Malawi must protect people from catastrophic medical spending

Recent news reports of drug shortages in public hospitals are unfortunately not news. Far from being an isolated lapse, such deadly shortfalls are a perennial problem. Insufficient services, facilities, medical supplies and human resources also have led to a loss of trust in Malawi’s health system.

When I worked in the public hospitals, many patients came to these facilities as their last resort, in desperation because they could not afford care elsewhere and had to settle for what little care they could get from public hospitals. Yet the technically free care these facilities offer poses different economic challenges for the poor that leave many unable to complete treatment or procure necessary medications. In reality, this free care is difficult to access and low in quality.

Less than 10% of the national budget goes to health, in contrast to the WHO-sponsored Abuja Declaration signed in 2001 by many nations committing to spend at least 15% on health. Malawi’s health budget allows only about US$ 25 per person per year for health services – just over half of the US$ 44 specified as the lowest possible level to provide essential services by the Taskforce on Innovative International Financing. Thus current financing can only provide half of what might in the best case (with no waste and good planning) be sufficient care.

Malawi public hospital: Drug shortage
Malawi public hospital: Drug shortage

Filling this financial gap to purchase health care becomes a major challenge when people have to spend money from their pockets. This is especially worse for people in rural areas, where medical services are almost nonexistent. Very poor people must first pay for transport to a health facility that has erratic supplies of medications and other medical necessities. So then they must find drugs in pharmacies, and pay more.Starting in 2001, global health initiatives poured money into Malawi for more than half a decade, with the Global Fund, World Bank and PEPFAR among others initiating vertical programs to reach vulnerable  people and reduce out-of-pocket health costs. Then the economic crisis saw budget cuts and withdrawal by major bilateral donors. Now a single illness or accident can shift poor families into crisis as health costs continue to increase.

In 2000 WHO said health systems should protect people from catastrophic health expenditures, defined as when households spend more than 40% of disposable income on health after subtracting subsistence costs. Given the current economic turmoil, Malawi is failing utterly on this count: subsistence costs are increasing while incomes are not.

Budget allocations to public hospitals have not increased, leaving most to operate in debt and lacking basic necessities. Many people thus spend their disposable income on medications and other medical expenses. This out-of-pocket expenditure on health is regressive (affecting the poor more than the rich) and prevents people from accessing desperately needed medical services, since only those who can pay receive treatment.

Prepayment of health services is the best form of health financing; many countries have implemented this form of revenue collection and have excellent health systems. Yet only private institutions like the Medical Aid Society of Malawi provide this, and their premium costs are prohibitive to an average rural resident.

The recent enactment of a national registration system provides a window of opportunity to set up a national health insurance system. This will ensure that the people getting medical care are those who most need it, unlike the current system where anyone can receive treatment at no cost. The insurance system will also establish a sense of shared responsibility to ensure hospitals respond to patients’ needs.

This initiative requires a coordinated effort between public and private sectors to provide checks and balances, but it has worked in countries similar to Malawi – why can’t it work for us?

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