This Little Piggy

As a former biotech/pharma business development guy and now amateur observer of global health matters, I am out of my depth when commenting on the economics and policy of health care provision and financing.  But I try to do it anyway, primarily because, from my naïve view point, a potential and potent first step to achieving better health among many of the world’s citizens is the creation of markets.  Markets are where the needs of consumers and buyers of health care services and products are collected, described, and priced so that providers of services and products can gauge demand and figure how to meet it.  Through the magic of economics and human society, the market works and providers compete to meet the need by being inventive, improving efficiency and creating new products, and ultimately proving affordable products and services.  That’s the theory anyway.  Also part of the theory is that government’s job is to figure out ways to prod, steer, and regulate the market so that it evolves in the right direction and their constituents are happy and healthy.

Along those lines, I noted an interesting blog posting last month by Adam Wagstaff, a research manager in the Development Research Group of the World Bank, entitled “Health reform: A consensus emerging in Asia?” (Wagstaff post).  Typically, I steer clear of health policy blogs and articles since they are written by specialists for specialists and I quickly get lost in the arcanery (an exception is the analysis put out by the Kaiser Family Foundation on US global health policy at  Adam caught my attention by starting his posting with “my sense is that while we health-reform aficionados are berating one another in the blogosphere, policymakers in Asia are quietly iterating toward something of a consensus on a whole swathe of key issues on health reform.”  His point is that a significant part of the population of six Asian countries, about 1 billion people, are part now participating in government programs that, while differing in detail, have a number of common elements and that these programs are meeting the health care needs of the participants regardless of their ability to pay out of pocket.

My rough summary of Adam’s “emerging consensus” is:

  • governments (via their tax revenues) are subsidizing insurance programs to achieve universal coverage with the net result that 20 to 70% of these countries’ citizens receive free or almost free care;
  • governments are using intermediary insurance management departments to pay for the insured care through performance-based payment systems, such as fee-for-service or per capita; and
  • governments are moving away from providing care through government-run hospitals and clinics and are using a range of providers, including no/low/for-profit companies as well as non-profit NGOs, and using bidding and contracts to create competition.

Of course, there are substantial problems to manage:  corruption, lack of information needed by users to make informed decisions, possible mis-incentives, and unaffordable patient costs, to name a few.  But Adam concludes:  “So, while we aficionados have been debating health reform passionately among ourselves, Asia’s policymakers have quietly got on with the business, and have come up with a rather interesting model.”

So to tie Andrew’s points back to my interest, developing global health businesses, I see these programs as a starting point for providing the market that businesses need to understand and meet demand.  The standard refrains from the global health activists is that “the market has failed” and from the companies is that  “there’s no market.”  But I think there can be a market and if one looks hard enough is one emerging now, and Adam’s view point is heartening.  From another direction, I note that the US is the world’s wealthiest country and we, the over-consumers that we are, have evolved an expensive and inefficient system (that finally most everyone agrees needs to be fixed) and we who care about global health need to show the players in our system, the insurance, drug and device companies and health care providers, how to scale their businesses to meet the basic needs of many people at low cost.  And those slimmed-down little piggies need to get to market.

I refer those enquiring readers who may be interested in my past posts on the topic of providing affordable care to my posts of 10/14 and 10/28/10.  In the former I tie the growing generic drug and bio-similiar industry in the developing world with the growth of micro-insurance programs, and in the latter, I summarize an article about the many roles of the private sector to deliver health care in the developing world.  For those readers who wish to dive more deeply into these topics, the WHO recently released a report on health systems financing (WHO report) (that I think is deficient in covering the role of private companies), and the Brookings Institution Press just published a book on health insurance programs in low- and middle-income countries (Escobar et al. 2011).


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