Aceso Global Policy Working Paper - Health Policy Challenges in Health Economics and Finance in Latin America

Latin American and Caribbean (LAC) countries have achieved a great deal in healthcare over the past few decades, reflecting early investment as well as creativity and experimentation at a level and scope beyond much of what has occurred in other regions. The mixed public-private system serving much of the region, the experience with social health insurance (SHI) and private insurance, and experiments with health service delivery and financing provide lessons that deserve further attention and implementation. Importantly, the rallying cry regarding insufficient spending captures only part of the challenge. Better organization, financing and delivery grounded in targeted incentives and accountabilities could have a major impact on raising access, quality and efficiency.

Regionally the health financing mix entails high reliance on out of pocket payments (OOP) and private insurance. Only 12 countries benefit from over 50 percent of public financing. Waiting time, and time-intensive requirements to access care within publicly financed systems pose high costs to patients. Even the poor turn to private alternatives.

Shortcomings in the quality and efficiency of services to date have received little attention or investment. Quality measures are scarce and no consensus exists on standards; facility management is weak; few studies that touch on relative productivity to measure efficiency; and, costs are largely unknown.

Over the coming decades, the rapidly shifting demographic, social and epidemiological patterns in the region will affect both public revenues and the demand for healthcare. The aging population and the rise of NCDs both have serious implications for healthcare costs in both the public and private sectors, and for the type of care required, e.g. more preventive services, long-term management of chronic conditions, integrated care and palliative care.

Health policy reforms in LAC deserve to be driven by sustainability. Integrated healthcare offers a solution to fragmentation in delivery and financing, and involves reliance on effective information technology that tracks performance and patients, and provider payment reforms that incentivize efficiency and quality, among other initiatives. Maintaining the coexistence of different health systems (SHI, public financing and delivery, private health insurance by employers or individuals) can be supported by the integration of medical records, adherence to protocols and clinical pathways, establishment of health networks built around primary care, along with harmonized incentives and payment systems affecting both hospitals and primary care. These restructuring initiatives can reinvigorate healthcare systems and prepare them for success and sustainability in the 21st Century. They offer a direction for reform that allows adapting to existing circumstances and institutions, but with updated objectives, infrastructure and processes.

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