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Latin America’s healthcare markets in the face of a crisis, what lessons can be learnt?

By Giovany Orozco Leal-

Amanda Perobelli/Reuters

The Covid-19 pandemic has exposed how fragile our globalised society still is to shocks from the natural environment. It has also demonstrated the far-reaching global impact of the economic, political, and social structures that our current mode of living depends on. This has been shown by the disproportionate effect the pandemic has had in deprived communities, from the local stage of cities and the communities within those cities; to the international stage where, for many industrialising economies, dealing with the pandemic by itself has turned into a humanitarian crisis.

Although it is impossible to predict, and perhaps even imagine the full impact the Covid-19 crisis is going to have in the future, looking at the challenges faced by healthcare services in a region as diverse as Latin America (which is also plagued by large within and cross-country inequalities), might shed light on what can be done and what needs to be done to combat this type of threat that trespasses borders and where no one is fully safe until everyone can be safe.

Goals and progress during the pre-Covid era in Latin America

The goal of having healthcare systems that don't leave patients with life-changing medical expenses and that reach everyone regardless of their ability to pay, has been a prominent part in the development and reform of healthcare systems in Latin America over the last two decades; even before it was made part of the Sustainable Development Goals as Universal Health Coverage in 2015. Although significant progress has been made towards this goal, the turn of the century brought a series of new challenges globally and regionally.

Along with many other countries, Latin American governments are experiencing increasing healthcare costs. This is partly driven by technological advances in health technologies, resource inefficiencies, and the double burden of infectious and chronic diseases. Demographic changes also matter as population growth in many Latin American countries is increasing at slower rates year by year, implying that, although ageing is not a driver of high costs yet, there is a reduction in the share of the active workforce which may generate a reduction in the taxable income used to finance public services such as healthcare. These, along with the current and future challenges from Covid-19, make the need for existing resources to be used efficiently more pressing than ever.

To this end, throughout the last decade, national agencies for Health Technology Assessment (HTAs) have been consolidated and expanding in the region, with the aims of achieving efficient and equitable use of resources, while improving national health outcomes. This trend originally emerged in Europe (where healthcare markets are tightly regulated), and since, many countries around the globe have started to create national agencies that coordinate, monitor and assess healthcare markets. Although HTA agencies are useful to contain rising costs and improve the allocation of limited resources, their implementation has not been uniform in Latin America due to the visible disparities in the political and economic realities across the region.

Cross-country limitations: infrastructure and financing

The limitations facing these agencies are also faced by healthcare markets overall, including lack of infrastructure and financing. These limitations translate into the lack of strong health information systems making it difficult to keep electronic records or generate data useful for training and decision-making. This also limits the potential for greater cooperation in terms of cross-country research and policy-making.

Beyond the technical implications, these issues have political implications too that need to be addressed as the slow uptake of policies and reforms is not only a consequence of the quality of research and data backing them but, most importantly, of political will which is strongly linked to the social and economic reality of each country.

As mentioned above, funding is one of the key issues healthcare systems across the region face. The World Health Organisation (WHO) advises 6% of GDP as a benchmark for the amount of public expenditure on healthcare for middle/upper-middle-income countries. However, up to 2018, only two countries in Latin America (Uruguay and Costa Rica) had a level of expenditure at or above the WHO recommendation.

Another feature of many health systems in the region is a strong reliance on taxation as the primary source of funding. This ties the funding of not only healthcare but the welfare state in general with a labour market characterised by high levels of informality. The informal economy is all economic activity that falls outside legal regulations or the tax system, and the IMF estimated that in 2017, 34% of GDP in Latin America and the Caribbean was accounted for by the informal economy (one of the highest in the world and at the same level as Sub-Saharan Africa). Although this estimate has decreased for more recent years, even if there are no official estimates yet it is expected that the Covid-19 pandemic has had a strongly negative impact in this area.

Furthermore, financial constraints limit healthcare to a partial coverage where the remaining demand for healthcare has to be met with out-of-pocket payments, these are direct payments that are not reimbursed by the health system and, on average, constituted nearly one-third of total healthcare expenditure in the region in 2018 (according to IMF and World Bank estimates). In fact, in countries such as Ecuador and Mexico, it reached 40% and 42% respectively, showcasing again the large inequalities that exist across the region.

Transition to the pandemic and post-pandemic world

When thinking about the transition into the post-pandemic world, it is important to be aware of the structural issues mentioned before, because these are having and will continue to have an important role in shaping the response of the region to the current crisis. For example, large cross-country inequalities gave low-income countries limited access to high-cost treatments even when the benefits could outweigh their cost (as was the case in Bolivia and Honduras which in the past had to apply for financial support to fund their HPV vaccination programmes). This is an even more pressing issue now in the context of a global pandemic that has no respect for borders.

In terms of national health finance, the World Bank estimates that, based on the experience of previous crises, the economic shock of the pandemic will lead to a reduction in government health expenditure (both as a consequence of reduced budgets and relative to other sectors of the economy), lower out of pocket expenditures, and less development assistance on a global scale. The latter can be exemplified by the current attempt by the UK government to cut more than £2 billion of its current foreign aid budget, most of which is destined for research in areas such as health and climate change in developing countries.

Considering the structure of the Latin American healthcare market and the implications these predictions could have is important because it highlights that overcoming the economic crisis caused by the current pandemic directly depends on solving the underlying health crisis. It is important to recognise this both on a national and an international scale, and it is important that policy-makers are aware of this too.

This allows envisioning not only the multiple issues that exist but how much more can be done, from better and more progressive taxation systems to support health investment, to the potentially high returns of these investments on a local and national level. And on a larger scale, it shows the potential of international cooperation (within and outside the region) in terms of research, bargaining power and policy-making. But then again, political will and responsibility are important, it has to come from the local to the international level, and it has to account for the existing injustices and inequalities if it wants to deal with the current crisis or the possibility of a future climate crisis, both of which do not care for borders and impose the requirement that no one is fully safe until we are all safe.



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