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The political context of universal health coverage

Photo credit: Ho New/Courtesy Reuters

This post was first published as an editorial in MMI Network news, 26 February 2013. Reposted here with permission.

While reading the outcome statement and background document of the joint World Bank/WHO ministerial level meeting on Universal Health Coverage (UHC) held last week, two clear issues emerge: The first one is getting political commitment to UHC at the highest government level; the second one is that “fiscal realities (in poor countries in particular) greatly constrain the ability to rely predominantly on public funding. Still, countries do not need to be rich to make progress towards UHC, experience suggest that political commitment is essential.”

The papers seem to suggest that fiscal reality is cast in stone and that within this fiscal reality countries have the political space to move forward to UHC. This approach, in essence, tells us something about the sad situation we have come to live in. A reality in which the financial oligarchy have taken over country democracies, according to Simon Johnson’s The Quiet Coup. A reality in which economic inequalities have an enormous negative impact on health equity and social wellbeing. Untaxed private wealth hinders many countries to finance strong public systems to reach or maintain Universal Health Coverage.

It is not only a problem of poorer countries. We have the same within the European Union. For instance 23.400 “mailbox” companies are registered in the Netherlands, with its infamous tax heaven industry. It lead for instance to Portuguese and Spanish multinationals to avoid paying tax in their respective countries. Both Spain and Portugal have to severely cut their public spending on health expenditures and privatize part of their health services, as required by austerity measures set by the European Union. Even the G20 starts to recognize that the tax avoidance by big business is a big problem for the social development of societies.

These examples merely indicate that the issue of fiscal space and progress on UHC are closely interlinked. The Lancet Article ‘Political and economic aspects of the transition to universal health coverage’ explains it as follows: “UHC will only be achieved if public policies ensure that a large share of this increased spending is pooled through a mechanism that promotes equitable and efficient utilization of care. The exact mechanisms for pooling will depend on social processes and political action that establish the parameters for an acceptable public role in health care. In some cases, the result will be a government that primarily regulates the health-care sector, in other cases a government that finances or directly provides care.” In many emerging economies, such as South-Africa, Indonesia; but also in European countries with traditional generous social security systems, there is strong political pressure to remain attractive for international (financial) investors. In parallel there is similar pressure to reduce public spending on health care and create space for health insurance companies in the market of (mandatory) social insurance packages. Authors have coined this process of tax competition “a race to the bottom in slow motion”, with specific policies becoming less generous without disappearing, or creating a public debt that will eventually force their termination.

The authors also suggest a mechanism to mitigate this race to the bottom, the so called social protection floor. The idea underpinning this initiative is that all states would commit to agreed minimum levels of social protection tailored for their respective country. The UN General Assembly resolution concerning universal health coverage acknowledges the link between universal health coverage and social protection mechanism, and urges member states to give priority to these links within their national social programs and policies.

The contradiction is obvious: There is a strong drive to have Universal Health Coverage included in the post 2015 development agenda and for countries to advance UHC at national level. At the same time these countries are dealing with (global) tax competition, tax evasion and a deregulated financial sector that is playing with casino capital at a global level. It is a good first step that WHO and World Bank work with member states to increase capacity and undertake steps towards universal health coverage. Actors working on advancing UHC inevitably will come to the issue of claiming national policy and fiscal space as a basic macro-economic condition for a country to advance its coverage of social protection and health services. Good examples in these include Brazil and Thailand.

The question is whether all the countries that are now supporting the cause of UHC are willing to make progress on further regulation of the financial sector and reform of their fiscal policies. Are these countries able to agree on global redistribution mechanisms and regulatory mechanism to curb the massive amount of untaxed wealth and casino capital, and hence free considerable resources to fund the national social protection floors? Will countries be able to develop true “progressive” taxation schemes, not merely income or VAT based, but rather on wealth and CO2 emission? Or do we want rather global philanthropy to provide the complimentary funds for advances in UHC and social security?

Bottom line: Universal Health coverage is in essence linked to political demands, choices and inherent power relations, both at the national and global level. If we all agree to have UHC included in the post 2015 agenda, then we should be willing to be truly involved in the political and ideological battle that will enfold over the coming period.

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