Abstract
The pandemic of chronic non-communicable diseases (NCDs) poses substantial challenges to the health financing sustainability in high-income and low/middle income countries (LMICs). The aim of this review is to identify the bottle neck inefficiencies in NCDs attributable spending and propose sustainable health financing solutions. The World Health Organization (WHO) introduced the “best buy” concept to scale up the core intervention package against NCDs targeted for LMICs. Population- and individual-based NCD best buy interventions are projected at US$170 billion over 2011–2025. Appropriately designed health financing arrangements can be powerful enablers to scale up the NCD best buys. Rapidly developing emerging nations dominate the landscape of LMICs. Their capability and willingness to invest resources for eradicating NCDs could strengthen WHO outreach efforts in Asia, Africa, and Latin America, much beyond current capacities. There has been a declining trend in international donor aid intended to cope with NCDs over the past decade. There is also a serious misalignment of these resources with the actual needs of recipient countries. Globally, the momentum towards the financing of intersectoral actions is growing, and this presents a cost-effective solution. A budget discrepancy of 10:1 in WHO and multilateral agencies remains in donor aid in favour of communicable diseases compared to NCDs. LMICs are likely to remain a bottleneck of NCDs imposed financing sustainability challenge in the long-run. Catastrophic household health expenditure from out of pocket spending on NCDs could plunge almost 150 million people into poverty worldwide. This epidemiological burden coupled with population ageing presents an exceptionally serious sustainability challenge, even among the richest countries which are members of the Organization for Economic Co-operation and Development (OECD). Strategic and political leadership of WHO and multilateral agencies would likely play essential roles in the struggle that has just begun.
Historical evolution leading to occurrence of NCDs pandemic
Non-communicable diseases (NCDs) evolved during the 20th century to dominate the epidemiological landscape following consecutive industrial revolutions alongside global population ageingCitation1. These pathologies, most notably cardiovascular diseases, malignant neoplasms, diabetes, pulmonary, and mental disordersCitation2 featured distinctively different clinical pathways compared with the challenges of the past. Instead of a rather acute and short course of mostly curable infections, NCDs brought mostly incurable lifetime illnesses which raised the demand for costly medical technologiesCitation3 and long-term care expenditure.
To understand this challenge in the broader context, it is important to know that the first established hierarchical health systems of 19th century Europe were based exclusively on a demographic growth modelCitation4. Strategic thinkers of that era assumed that, after massive eradication of contagious diseases through preventive measures, the overall cost of medical care should plateau or even fall in the long runCitation5. The very phenomenon of NCDs burden expansion and dominance would be a big surprise for them if they could have seen the world 150 years into the future.
From an actuarial perspective, communicable and non-communicable diseases differ in persistence and concentration of risk. Both are financially problematic. NCDs are more concentrated among the elderly population, and those who already have an NCD and are susceptible to get anotherCitation6, and economically disadvantaged individuals such as those who are least able to earn wages, pay taxes, or pay insurance premiums, hence widening the divide between sources of payment and receipt of servicesCitation7. Contemporary momentum worldwide witnesses that the burden of NCDs are moving from rich towards developing nations. Therefore, the dominant share of this financial sustainability challenge is taking place in these regions. An objective of this literature review is to identify the bottle neck inefficiencies in NCDs attributable spending and propose sustainable health financing solutions.
Role of low- and middle-income countries dominated by major emerging nations
The rise of the Emerging nations or fastest developing large economiesCitation8 took place for well over two decades. Goldman Sachs, Brookings Institute, World Bank ,and later academic literature label them using the acronym BRICs (Brazil, Russia, India, China)Citation9, or more recently EM7. The Russian mortality crisis, largely attributable to NCDs, ended with 20th century, and it experienced a significant epidemiological transition for the betterCitation10. China and Russia exhibited the most effective governmental policies in this areaCitation11. With major reforms started in 2009, China is among the few emerging economies to have made progress toward financing comprehensive healthcare to meet the challenges of 2020 and 2030Citation12. Recent evidence indicates that catastrophic household health expenditure from out of pocket spending on NCDs related medical care was assessed to plunge almost 150 million people into poverty worldwideCitation13. The loop of negative impact of NCDs, on overall economy performance and productivityCitation14, can seriously impede national progress toward the sustainable millennium development goalsCitation15. NCDs dynamics in Brazil is supporting this statement as wellCitation16.
Given the population and forecasted economy size as we approach 2050, these developments in China and India are certainly the ones shaping the global NCD landscapeCitation17. India, being at the far more juvenile stage of population ageing, is experiencing the double burden of communicable and non-communicable diseasesCitation18. India was capable to devote significantly higher investment in healthcare in absolute terms compared to its past. Its bottleneck is a steady %GDP health spending projected to rise from 3.8% GDP in 2012 to 4.3% in 2025Citation19.
China has a distinctively different epidemiological situation. It is currently in an almost three decades more advanced stage of population ageing coupled with a strong burden of NCDs conditions. China’s massive hospital system is curatively oriented and experiences huge market demand for NCDs related diagnostic and treatment interventions. Preventive measures, such as cancer screening, lag behind OECD. Monitoring and surveillance capacities for NCDs need strengthening exponentially for policy-makers to track the progress of public health and legislative interventionsCitation20.
In 2014, the Bulletin of the World Health Organization (WHO) devoted an entire issue on a special theme to the global health challenges in BRICs nationsCitation21. Their contemporary priorities, publicly announced in the official documentsCitation22, still do not hold NCD related polices high on the agenda. Brookings Institute, in a recent report using World Bank dataCitation23, anticipated that EM7 (BRIC + Mexico, Indonesia, Turkey) shall deliver one half of global GDP growth in 2019 compared to joint G7 countries output which will contribute with approximately one quarter at the same timeCitation24. These major countries are rare large net-donors of international humanitarian aid and technology transfers among low and middle-income countries (LMICs). Their capability and willingness to invest resources for eradicating NCDs diseases could mean strengthening outreach in Asia, Africa, and Latin America much beyond current capacitiesCitation25. Within the grouping, cumulative Global Fund contributions as of 2012 were strongly dominated by India, with well over one billion $US, while WHO Extrabudgetary contributions and the Global Alliance for Vaccines and Immunizations (GAVI) contributions were dominated by Russia. The ultimately strongest WHO Core contributor within the grouping was the People’s Republic of ChinaCitation26. It long ago reached all the Millennium Development Goals (MDGs), by 2015Citation27. BRICS nations share accelerated population ageing and health financing sustainability challengesCitation28. They also exhibit converging health policy priorities to a significant degreeCitation29. Therefore, we might expect more serious investment into NCDs related capacity building alongside existing WHO strategies in the foreseeable future.
Rethinking incentives in health systems for scale up of the NCD best buys worldwide
WHO introduced a best buys concept to scale up the core intervention package against NCDs targeted for LMICsCitation30. Basic population-based measures such as reducing tobacco, harmful alcohol use, changing unhealthy diet patterns, and promoting physical activity were estimated to cost less than US$0.40 per personCitation31. Best buys priority actions against NCDs accumulate to US$170 billion over the 2011–2025 time horizonsCitation32.
Health financing arrangements can be powerful enablers to scale up the NCD best buys. Appropriately designed health financing arrangements ensure availability of funding for the right services at the right time and provide behavioural incentives for both providers and the population. Unfortunately, however, health financing arrangements in many countries not only do not facilitate transformative agendas, but may actually hinder themCitation33. Beyond significant under-funding in many health systems and opaque priority setting processes, a vexing health financing problem relates to incentives which do not value the service delivery approaches needed to scale up the best buys: inter-sectorial action, health promotion and prevention, and primary care.
Missing and misaligned incentives
Population interventions require strong inter-sectorial action. Yet, when thinking about health financing, we focus on and measure resources flows within the jurisdiction of health systems. We typically neglect thinking about how we could be smarter and use financial incentives to harness the support of other sectors and stimulate their actions to attain the goals of lower levels and better management of NCDs. The case of missing incentives is a problem, since many of the most effective and cost-effective strategies to tackle NCD risk factors and promote positive social determinants of health are at least partially delivered in other sectors.
Many countries have revised incentive arrangements for individual health services, and the tendency has been a move away from historical and line item budgets in the public sector. Development of new purchasing arrangements and payment mechanisms focused on a particular level of care rather than looking at the entire continuum of services. From the perspective of NCDs, this continuum often reflects misaligned incentives that impede the scale up of the best buys. For example, many countries are moving towards the continuum of capitation payment for primary care, some form of fee-for-service for outpatient specialist care, and case-based payment for hospital care. This continuum of incentives undervalues health promotion and prevention, reinforces specialist and hospital orientation of care provision, and leads to episodic rather than continuous careCitation34.
Growing momentum to finance intersectoral action
There is good news, however. For population interventions, the situation is changing and momentum towards the financing of intersectional actions is growingCitation35. These actions change governance arrangements in different ways, making it easier for health and other sectors to share resources and funding. Importantly there can also can joint accountability for the achievement of specific health-related goals. Such institutionalized funding mechanisms are the key to enabling stable and responsive governance mechanisms.
One commonly used approach is to agree on dedicated funds from the health budget for the express purpose of delivering intersectoral activities that will help achieve overall health objectives. Typically, administration of such funds is managed at the national level by the health ministry, local health budget holders, or local government. Social insurance funds may also set aside some funds for these types of activities. The prescriptive fund allocation process stipulates that funding be linked to use of a specific cross-sectoral programme to address a particular issue, or it may allow for innovation in the way in which a priority issue is addressed. The latter may be a competitive process where organizations from two or more sectors have to develop a proposal on how to use funds to address an NCD concern. Examples of this include a scheme in Finland where municipalities applied for funding for intersectoral health promotion programmes to support mental health activities in schoolsCitation36. The Public Health Agency of Canada’s Innovation Strategy may provide a useful example of moving to sustainability; funding is provided in three phases for up to 8 years, to scale up intersectoral projects that have been shown to be successfully implemented and evaluatedCitation37.
Another approach is establishing an independent body or agency which can then set its own priorities for intersectoral action. Funds can be delegated to the independent agency from multiple sources of revenue or taxation, not just health budgets. Health Promotion Switzerland receives funding from an annual surcharge on health insurance premiums. It then competitively co-finances intersectoral projects that are aligned with its strategic goals, particularly in the areas of diet, physical activity, and mental healthCitation38. The challenge is to ensure that the priorities of these organizations match those of the health system, including NCDs. A sustained and successful example outside the OECD is the Thai Health Promotion Foundation, funded with a 2% surcharge on alcohol and tobacco excise dutiesCitation39.
A practical way to leverage funding from multiple sectors is adopting a joint budgeting approach. This can also be used to overcome inflexibility in funding within health systemsCitation40. There are many ways in which this approach can be implemented on either a voluntary or a mandatory basis, for instance there may be budget alignment to address a specific issue, with mutually determined targets and outcomes, or there may be a formal legal process to establish a joint fund, often time-limited, to be spent on agreed projects or delivery of specific services. There are examples of formal and informal joint budgeting initiatives at the local levels in low, middle, and high-income countries focused on NCDs and risk factors for NCDsCitation41.
The effectiveness of these and other mechanisms for intersectional action depends heavily on factors such as organizational structure, management, culture, and trust. In part, lack of trust across sectors might be overcome by highlighting benefits of specific interest to different sectors, e.g. education and school related benefits of health promotion when making return on investment arguments.
Aligning incentives for individual services
To implement effective service delivery arrangements for NCDs, strategic purchasing mechanisms must value health promotion, provide for early detection and management of conditions, reward task profile expansion of primary care, provide incentives to consider the full spectrum of care rather than the illness episode, and foster work across levels of care. Health financing strategies can contribute to better NCD outcomes by identifying and addressing missing incentives and misalignment of incentives that are not in line with these service delivery objectives.
As countries rethink how they deliver primary care to better respond to the challenges of NCDs in a life-course approach and in the context of multi-morbidity, purchasing arrangements for primary care also need to be reconsidered. Countries that continue allocating public funds to primary care based on historical line-item budgets can consider moving towards population-based capitation payments which also take into account social determinants of health. Such a move has traditionally improved equity in resource allocation, and increased capacity of purchasers and providers as well in terms of moving towards a more strategic orientation to service mix.
Capitation payments are only the first step because they still do not provide sufficient incentives for outreach, early detection, and proactive disease management. This is particularly the case in low funding high workload casesCitation42. And even more so in countries where specialists and hospitals are remunerated using a payment mechanism linked to volume in some fashion (fee-for-service, case-based payment).
Despite this weakness for many LMICs, capitated primary care is likely to remain a manageable payment mechanism for the coming decadesCitation43. To address the noted weaknesses and incentives misalignment across the interface, incremental approaches can be used. These approaches involve retaining base payment mechanisms and adding on further elements. Pay-for-coordination or pay-for performance or carving out services for bundled payments are examples. The whole spectrum of care provision for a particular condition is given one single payment for a defined period of time. Mixed or blended payments, using a few types of payment mechanism together to achieve an optimal incentive mix, are becoming increasingly common in middle-income and high-income countries with stronger purchaser capacityCitation44.
A significant proportion of the literature on the impact of these instruments comes from higher-income countries with reasonable payment rates in primary healthcare. Other parts of this literature come from countries with fee-for-service payment mechanisms. These results are difficult to extrapolate to settings with underpaid and understaffed primary healthcare services that have low capitation base rates and extremely low coverage of basic NCD-related detection and management servicesCitation33. In such cases, pay-for-performance or selective fee-for-service for particular services may provide a stepping stone towards more active primary care providers. Additional funds may enable them to hire additional staff to perform labour-intensive activitiesCitation45.
This approach can be introduced fairly quickly to overcome inertia. Initial complexities can be adjusted to the experience and capacity of the strategic purchaser. Moving towards more complex payment mechanisms will strengthen these dimensions, build purchaser and provider capacity, and contribute to strengthening the information system. A critical design aspect of more successful initiatives is clear: clinical practice and the model of service delivery need to be clearly defined for new payment incentives to have a lasting effect.
Large-scale change would involve moving away from payment mechanisms defined by level of care towards full capitation for the totality of care for a defined population, with care coordination intermediaries between the purchaser or payer and the provider network. Population-based full capitation payments to providers or managed care organizations have a history in the UK (GP fundholding) and in the US, in the publicly funded Medicare sytem (managed care). Since 2012, a new wave of accountable care organizations emerged in the USA in response to health reforms under the Patient Protection and Affordable Care Act. In the WHO European Region, smaller-scale initiatives have been introduced in Germany, Hungary, and Spain.
In reviewing many examples of financial incentives to understand how they change provider and patient behaviour, common themes have emerged. First, financial incentives, be they pay-for-performance, pay-for-coordination, bundled payment, or full capitation, should not be introduced as an isolated instrument, but rather as an integral component of a systematic and multi-pronged approach to transforming the service delivery system with a view to scaling up prevention, early detection, and disease management for NCDs. Other instruments should include guidelines, training, performance monitoring with feedback, better information solutions, and task shifting, among others. Second, while incremental financial incentives can help address some of the weaknesses in commonly used base payment mechanisms, they can only go so far in correcting misalignment issuesCitation46. Third, if the underlying service delivery structure is not effective (such as solo practice in primary care, lack of integration with outreach, lack of provider autonomy, or ineffective staff mix), no incentives can fix these larger systemic, structural problems. Finally, policy-makers and purchasing organizations also have non-financial incentives at their disposal to steer provider behaviour and address misalignments.
Growing political awareness—promise for investment in the future
Since the beginning of the 21st century, high-level political awareness on NCDs maturated, leading to adoption of a series of UN and WHO policy documentsCitation47–49. The decreasing tide of international donor aidCitation50 is intended to cope with NCDs and serious misalignment of these resources with the actual needs of recipient countriesCitation51. It is remarkable to understand that there remains a large discrepancy in donor aid for HIV, tuberculosis, and malaria against NCDs. This could be crucial for low and middle income world regions, since only 3% of global health aid was devoted to the latter ones in 2011. Among these sources, WHO, as a dominant supporter of NCD, allocated less than 10% to NCDs at the timeCitation52. Another detailed investigation was conducted on major multilateral donor agencies such as the World Bank, Bill & Melinda Gates Foundation, and the Global Fund to Fight HIV/AIDS, Tuberculosis, and Malaria, etc. It showed that, in 2005, the discrepancy in funding priorities was so huge that US$1029.10 for HIV/AIDS were spent per single fatal outcome, compared to $3.21 for non-communicable diseasesCitation53. Developments seem to be slightly less concerning as we approach closer to contemporary momentumCitation54, although disparity in favour of communicable illnesses remains huge. LMICs are likely to remain a bottleneck of NCD imposed financing sustainability challenge in the long runCitation55. With an overly simplified landscape, out of pocket payments and poor insurance coverage remain root causes of citizen vulnerability. This is most glaring in rural regions and frequently leads to catastrophic household expenditure, sinking entire families into poverty. Nevertheless, the epidemiological burden of a scale of NCDs coupled with population ageing means that sustainability challenge will be exceptionally serious, even among the richest OECD nationsCitation56. Devotion of WHO and other major multilateral agencies and their political guidance are increasingly likely to play essential roles in the struggle that has just begun.
Transparency
Declaration of funding
Grant funded by Swedish FORTE number 2017-02235 and Grant OI 175 014 funded by the Serbian Ministry of Education Science and Technological Development have jointly co-financed the underlying efforts behind this contribution.
Declaration of financial/other interests
The authors have no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties. JME peer reviewers on this manuscript have no relevant financial or other relationships to disclose.
Acknowledgements
None reported.
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