Healthcare Reform and Povery in Latin America

Healthcare Reform and Povery in Latin America

Fieno, John

Lloyd-Sherlock, Peter, ed. Healthcare Reform and Poverty in Latin America. London: Institute of Latin American Studies, University of London, 2000. Illustrations, tables, bibliography, 205 pp.; paperback $19.95.

The importance of education and health in the economic growth of developing countries and the persistent problems in health care provision across Latin America have made health care policy a critical issue in the region’s political economy. This collection of articles assesses how successful government reforms in the health care sector have been in attacking two key problems: poor results in the overall health indicators in many countries despite relatively high expenditures (both public and private), and longstanding inequities in access to health care. The book argues that the reforms have done little to correct these problems. Even though the volume lacks some elements that would have made its arguments more convincing, it provides a good introduction to the debate on health care policy in Latin America.

The collection includes an introduction to health care policy in the Americas, a chapter that suggests guidelines for future reforms, and seven individual case studies: El Salvador, Brazil, Chile, Cuba, Mexico, Argentina, and Colombia. The introduction, by Christopher Abel and Peter Lloyd-Sherlock, presents the dilemmas of the health care sector with clarity and an appreciation of the history of health policy in the Americas. That history is important, because past policy trajectories often define the political debates on health. The introduction’s most compelling point is that despite waves of reform, especially in the 1990s, public health spending in Latin America has been and continues to be regressive.

The most interesting chapter is the guidelines for future reforms, titled “Structural Pluralism” and written by Juan Luis Londono and Julio Frenk. The authors try to describe where Latin American countries are today and, instead of telling them where to go, they seek to highlight how a national health system should function. That is, they are more concerned about the functional aspects of a national health system than about its institutional structures.

They start with a key point: as a region, Latin America should do better on key indicators of public health (coverage of population, infant mortality, and so on), given its level of development. The authors create a typology for health systems in Latin America with four categories. The united public model (Cuba and Costa Rica) is essentially universal stateprovided health care. The public contract model (Brazil) is similar, but in it private health care provision complements the public sector. The atomized private model (Argentina and Paraguay) uses private insurance agencies to organize the sector, and the segregated model (the rest of the Americas) divides the population into three segments: those insured through the formal job sector in some kind of publicly financed insurance regime; those who have private insurance or pay out of pocket; and the poor, who seek health care provided by a national Ministry of Health.

All four models, Londono and Frenk argue, have serious problems. Even if a Canadian-style system were politically feasible in Latin American countries, the united public model and the public contract model would still have major deficiencies. The united public model has few incentives for improvement or innovation and few opportunities for citizen input. The public contract model tends to make cost and quality control more difficult because the numerous private and public health care providers lack regulation and supervision. The atomized private model has not only the problem of health coverage for the poor but also gross inefficiency, given the lack of competition among private insurance agencies.

Londono and Frenk mention three substantial problems in the segregated model. The de facto three-tier system leads to duplication and wasted resources. The quality of service differs significantly across the tiers and, not surprisingly, the poor suffer the most. The segregated system, furthermore, might create incentives for private health insurance firms to shift costs “by skimming the cream from the top”-by insuring only the wealthiest, youngest, and probably healthiest in the population and letting the state care for the rest. The state therefore would have to care for a disproportionate number of sick clients and assume their costs, which is very inefficient resource allocation in terms of the entire health system.

In the face of these problems, Londono and Frenk propose “structural pluralism,” a scenario that emphasizes function over institutional arrangements. They argue that current institutions should be paired with a particular function in the health care system: modulation, financing, articulation, or delivery. Financing and delivery, clear functions of any health care system, are given little attention. Nevertheless, the authors argue that any financing regime must have the capacity to raise sufficient revenue for universal access to health care. They are fuzzy on delivery as well, except to say that a mix of delivery options is appropriate and even preferred.

Modulation and articulation are not obvious functions, but Londono and Frenk push their necessity in any health system. Modulation refers to “the fair and transparent rules of the game, in order to foster a harmonious development of the system” (p. 39). The national ministry of health in a given country, they assert, should establish these rules. Articulation refers to the relationship among financing agents, health care providers, and their clients. Ideally, the articulation function would transform health insurance agencies or firms into purchasers of health care services for clients. In effect, these purchasers, called Organizations for Health Service Articulation (OHSAs), would operate in a quasi-market between financing agents and health care providers. The goal would be for this quasi-market to spread risk across providers, maximize access to health care, and represent consumers in the health care system.

Londono and Frenk summarize the politics of reform in health care by arguing, in effect, that there is a politics of no reform. Sweeping change in a national health care system (to a Canadian-style system, for example) is impossible because consensus too often rests on what vested actors do not want rather than what they do want. More incremental changes tend to have little or no effect because they do not address the key causes of a given problem. Londono and Frenk call for “sequential policy configurations,” which they define as “strategies that identify sets of coherent interventions to attack the most critical bottlenecks in the system” (p. 54). These require “high levels of technical quality and internal coherence, which are implemented progressively” (p. 54).

Several comments about this chapter are in order. First of all, the authors’ typology of health systems in Latin America is a very helpful tool for understanding the general types of health systems and their weaknesses. Second, the authors point toward important institutional arrangements that limit the capacity of these health systems to provide adequate services to the poor in most Latin American countries. Third, the identification of modulation and articulation is a substantial contribution because too many times, the focus is solely on the financing and delivery of health services not their encompassing overall structures.

Despite these excellent points, other parts of “Structural Pluralism” are less convincing. When Londono and Frenk propose “sequential policy configurations,” it really sounds like the new public administration: the introduction of market incentives, an emphasis on results, a focus on the citizen as a customer, increased flexibility for lower-level bureaucrats (while upper-level bureaucrats write the rules and think about the big picture), and the creation of foundations or other quasipublic institutions that represent citizens within the health system. If “sequential policy configurations” is a form of new public administration for health, administration might be the most important problem facing health systems across Latin America. And if administration is the most important problem, the real issue might not be the reform of health systems but the reform of public administration across Latin America.

The Organizations of Health Service Articulation (OHSAs) are supposed to be new institutions that maximize the quality of health care for the customer as well as the efficiency of health financing, whether those funds are private or public. There is no guarantee, however, that OHSAs will have the market power to force health care providers to lower costs, or that OHSAs will not “skim the cream from the top” in the same manner as health insurance firms are wont to do. Londono and Frenk admit that OHSAs are only as good as the modulation-the rules-set for them. To assume that national ministries of health, which would be responsible for such regulations, are immune to capture from interest groups is a tenuous proposition.

Even though there is an enormous literature on public finance, Londono and Frenk (and the volume as a whole) might have better served the purpose by spending more time on the issue of public finance in health care. In particular, with the emphasis on decentralization across the region in the 1990s, the revenue and expenditure assignment in health is a critical question that is all but ignored here. This chapter, nevertheless, is still the only theoretical one in the volume, and it explains cogently the challenges for policymakers to correct the failures of health care provision across the region.

Among the seven country case studies, this review will discuss only two: El Salvador and Brazil. In “Health Reform: Theory and Practice in El Salvador,” Nuria Homedes, Ana Carolina Paz-NarvAez, Ernesto Selva– Sutter, Olga Solas, and Antonio Ugalde describe the failure of health care reform and make three points. First, health care reform in El Salvador after the country’s bloody civil war was driven primarily by international aid institutions; namely the World Bank and, to a lesser degree, the U.S. Agency for International Development (USAID) and the InterAmerican Development Bank. At the behest of the World Bank, the reform was based on the tenets of the “Washington Consensus”: for the sake of fiscal discipline, lower health spending but improve efficiency through privatization and decentralization.

Homedes et al. argue, second, that the planning and ultimate approval of the health reform was done in secret, without any input for social groups or even the bureaucracy itself. Often politicians simply nodded at what officials from Washington said. One outcome associated with this lack of social input was that the Washington-based institutions encouraged health officials to invest in hospitals instead of primary care because they had more experience with hospital administration. In a low-income country like El Salvador, this makes little sense.

The authors’ third point is that privatization and decentralization exacerbated problems in the health care sector because of the relative lack of administrative capacity of both nascent private firms and local governments. Homedes et al. emphasize that simply importing models from afar will not work; but their claim about the vices of decentralization should be taken with caution. Decentralization was not really implemented in El Salvador, given the lack of coordination between the national and local ministries of health and weak bureaucratic structures in many municipal governments, especially rural ones.

In the chapter “Decentralization in Practice,” Sarah Atkinson looks at public health care provision in the Brazilian state of Ceara. Brazil’s health care system was decentralized in the early 1990s, as the municipalities became more responsible for health care provision in Brazil’s public contract model. Ceara, furthermore, has the reputation of good governance despite its location in the Northeast, a bastion of clientelism. Atkinson’s main point is that clientelism is a traditional conduit for local folk to gain access to public services; it is also a vestige of rural Latin America that does not automatically disappear in a democratic transition or under the new public administration.

Atkinson gives a detailed account of the culture of health care in Ceara’s municipalities. The most interesting finding is a survey showing that rural clients of the health care system were most satisfied with service while metropolitan and urban clients were less satisfied, even though the service for rural clients was substantially worse. Atkinson describes the dynamics of the patron-client relationship in rural Ceara and the delicate interplay between the citizen and the state when citizens lack information. Politicians who offered the best health services were not elected, while those who did not but maintained personalistic (clientelistic) relationships with voters were reelected.

Among the other country studies, the chapter on Cuba, by Richard Garfield and Timothy Holtz, explains how Cuba is trying to maintain its excellent public health system in the face of the relative collapse of its economy. It is a good, short article for those who know little about the Cuban public health system. The other chapters, on Chile, Mexico, Argentina, and Colombia all follow a similar storyline: their respective national health systems have attempted to increase access to health care for the poorest and most vulnerable populations as the countries have attempted to execute fiscal adjustment and decentralization at the same time. Although Chile has made some progress, according to Armando Barrientos, the other three countries have not.

The key variable in explaining Chile’s relative success and the other countries’ lack of it is political leadership. The essays on Mexico, Argentina, and Colombia state explicitly that increased equity in health care was not a serious concern of these respective governments. Those who read these chapters will receive a solid history on these health care systems (in particular, the history of Argentina’s health system is very detailed), as well as a fair amount of descriptive data.

As a whole, also, this volume does have some unfortunate omissions. Even though data on health care in Latin America can be found in a myriad of places, an appendix with data, both national and subnational levels (at least for federal systems like Brazil and Argentina) presented in a systematic manner would have been helpful. (The series Federalismo no Brasil (Sao Paulo: Fundap) is a good example of copious data provided in appendixes.) Given the importance of decentralization in health care policy, a presentation of subnational data would have been a good resource for many scholars, who often have to look for this data in many sources.

Finally, the volume lacks a concluding chapter to tie all the loose ends together. It could have used a final chapter or two to highlight a particular theme that cut across the articles. Three possible candidates for this theme would be decentralization and its effect on equity and efficiency, the role of citizens and the new definition of citizenship in health care reform, and specific health policies that have helped or hurt the poor across the region.

This set of articles provides, nevertheless, a good introduction to health care policy in Latin America, especially for scholars who need a brief, nontechnical treatment of the subject. The theoretical chapter by Londono and Frenk helps the reader to make sense of how health care is provided in Latin American countries and outlines the challenge of achieving greater equity in terms of health care access. The case studies give an accurate picture of the health systems in the respective countries (except for the chapter on Brazil, in which Atkinson provides, with great rigor, a qualitative analysis of one Brazilian state). Lloyd-Sherlock and all the authors should be commended for a volume that takes on a very important and complex topic in Latin America’s political economy with clarity and cogent analysis.

John Fieno

University of Wisconsin, Madison

Copyright Latin American Politics and Society Summer 2002

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