Why out-of-pocket health spending moving in wrong direction

In 2012, Bangladeshis paid 62% of the total health expenditure out of their pockets. That year, the authorities formulated the Health Care Financing Strategy, aiming to reduce out-of-pocket health expenditure to 32% by 2032.

But, instead of coming down, the rate has increased with every passing year. In 2020, 69% of the total health expenditure in Bangladesh was paid out-of-pocket by treatment seekers, according to Bangladesh National Health Accounts 1997-20.

This trend goes against the notion of a middle-income country. Out-of-pocket health expenditures are lower in middle-income countries than in least-developed or poor ones; however, in Bangladesh – which is poised to graduate to the status of a developing country in 2026 and expects to become an upper middle-income country by 2031 – the spending is still at the level of poor countries.

According to the Global Health Expenditure Database, the World Health Organisation, and the Bangladesh National Health Accounts, out-of-pocket health expenditure is the highest in Bangladesh among all of its South Asian neighbours except for war-torn and poverty-stricken Afghanistan. In 2019, out-of-pocket expenditure as a share of current health expenditure for Afghanistan was 79.3%.

If out-of-pocket expenditure is not brought under control, Bangladesh will not be able to fulfil all the indicators of an upper middle-income country even if it becomes one by 2031 in terms of per capita GDP, said Dr Abdur Razzaque Sarker, health economist of the Bangladesh Institute of Development Studies.

Besides, there is an urgency to achieving the 2030 Agenda for Sustainable Development, adopted by all United Nations member states in 2015.

In line with sustainable development goals (SDGs), the government is committed to achieving universal health coverage by 2030. But, reliance on out-of-pocket payments is a major barrier to achieving it.

Excessive health costs are becoming the cause of economic shocks for many households. The present rate of out-of-pocket payments as a share of total health expenditure in Bangladesh is more than triple the WHO recommended rate – direct out-of-pocket payments should not exceed 15-20% of the total health expenditure.

"Increased domestic spending is essential for achieving universal health coverage and the health-related sustainable development goals," said WHO Director-General Dr Tedros Adhanom Ghebreyesus.

"But health spending is not a cost, it's an investment in poverty reduction, jobs, productivity, inclusive economic growth, and healthier, safer, fairer societies," he added.

Even though the Health Care Financing Strategy set a target of increasing government share in health expenditure to 30% by 2032, the rate dropped to 23% in 2020 from 28% two years earlier.

Moreover, the government's Eighth Five-Year Plan has given the highest priority to developing the healthcare system through increased budgetary allocation, sharply stronger management, and partnership with private healthcare. But, the public expenditure on health has remained virtually stagnant at 0.7% of the GDP for a fairly long time, which needs immediate attention to increase.

Expenses on medicines, medical tests can be reduced

According to the Health Economics Unit under the health ministry, patients spent a whopping 64.6% of their health expenses on drugs, 11.7% on laboratory charges, 10.8% on doctors, 2.4% on other healthcare practitioners, 0.3% on dentists, 10.1% on hospitals and 0.1% on medical products.

Dr Abdur Razzaque Sarker said when medical expenses will be borne by the government, the government will not want anyone to buy excess medicines and do unnecessary diagnostic tests. Then medicines will not be sold without a prescription.

"In our country, we can buy any medicine we want. But the prices of medicines are very high. The rate of antibiotic consumption among our patients is high, but so are the costs of antibiotics. Due to these reasons, medicine costs are high. If we can control the sale of medicines without prescription, then out-of-pocket expenses will be greatly reduced."

After medicines, medical tests account for hefty costs, which also can be controlled if the government wants, mentioned Abdur Razzaque.

"There is no monitoring of how many tests are done in any government or private hospital. But we don't know how many tests a doctor has ordered for any disease in a year. If this can be monitored online, we can understand if more diagnostic tests are being done in any private hospital. As this cannot be done, we cannot say whether these tests are necessary for the patients. Out-of-pocket expenditures are not coming down as these regulations are not being done properly," he explained.

He also said that if the monitoring system is strengthened, other diseases can be managed well. Then the health status will increase, and caesarean sections and maternal deaths will decrease.

"When facilities are adequately staffed and monitored, other indicators of health services will be better as they are connected to each other."

Rise in out-of-pocket expenses widens inequality

An increase in out-of-pocket expenditures means that only the affluent quarters can afford to pay for treatment and those who do not have money cannot spend or get health care.

According to the Bangladesh National Health Accounts data, wealthy households spend five times more than poor households on healthcare.

On the other hand, the Health Economics Unit says that every year, around 16% of patients refrain from taking necessary healthcare services due to the continuous rise in out-of-pocket expenditure.

Eminent economist Professor Wahid Uddin Mahmud told The Business Standard, "As we have seen in various surveys, the benefits of government spending on health and education are fairly distributed among the citizens. The more the government spends on education and health, the better the income distribution will be. But, if out-of-pocket expenses increase, healthcare will be discriminatory."

Wahid Uddin Mahmud further said that the government has been complacent by developing some social indicators very quickly with some low-cost solutions.

"We have improved on social indicators by giving oral saline, vaccinating children, increasing the use of contraceptives, and sending girls to school. These tasks cost less. Using low-cost solutions, we have made much faster progress in education and health indicators compared to other countries like ours, despite spending much less against the GDP in the public social sector," he maintained.

"But we had already said this progress would not be sustainable because opportunities for low-cost solutions have run out. If more progress is to be made now, more hospitals are needed to reduce infant mortality and increase maternity services. Bangladesh's development surprise will not last if allocations are not increased in these sectors."

Government data says Bangladesh's performance in social development indicators has been declining since 2013-2014, he added.

Health is a foundational element of a country's human capital. Without good health, children cannot go to school and learn, and adults cannot work and contribute to their households and economies. A healthy, educated, and resilient population is a must for countries to compete effectively in the global economy.

"The only way that we will actually bring health care to every person, everywhere in the world, is if we fundamentally change the system so that governments and people demand more investments in health," says World Bank Group President Jim Yong Kim. 

When investments in health begin in the early years of life and are sustained through the life cycle – for infants, children, adolescents, adults, and seniors – they lay a strong foundation for the growth and competitiveness of nations.

Why Health Care Financing Strategy is wrong way round

The government had outlined a pathway to bring down out-of-pocket expenditure to 32% by 2032 – implementing "Shastho Surokhsma Karmasuchi" in the first place, which would ensure free treatment only to the poor people and then involving people from all walks of life and introducing a health insurance gradually.

Dr Subrata Paul, focal person of the Bangladesh National Health Accounts Cell, told TBS that they started implementing Shastho Surokhsma Karmasuchi in 2015-2016 and the programme is being expanded now.

"But we are facing many challenges. People don't know much about health insurance, they know about life insurance."

Besides, internal migration of people is another obstacle to spreading health insurance coverage, he added.

"It is not possible to bring the informal sector under insurance right now, so we have chosen government officials in the first stage. If this becomes successful, it will be spread among the private sector," said Subrata Paul.

Dr Subrata Paul also said they are preparing a policy advocacy on other issues regarding which the health ministry and finance ministry will be the supervisory authority of health insurance programme and determine its modality.

The strategy also speaks of capacity building, enhancing efficiency, and increasing financing alongside reducing out-of-pocket expenditure.

Asked in this regard, Subrata Paul said, "Now we are trying to be practical. Every year, at least 15%-20% of the health allocation in the national budget is returned to the Ministry of Finance. We cannot spend what we get, and this is why we cannot bargain with the finance ministry to increase the allocation.

"During the Covid period, the government proved that the health sector is a priority sector. There were no instances that the health ministry sought any allocation but the finance ministry declined that. The problem lies in efficiency."