Financing as an instrument of public policy.

Abstract

The Word Bank Study "Financing Health Services in Developing Countries: An Agenda for Reform" is centered on a thesis of decreased government responsibility for financing health services. The study points out that more basic medical services are needed for the poor, but the aged and increased urbanization are forcing the application of more finances into hospitalization services. The World Bank study incorrectly assumes that the above problem is due to an epidemiologic polarization of rich vs. poor and that the only benefits from curative medicine are private, not societal, benefits. The proposal stemming from these assumptions financially separates curative from preventative services, regardless of its proven costliness and inefficiency. The 4 suggested specific World Bank reforms are: 1) charging fees for the use of health services; 2) provision of insurance or other risk coverage; 3) effective use of nongovernment resources, i.e. private practices, midwives; and 4) decentralization of government health services. These are interesting, although imperfect, solutions to the pressing problem of health care finance. The largest issues may be problems from the fragmentation of health services, cost inflation, and lack of effective controls--issues that are not dealt with in the World Bank study.