insurance that provides immediate reimbursement for health care services significantly increases the likelihood of patients seeking outpatient treatment in China compared to reimbursement beneficiaries with a delay. China isn’t the only country where insurance companies provide delayed reimbursement. In fact, in France patients pay the full cost of physician visits up front and only later are reimbursed 70 percent of the cost.

Why would the delayed reimbursement make a difference? I can think of three reasons.

  1. Liquidity Constraints.  Some individuals may not be able to afford the payment.  Poor individuals may literally not have the capital to pay for these services up front.  Getting loans from formal institutions (e.g., banks) or informal ones (e.g., friends and family) may be costly either in terms of interest of obligations to family and friends.  Even if an individual is rich, acquiring extra money may be costly (e.g., trip to ATM, ATM fees, interest on credit card).
  2. Probability of Non-Payment.  Although may policies are written where payment is assured, in practice reimbursement rates will not be 100 percent.  For instance, individuals could fail to submit the correct forms for reimbursement, they could move addresses, or the patient could die.  In addition, patients may have some uncertainty surrounding the benefits covered and thus they may not be 100% sure that they will receive reimbursement.  Beneficiaries may not trust their insurance plan; they may assume it is trying to cheat them and thus with some non-zero probability the beneficiary will not get paid.
  3. Reflection of value.  Even if a patient is rich and payment probabilities are 100%, the patient may still be less likely to use the service if they don’t need it if they realize the true cost.  Alternatively, patients who realize a service is valuable may also be more likely to use it.
Source:

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Why did the people of Nigeria reject the polio vaccine?

January 12, 2010 in Health Care in Developing Nations, Vaccinations | 1 comment

From a letter in Health Affairs:

In 1996 Pfizer came to Kano to administer a test of the drug Trovan for a meningitis outbreak. One hundred children were given Trovan, and another hundred were given chloramphenicol, a drug approved by the World Health Organization (WHO).  Of the 200 children, eleven died due to Trovan and low dosages of chloramphenicol, and many others suffered injuries (paralysis, deafness, blindness, brain damage, liver damage, and joint disease) from Trovan. The U.S. Food
and Drug Administration (FDA) approved Trovan for adults in 1997 but severely restricted its use in 1999. Europe banned it outright.

In 2000 a Nigerian report exposed the negative outcomes from this drug trial; in Kano there were street demonstrations and demands for reform. Thirty families sued Pfizer in 2001, and in 2007 the Nigerian and Kano State governments also sued for damages. In February 2009 there was an out-of-court settlement
for a reported $45 million.

This incidentwas on everyone’s mind when WHO personnel showed up in Kano with an American-made vaccine for polio eradication…There was a political dimension to this problem, but people were wary of any medicine from the United States.  When Muslim religious leaders stated that the vaccine would sterilize young girls—a terrible outcome like that of Trovan—the program was “boycotted.”

  • Alan Frishman, Hobart and Wm. Smith Colleges, Geneva, New York

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Urinalysis in Nepal

December 4, 2009 in Health Care in Developing Nations | 1 comment

In The Healing of America, T.R. Reid discusses some ‘interesting’ urinalysis techniques practiced by Dr. Tenzin in Nepal.  

“When they do urinalysis up at Khunde [a Western-style clinic in Nepal], all the do is stick a slip of paper into a sample,” he said.  ”But that can’t be enough.  I just don’t think it is possible to diagnose a medical problem and propose a course of treatment without tasting the urine.  Certainly I wouldn’t begin a diagnosis of your shoulder until I had tasted your urine.  It tells so much about a patient’s health status.”

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Paying poor people to get vaccinated

June 11, 2009 in Health Care in Developing Nations, Public Policy, Vaccinations | No comments

Conditional Cash Transfer (CCT) programs have become very popular among development economists.  This programs pay poor families to have their children attend school and/or get vaccinated.  Some of the larger programs include Bolsa Família in Brazil and Oportunidades in Mexico.  

Should economists support CCTs that pay the poor to get vaccinated?  This depends on 2 factors: 1) are these program effective and 2) what are the unintended consequences of implementing CCT.  Let us review both issues.

CCT program effectiveness

Barham and Maluccio (2009) review some of the studies on CCTs and vaccination rates.

  • Mexico.  ”Barham et al. (2007) examine the effect of the Mexican CCT program, Oportunidades, in rural areas using data from a randomized experiment…They find small average program effects, on the order of 3 percentage points, and argue that this is due to high coverage rates (above 90%) before the program. They also find…larger effects for those children whose mothers were less educated or who lived further away from a health facility.”
  • Honduras. “Morris et al. (2004) examine the impact of a conditional voucher program in rural Honduras, also using a randomized experiment. They find small significant increases for the first dose of DPT and no effect for MCV, but do not investigate DPT3 or sub-population effects.”
  • Nicaragua. Barham and Maluccio (2009) investigate the Red de Protección Social (RPS) CCT which began in 2000.  They find that ”the program led to large increases in vaccination coverage…Effects were particularly large for those sub-populations that are traditionally harder to reach children who live further away from a health facility or whose mothers are less educated. In terms of achieving eradication, on-time vaccination coverage in the treatment group was close to or greater than 95% for BCG, OPV3 and DPT3 by 2002, whereas it remained below 90% for the country as a whole for OPV3 and DPT3.”

Overall, it does seem that paying individuals does increase vaccination rates.

Unintended Consequences

Below is a list of some of the unintended consequences of CCTs:

  • Weakening the formal sector and stifling tax revenues.  Usually, only poor individuals are eligible for these conditional cash transfers.  This program structure gives poor individuals an incentive to either underreport income or to avoid participating in the formal sector workforce.
  • Using CCTs for political means.  Politicians may vary the CCT by municipality to get votes.  Populist candidates will advocate raising the level of the cash transfer to attract the votes of the poor.  
  • Corruption.  Whenever government officials are handing out cash, one has to worry that some portion of program funds land in the pockets of program administrators.  
  • Weakening of the social contract.  Many individuals may get vaccines to protect their children, but also to protect the health of one’s neighbor.  Gneezy and Rustichini (2000) found that fining parents who are late to pick up their children from school actually increased tardiness.  Similarly, the long term effect of paying people to get vaccines may reduce citizen’s motivation to get their children vaccinate in the absence of payment.
  • Effect on Government Credibility in the cash of a deadly vaccine.  Earlier this month, I blogged about how the rush to produce a flu vaccine in 1976 actually lead to dozens of deaths.  If the government uses a CCT to convince individuals to take an unsafe vaccine, the political backlash will be overwhelming.  Poor citizens may lose faith in a number of other well-intentioned government initiatives.

Conclusion

So what do you think?  Are conditional cash payments to increase vaccination coverage a good strategy?

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AIDS Crowds-Out

May 27, 2009 in Contagious Disease, Health Care in Developing Nations | 1 comment

Case and Paxson (2009):

“We document the impact of the AIDS crisis on non-AIDS related health services in fourteen sub-Saharan African countries…Regions of countries that have light AIDS burdens have witnessed small or no declines in health care, using the measures noted above, while those regions currently shouldering the heaviest burdens have seen the largest erosion in treatment for pregnant women and children.“

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Cuban Exports: Sugar, Cigars…and Cancer drugs?

March 26, 2009 in Health Care in Developing Nations, International Health Care Systems, Pharmaceuticals | 3 comments

Cuba is well known for its high quality cigars and sugar production, but is less well-known for its production of high quality pharmaceuticals.  According to MSNBC, “With more than 7,000 scientists dedicated to researching new drugs, Cuba has one of the most sophisticated biotech industries in the developing world. Last year the country earned $350 million from exporting 180 different medicines.”  After Ronald Regean reinstated the Cuban trade embargo in 1982, Cuba had to rely on its own biotech industry to produce drugs, since it could not import them directly from the U.S.  Thus spawned the Cuban biotech industry.

The latest news out of Havana claims that Cuba researchers have a new discovery.  According to news reports from Havana, a Cuban Research Institute has just patented a promising lung cancer drug.  The drug is called CimaVax EGF and in clinical trials it has been shown to increase life expectancy in lung cancer patients by 4-5 months.  Researchers claim that those who use CimaVax EGF “…breathe easier, experience less fatigue, less pain and increased appetite. It is administered in conjunction with conventional treatments of chemo and radiotherapy.”

When you think of Cuba, images of  Fidel Castro and Cohiba may come to mind.  But soon, you may have to think of Cuba as the home of live-saving lung cancer drugs.

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Flushed

November 21, 2008 in Books, Health Care in Developing Nations | 1 comment

I just finished reading an interesting book on plumbing.  I can just see that I lost half my readers with that last sentence.  How can plumbing be interesting?

It turns out that if you are interested in health, you must be interested in plumbing.  Disposing of human waste is one of the biggest health problems, especially for individuals living in cramped urban areas.  In Flushed: How the plumber Saved Civilization, W. Hodding Carter takes the reader on an enjoyable, not-too-serious journey through wonderful world of plumbing.  This book is not written by an expert, but what is lacking in in-depth reporting is made up for with personal experiences and lighthearted commentary.  Mr. Carter gives the reader interesting historical information, technical details on sewage, and describes his tourist trips to visit plumbing systems of the past and present from around the world.  Even included are Mr. Carter’s own attempts at fixing the plumbing system in his house and his eventual purchase of a toilet with a heated seat [I am told by my brother that this is popular in Japan].

One of the most interesting anecdotes relates Mr. Carter’s trip to India to visit Sulabh International.  India lacks the wastewater treatment infrastructure to keep its waterways clean.

“As a result, India’s produce teems with bacteria and infectious diseases.  The country has an infant mortality rate of sixty deaths in a thousand births and two million Indian children die every year of diseases due in part to poor sewage disposal.  

Sewage is the scourge of India”

Sulabh International is an NGO who’s goal is to improve the sanitation and human waste disposal across India.  The NGO has developed a flush toilet which uses little water and where human waste is organically compounded to later be used for fertilizer.

After you have a glass of wine with dinner and hear nature’s call, be thankful for modern plumbing.

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Obama likes condoms

November 10, 2008 in Health Care in Developing Nations | No comments

The Think Progress Wonk Room says that President-elect Obama will reverse the Bush-era rule that NGOs must refrain from promoting family planning measures if they wish to receive federal funding:

“…While the policy was “purportedly designed to reduce abortion by limiting a woman’s access to abortion services, and to ensure that U.S. funding for family planning services overseas is completely separate from abortion activities,” in actuality the rule has denied “many NGOs access to in-kind donations of the very contraceptives that can prevent recourse to abortions”

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Olympic Post IV: Pauly on Health Insurance in India and China

August 21, 2008 in Health Care in Developing Nations, Health Insurance, International Health Care Systems | Permalink

In the July/August 2008 edition of Health Affairs, health economist Mark Pauly discuss his opinions with respect to the evolution of health insurance in India and China. He notes that in both countries, rising incomes has lead to increased demand for medical care, especially in urban areas. Despite the increased demand for medical care, there has not been nearly as much an increase in health insurance coverage. Out-of-pocket payments as a portion of total health care spending are 80% in India and 60% in China.

This has lead to calls by many politicians to increase “access to care” by increasing health insurance coverage rates. Pauly, cautions that mandating generous health insurance coverage may not be ideal:

“The problem with insurance that ‘improves access’ to care is that such additional use of care will almost surely raise average spending on care and, therefore, the premium that an unsubsidized insurer would have to charge…using regulation to push access and equity that makes insurance seem like a bad buy to its middle-class customers will be undesirable.”

If legislating a more generous insurance benefit package will reduce demand for health insurance, one solution is to have the government provide health insurance for all its citizens. This will increase equity, but could lead to other undesirable outcomes such as rent-seeking behavior, and politically determined medical care decisions. Further, using taxes to fund the public health insurance system could increase “black market” activity. That is,

“Using taxes as a vehicle to make insurance compulsory runs the risk of driving measurable and taxable income underground for people who expect to pay more in taxes from public goods than they will get.”

Dr. Pauly reminds us, that there is no easy way to solve the health care needs facings the citizens of the world’s two largest countries: India and China.

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The success (or corruption) of Microfinance

July 2, 2008 in Economics - General, Health Care in Developing Nations | Permalink

This blog has repeatedly reported on the success of microfinance organizations such as Nobel-prize-winner Muhammad Yunus’ Grameen Bank and ACCIÓN (see 26 Mar 07 and 26 May 06 posts). Up to this point, the organizations who have worked to make loans to the world’s poor have been nonprofit organizations. Now, however, The Economist reports (“Doing good…“) that CompartamosBanco is a private for-profit business who is aiming to make money making loans to the poor.

Having for-profit businesses service loans shows that microfinance is expanding. The profits from these loans can be used to offer more and more loans to the the world’s poor. However, for-profit firms do charge high interest rates. Interest rates at CompartamosBanco are currently 79%. These figures are so high because it costs $152 to service the average $450 loan.

While Muhammad Yunus is somewhat troubled by the advent of for-profit microfinance, ACCIÓN has partnered with CompartamosBanco on some projects.

Should microfinance be a for profit business? What is your opinion?

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