From Africa Recovery, Vol.16#1, April 2002, page 22

To cure poverty, heal the poor

WHO study finds investments in health pay big development dividends

Declaring that "poverty itself" is the principal cause of illness in poor countries, and that "disease in some low-income regions, especially sub-Saharan Africa, stands as a stark barrier to economic growth," an international panel of economists and health experts has called for a massive increase in global spending on health care in developing countries. Research conducted by the Commission on Macroeconomics and Health, established by the World Health Organization (WHO) and headed by Harvard University economist Jeffrey Sachs, found that the economic impact of ill health on individuals and societies is far greater than previous estimates. Providing basic health care to the world's poor, the commission asserted, is both technically feasible and cost effective. The results could be dramatic: saving 8 million lives annually and fuelling development by generating hundreds of billions of dollars in new economic activity every year. "Working together for health is not just a matter of charity," UN Secretary-General Kofi Annan told the World Economic Forum in New York in February. "It also makes economic sense."

But the price tag is high. The commission estimates that annual spending on health care in the least developed countries (LDCs) and other low-income states would have to increase from the current level of $53.5 bn to $93 bn by 2007, and to $119 bn per year by 2015 (see table, below). These figures do not include an additional $8 - $12 bn needed yearly for Mr. Annan's Global AIDS and Health Fund. The proposed increases are far beyond the means of developing countries and would require a huge -- and extremely unlikely -- rise in official development assistance (ODA) from donor states. The study, its authors acknowledge, is therefore "a vision of what should be done, rather than a prediction of what will happen."

Funding for basic health care (per year, $ bn)
	Current 2001	Required 2007	Required 2015
Total (low income countries only)	$53.5	$93	$119
Sources of finance
Domestic
by LDCs	$7	$11	$16
by other low-income countries	$43	$62	$74
Donor
for LDCs	$1.5	$14	$21
for other low-income countries	$2	$6	$8
for middle-income countries	$2	$2	$2
for medical research, development	$0.5	$3	$4
for intl. agencies (WHO, World Bank)	$1	$2	$3
Total donor funding	$7	$27	$38
Source: UN Africa Recovery from WHO Commission on Macroeconomics and Health data.

Yet the cost of inaction, they caution, will be even higher, whether measured in lives lost, development deferred or threats to international peace and security. "Disease breeds instability in poor countries, which rebounds on the rich countries as well," the commission warns. "With globalization on trial as never before, the world must succeed in achieving its solemn commitments to reduce poverty and improve health. The resources -- human, scientific and financial -- exist to succeed."

Bringing medicine "close-to-client"

As large as these sums are, they are intended only to finance those "essential" services required to meet the minimum health goals adopted by world leaders at the September 2000 UN Millennium Assembly, which set ambitious targets for poverty reduction. Those goals include:

-- Reducing under-five mortality rates by 66 per cent by 2015.

-- Reducing maternal mortality rates by 75 per cent by 2015.

-- Halting the increase of HIV/AIDS, malaria and tuberculosis infections by 2015 and beginning to reduce incidence rates.

These objectives can be reached, the commission argues, by targeting the handful of communicable diseases, including AIDS, tuberculosis, malaria, childhood infectious diseases, and dietary deficiencies responsible for the great majority of deaths and illnesses in developing countries. Many of the necessary treatments and services, Professor Sachs told Africa Recovery, "are highly effective and can be applied in low-income settings. But to a quite shocking extent they don't reach the poor because neither the poor themselves nor their governments have the resources to obtain these life-saving interventions. The problem is not that these interventions fail to work. The problem is that they don't reach enough people."

Photo : ©WHO / P. Pittet

The solution, the report asserts, is to forge a new global partnership between developed and developing countries for the delivery of health care. Poor countries would increase health spending, but the commission acknowledges that only a fraction of the costs can be met from domestic resources. More important would be governments' agreement to reorder national health priorities away from an excessive emphasis on urban elites and more towards the rural areas and the poor, where the need is greatest. Recipient countries would establish representative national health committees made up of government, civil society and health professionals, and pursue rigorous transparency and accountability in budgeting and delivery programmes. Only those countries which demonstrate the political will and capacity to implement internal reforms would be eligible for increased assistance.

In exchange, the commission argues, "High-income countries would resolve that donor funds should not be the factor that limits the capacity to provide health services to the world's poorest people." To ensure sustainability in Africa and other regions where poverty is greatest, the study notes, aid should come in grant form instead of loans, and be accompanied by increased funding for related sectors like education, clean water and sanitation, that directly affect health.

Some development "pessimists" argue that mismanagement, corruption and collapsed infrastructure make it impossible to deliver effective health care in the poorest countries. Rejecting that view, the commission argues that a properly funded community based, or "close-to-client" system of rudimentary clinics and health posts, staffed by local residents with minimal training and backed by simple regional hospitals and a few more sophisticated national facilities, would be capable of delivering basic health services in all but the most unstable countries, and could be established relatively quickly. "The irony of the pessimists," Mr. Sachs said, "is that almost everywhere you look at investments in health care you find almost miraculous achievements such as the campaign against smallpox, the campaign against polio or against African river blindness," which have largely eradicated these debilitating diseases.

The commission also takes issue with those it labels "blithe optimists," who oppose large increases in health spending in the belief that improved health will be a natural outcome of economic growth and development. The study found no direct link between high growth rates and improved health, and noted that, "the disease burden itself will slow the economic growth that is presumed to solve health problems." What is needed instead, the commission insists, is "a concerted global strategy of increasing the access of the world's poor to essential health services."

Big investment, big returns

It is the commission's findings on the link between development and disease, and its rationale for a massive increase in spending, however, which have attracted the most attention. Classical economic analyzes of the impact of disease, Mr. Sachs explained, viewed illness as an unfortunate consequence of poverty that would diminish as economies develop. The commission has stood that view on its head -- arguing that in countries afflicted with pandemic illnesses like AIDS and malaria, poverty itself is a consequence of chronic disease. "We found that malaria not only causes repeated episodes of disease and tragic loss of life but also that malaria impedes foreign direct investment in Africa. It impedes tourism and trade."

"All the ways that malaria and AIDS and other diseases impact the overall functioning of societies and economies were left out of standard cost-of-illness calculations," he continued. When those effects are factored in, "the cost of disease is much, much greater than previously felt, because disease not only affects the individual, but also impedes economic growth and leaves regions impoverished."

If traditional economists have underestimated the cost of disease, the commission believes, so too have they underestimated the economic benefits of improved health. "We found quite striking evidence that improved health is not only a reward in terms of personal income over a lifetime, but also helps to support faster economic growth," Mr. Sachs said. Combining the additional income and higher growth rates produced by improved health, and multiplying that by the 8 million lives the commission estimates their proposal could save each year, would produce $360 bn annually in economic gains, Mr. Sachs asserted. Even that figure, he said, was conservative. "It's arguable that the real economic benefits would be even larger. The world would be almost reckless not to embark on this kind of scaled-up investment."

But the investment required to reach the millennium health targets are far beyond the means of the 2.5 billion people in African and other low-income countries who are most at risk. According to the report, the governments and citizens of the LDCs generated $7 bn domestically for health care in 2001. Domestic resources for health would have to increase to $11 bn annually by 2007 and to $16 bn by 2015. The donor community, in turn, would have to increase its support of health programmes in LDCs alone from last year's $1.5 bn to $14 bn annually by 2007 and $21 bn by 2015.

To reach the global millennium targets, donor countries and multilateral agencies would have to increase their overall support for health programmes in all developing countries from $7 bn annually in 2001 to $27 bn by 2007 and $38 bn by 2015.

Even at that price, Mr. Sachs insists, it is a bargain. "What we're talking about is one-tenth of 1 per cent of donor GNP -- one penny out of every $10 -- to meet the most central goals that the world has set, to keep people alive." Even when increased donor funding for improved sanitation, water and education services is added, he said, "the rich countries are so rich [that] we think it is utterly affordable. After all, we're looking at the possibility of saving millions of people who are dying from their poverty right now." Mr. Sachs estimated that if wealthy countries met the international target of providing 0.7 per cent of their gross national product as development assistance, an additional $125 bn in ODA would be available annually -- more than enough for increased health funding.

In 2000, however, the percentage of GNP devoted to development aid slipped to an average of just 0.22 per cent -- an all-time low -- and officials in the US and other wealthy countries have increasingly expressed doubts about the effectiveness of traditional aid programmes. But the HIV/AIDS pandemic, and its spread around the world in less than a generation, Mr. Sachs said, has brought home to Northern policymakers the danger of inaction. "We need a new approach," he concluded. "Once the analysts have looked at the evidence we are going to get the United States to come around. That's my prediction."

The full report of the Commission on Macroeconomics and Health
is available online from the World Health Organization at:
<http://www3.who.int/whosis/cmh/cmh_report/e/report.cfm>.

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