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Health and the New Post-‐Revolution Social Contract Egypt in the Transitional Period: Experiences from Developed Countries Abdallah Erfan Assistant Professor, Business Administration Department College of Commerce, al-‐Azhar University Health and the New Post-‐Revolution Social Contract Egypt in the Transitional Period: Experiences from Developed Countries (A Workshop) Abdallah Erfan Assistant Professor, Business Administration Department College of Commerce, al-‐Azhar University Arab Forum For alternatives think tank seeks to perpetuate the values of scientific thinking in Arab societies, and is working to address issues of political, social and economic development in the framework of the traditions and rules of scientific, away from the language of incitement and propaganda, in the framework of respect for political contexts and social systems, as well as universal human values. It is working to provide space for the interaction of experts, activists and researchers interested in issues of reform in the Arab region, governed by scientific principles and respect for diversity, is also keen Forum to offer policy alternatives and the potential social, not just hoped for the decision maker and the elites of different political and civil society organizations, in the framework of respect for the values of justice and democracy.
For this purpose the AFA seeks to develop mechanisms to engage with local, regional, and international institutions interested in change and reform. In this phase, the AFA is focused on three major areas: policy analysis and public institutions, transitional phases and democratization, and social movements and civil society. The AFA is a limited liability company (Commercial Registry No. 30743) These papers are published on a non-‐periodic basis and are the product of an internal seminar; they do not necessarily express the views of the Arab Forum for Alternatives CONTENTS Health Services and the Post-‐Revolution Social Contract The Problems of the Egyptian Health System The Ministry of Health Medical Insurance Suggestions for Reform and a New Social Contract Toward a New Socio-‐Economic Structure If health is not provided to everyone, then why then did the revolution happen? —Martyr INTRODUCTION As confirmed by international conventions, the right to health is an essential right that includes the provision of a standard of living for adequate health and sustainable well-‐being for oneself and family. The quality and efficiency of the health sector impacts the level of human development in any nation, and the establishment of a health system that covers the entire population is an important indicator of social justice. Health is an essential human right to be provided whenever needed, regardless of social, economic, or religious considerations. Health conditions are directly linked to socio-‐economic status and welfare. Better health means a higher capacity to work and produce, which is then translated into the ability to break out of poverty. If health services are provided exclusively to certain groups and denied to others due to their misfortune, the latter group is likely to remain poor and dependent. Such conditions only deepen political injustice, stifle economic innovation and productivity, and lead to the deterioration of ethical and human conditions. The slogan of the January 25th Revolution was “freedom, dignity, social justice.” A common element linking these three objectives is health and the provision of universal health services irrespective of financial capability. Access to the means of adequate health ensures individual independence, freedom, and the ability to enjoy life and contribute to it. The right to health enables the individual to work and produce, which then gives him the dignity to earn his own living. Access to adequate health influences the productive capacities necessary for economic development. The spread of disease causes youth mortality and lowers human productivity levels. Both of these risks place a heavy burden on time, effort, and cost, whether in production or medical costs. In the long term, medical costs can be substantial and might constitute an obstacle to the provision of medical services to a large segment of the population. At the same time, creativity and innovation require good health, both physical and psychological, which is necessary to unlock human capabilities and experimentation. This is especially relevant when assessing the advantages of making health services more widely available to Egyptians. HEALTH SERVICES AND THE POST-‐REVOLUTION SOCIAL CONTRACT Debates about state services such as health and education are directly related to the nature of the social contract between the state and society. Each party commits to performing its obligations consensually as long as the other party performs theirs. The social contract that emerged from the July 1952 Revolution recognized the state’s responsibility to provide all appropriate services to the citizenry in return for a high taxation level commensurate with the scope of this responsibility. This contract continued until the early 1970s, when the state unilaterally decided that these conditions were unsustainable. The results of the five-‐year plan, the alliance with the United States, and the adoption of free-‐market policies heralded the end of the old social contract. The termination of the contract was neither bilateral nor public, but was carried out solely by the state. The state then established a new contract with other parties, to which it remains committed, while the people continue to uphold the conditions of the original contract. As predicted, the state withdrew from service sectors, but the private sector did not step in to replace it. As a result, funds allocated to health, education, and public services shrank, and salaries for public-‐sector jobs remained fixed at certain levels. All mechanisms for societal dialogue, whether through unions for improved work conditions or other bodies, were destroyed, while the market and prices were liberalized without regulation. Citizens began to adapt to the new social contract, especially since all mechanisms to revisit and renegotiate the contract were blocked. In turn, this marked the beginning of the deterioration of the public sector in Egypt. Teachers began to venture into private tutoring; doctors began to focus on private clinics; and prices of services stabilized through the acceptance of bribes. The regime could not be honest with the people about the new changes; everyone knew the reality but kept silent. Honesty would mean change, and this was out of the question. In these circumstances, a new social contract took shape, based on pretense, neglect, and cooptation. The state would pretend to fulfill its role by providing nominal salaries; in exchange, doctors and teachers would pretend to do their nominal jobs, while civil servants would turn a blind eye to corruption and state inefficiency in exchange for the state disregarding their violations. In short, the new social contract entailed a state of mutual complicity. THE PROBLEMS OF THE EGYPTIAN HEALTH SYSTEM As result of the dysfunction in the Egyptian economy and the state’s retreat without a concomitant advance by private sector, social conditions began to deteriorate, leading to overall inefficiency and injustice. LOW SPENDING Average spending on health in Egypt has drastically declined, especially in comparison to other countries, dropping from 3.8 percent of GDP in 2000 to 1.5 percent in 2011, while the international average was 5.8 percent of GDP.1 Even in 2000, health spending was relatively low when compared to other countries. Whereas Brazil allocated 8.3 percent of government expenditure to health and the 1 Taqrir al-‐itijahat al-‐iqtisadiyya and al-‐istiratijiyya (Report
on Strategic Economic Directions). AlAhram Center for Political and Strategic Studies. Cairo, 2011, p. 64. US 13 percent, in Egypt only 4.9 of government spending went to health. Deducting allocations for loan payments, the real percentage came to 4 percent. This drop in spending resulted in lower quality health services due to salary cuts and reduced funds for surgical equipment, medicine, and the maintenance of facilities and equipment. Investment in the expansion and upgrading of buildings and assets similarly declined. Health expenditure statistics in 20002 Country Total health Government health Government health expenditure as % expenditure as % of expenditure as % of of GDP total government total health expenditure expenditure Brazil 8.3 40.8 8.4 Egypt 3.8 46.1 6.5 Israel 10.9 75.9 15.4 USA 13 44.3 16.7 Although the salaries of health workers dropped, whether doctors, nurses, or administrators, they still account for 50 percent of health spending. Low wages are one of the primary reasons for poor quality, inefficiency, and inequality in health services. Significantly, Egypt does not lack doctors or nurses, boasting 28 doctors per 10,000 patients, in comparison to the average of 18 in the Middle East and North Africa. Nor does Egypt suffer from a shortage of beds, with 27 beds per 10,000 patients, compared to an average of 21.7 in the same region. General Health Statistics3 Unit
Egypt MENA region 78.3
214
Population Million 5
4.3
Total health % expenditure as % of GDP 112
315
Per capita share of USD health expenditure 2.789
8.178
Per capita share USD GDP 27
21.6
Hospital beds per Ratio 10,000 people 28.3
18.3
Doctors per 10,000 Ratio 2 Al-‐Hala al-‐sihiyya wa al-‐khadamat al-‐sihiyya fi masr: dirasat tahliliyya lil-‐wad’ al-‐rahin wa ru’a mustaqbaliyya (Health Conditions and Health Services in Egypt: An Analytical Study of the Current Situation and Future Perspectives). Association Of Health & Environmental Development., 2005. P. 161. 3 MENA: Health Care Sector Report. Al Masah Capital Limited, p. 28. people 70.3
71.4
Life expectancy Years 18.2
25.9
Child mortality Death per 1,000 7.7
4.5
Percentage of % elderly Low salaries in the health sector go hand in hand with reduced expenditure on medicine and medical equipment, and low public investments, both in the expansion and maintenance of existing assets, in addition to a deterioration in the quality of health services provided. Naturally, both parties to the health equation, the doctor and the patient, resort to other alternatives that do not necessarily mitigate inefficiency and poor quality, but only reinforce inequality and unfairness in health services. The Chaotic Provision of Health Services Various sectors are involved in the provision of health services, including the Ministry of Health and Population, the state Health Insurance Agency, teaching hospitals, ministries such as the Ministry Defense and the Ministry of Interior, unions and professional syndicates, and private clinics. It is difficult to efficiently provide high quality health services given such a large number of unregulated institutions that provide health services. As a result, each institution unilaterally provides it own medical services in an attempt to meet the needs of its stakeholders. All attempts to reach a collective solution for the provision of quality health services after the withdrawal of state have failed. THE MINISTRY OF HEALTH The Ministry of Health is the main provider of health services, possessing the most health facilities in Egypt. It provides health services through its 1,250 hospitals, with 116,000 beds and a highly centralized administration that prevents the maximization of its potential. The ministry deals with 26 other government bodies, which makes its ability to plan, invest, and monitor all its operations and activities even more difficult. Moreover the ministry is burdened with tasks and missions that are not clearly defined, amid a lack of coordination and communication among its different components. This makes it difficult to determine accountability and responsibility for incompetence. The ministry maintains no official systems and policies, but makes its decisions in a highly personal manner. Finally, decision making is based on neither an organized database nor a health information system. Due to this dysfunction, there is confusion between strategic and tactical or operational levels. The latter handles operations either in full or in part, while the Ministry plans, executes, and supervises health services on all levels. This leads to overlap in mandates and specializations, as well as the duplication of efforts, and makes it difficult to trace the root cause of dysfunctional performance. In addition, the system has produced a clear conflict of interests. This extreme centralization in planning, execution, and investment has seriously weakened the system’s responsiveness to local needs, which has given rise to a substantial gap between current policies and strategies, on one hand, and the realities of local communities, on the other. The structure of the ministry only increases costs amid the lack of a centralized system to coordinate among different service providers, which would cut costs and expand health coverage. Moreover, resources are not properly distributed between primary, secondary, and higher levels of medical services, with a bias in favor of secondary and advanced care at the cost of primary care. The problem is compounded by administrative personnel who are poorly qualified to make the best of allocated resources, which then results in great waste in secondary and advanced care as well. The ministry maintains no medical records system. Data is fragmented among different institutions within the ministry, which results in the provision of incomplete and inaccurate data. Moreover, the ministry does not have a clear vision of its information systems, and its different departments do not coordinate efforts to collect and categorize their data. Even worse, data is not used as a basis for planning or supervision. Due to these problems, pharmacies and pharmaceutical providers must deal with production and pricing systems that are not based on reliable data, causing recurring shortages and surpluses in many medicines, which in turn results in missed opportunities or high storage expenses. HEALTH INSURANCE Citizens working in the government, public, and private sectors are all covered by the Health Insurance Agency, as are pensioners, widows, children, and school students.4 In 1993, a law was passed making all school students eligible for health care, while in 1997, another law was passed granting optional care to preschool age children. The Health Insurance Agency currently covers 58 percent of the Egyptian population from different segments of society, with some 45 million Egyptians insured.5 Yet, a distinction must be made here between theoretical coverage and the actual ability to access health services. Egyptian citizens are generally dissatisfied with the quality of health services, health providers, and the lack of improvements. In addition, insurance services are either in short supply or wholly lacking in rural 4 Central Agency for public mobilization & Statistics: (http://www.capmas.gov.eg/pages_ar.aspx?pageid=892 ) 5 Talima, Nisma. Mata wa kayf tasil al-‐thawra ila al-‐siha? (When and How Will the Revolution Reach Health?). Masress, (http://www.masress.com/alahaly/6311). areas or those without medical facilities, especially when compared to urban areas. A public opinion poll conducted by the Cabinet’s Information and Decision Support Center found that government workers identified low wages followed by the low quality of health services as the worst problems they face.6 There are no independent institutions in Egypt to ensure the quality of health services, whether in the private or public sector. In the public sector, the Ministry of Health monitors the quality of its services through the Department of Quality Administration, which is part of the ministry and thus raises the question of a potential conflict of interest and overlapping roles. In the private sector, there are no institutions specializing in quality control and evaluation. More importantly, there are no incentives or penalties for quality control. It is no wonder, then, that among 1,200 hospitals, only one—Dar al-‐Shifaa’ Hospital—has obtained a quality assurance accreditation certificate from the Joint Commission International.7 Fairness A system’s ability to insulate itself from financial risk is an important element of its success. With the average citizen incurring 60 percent of the cost of health coverage, the fairness of the Egyptian health system is called into doubt. Since individuals with salaries and fixed incomes pay the most taxes, they bear the brunt of funding the public health system, which no doubt exacerbates the unequal distribution of health services. Sector Ministry of Health and Population Health Insurance Agency Family out of point expenditure Other ministries Public sector companies Distribution of health expenditure8 % Sector 21 Educational medical institution % 1 10 60 Medical institutions Unions 1 1 7 1 Private 1 The question of who benefits from the services provided by the Egyptian health system adds another dimension to the issue of fairness. The lowest social stratum receives 16 percent of overall government spending in comparison to 24 percent dedicated to the highest social stratum.9 The poorest 20 percent of the population 6 Khayri, Amina. Auruba jaratuna – al-‐ta’min al-‐sihi fi Masr ya’d al-‐fuqura biri’aya wa yutalib al-‐
aghniyya bil-‐musharaka fi al-‐masu’liyya (Our Neighbor Europe: Health Insurance in Egypt Promises Care to the Poor and Demands Participation from the Wealthy in Taking Responsibility). Al-‐Hayyat. London, 5 December, 2009; (http://www.al-‐
ahaly.com/?option=com_content&view=article&id=5074:-‐25-‐&Itemid=43). 7 Talima, Nisma. 8 Al-‐Hala al-‐sihiyya wa al-‐khadamat al-‐sihiyya fi masr: dirasat tahliliyya lil-‐wad’ al-‐rahin wa ru’a mustaqbaliyya, p. 16. 9 Ishkaliyyat al-‐infaq al-‐sihi fi Masr (The Problems of Health Spending in Egypt). Egyptian Initiative for Personal Rights. April, 2009. p. 14. benefits from 19.3 percent of Health Ministry services, while the richest 20 percent benefits from the same percentage (20 percent). The poorest quintile uses 17.5 percent of health insurance services to school students, in comparison to 20.5 percent for the richest quintile. The poorest quintile benefits from 14 percent of services provided by the Health Insurance Agency, while 33.6 percent of its services go to the richest quintile. Finally, the poorest quintile benefits from 13 percent of Health Ministry services while 25.3 percent of services go to the richest quintile.10 These figures clearly demonstrate that health services do not target the poor, and that the poor, based on their poverty, can benefit from such services even when they are available. In fact, health services do not go to the poor. Public health spending differs between rural and urban areas, as well as between Upper and Lower Egypt. In addition to the low salaries for doctors and inadequate medical equipment, absenteeism in medical centers in rural and peripheral areas causes noticeable understaffing in Upper Egypt, especially when compared with Lower Egypt. In addition, medical services in rural areas are already generally lower than other areas. Travel to urban centers and Cairo to obtain medical services in private clinics puts heavy costs on rural residents, assuming that they are financially able to shoulder these costs in the first place Travel to urban centers by a significant segment of the citizenry increases their financial burdens and levels of risk. In the meantime, they pay their share of taxes, which should ostensibly entail equal spending in return. The geographic division of health work11 Urban
Lower Egypt Upper Egypt Peripheral Doctors 99 67.4 56 110 Nursing 99 143 89 212 Suggestions for Reform and a New Social Contract Clearly, the system has failed to provide high quality health services for all citizens, meet their expectations, and protect them against financial risk. Equally clearly, there are serious problems in the levels of efficiency, quality, and fairness, all of which necessitate a radical renegotiation of the existing health system and the consideration of alternatives. What, then, should be done? Since the 1970s, many initiatives have aimed to improve efficiency, administration, and coordination among health service providers. The key missing component in all of them is a comprehensive vision and a disregard for the structural problems in the health system. In 2006, the government signed an agreement with the European Union for an aid package of €88 million to overhaul the health system. The deal 10 Ibid, p. 28. 11 Al-‐Hala al-‐sihiyya wa al-‐khadamat al-‐sihiyya fi masr: dirasat tahliliyya lil-‐wad’ al-‐rahin wa ru’a mustaqbaliyya, p. 161. entailed introducing a new health insurance law, empowering the role of the Ministry of Health, and separating health service providers from insurance companies, thus freeing up needed financial resources, which is the greatest obstacle to the provision of adequate health services. Amid fears that the overhaul would be a step toward privatization, even partial, the proposed law provoked a broad debate on the health insurance system, although the law provided for state subsidies to citizens who could not afford health service costs. The new law was based on a separation between the financing and provision of health services, also providing for the administration of funding sources to ensure sustainability. After years of study and consideration by the Egyptian government, the final draft of the law was produced with the help of several international parties, including the World Bank, USAID, and the EU.12 The new bill was flawed in that it relied on the same financial resources that had already proven ineffective in existing social and economic conditions and had fostered distrust in the government. It did not reflect an understanding that problems of low quality and inefficiency, lack of access to health services in rural areas and Upper Egypt, mismanagement, and corruption all indicate the need to overhaul the system, clearly identify the roles of each competent party, and define their responsibility in a new social contract that reflects the evolution of socio-‐
economic structures. A NEW SOCIO-‐ECONOMIC STRUCTURE Often such restructuring attempts are given to failure, despite the most sincere efforts, because they disregard the larger socio-‐political system. Without fixing the wage system to guarantee dignified, fair living condition for all citizens, it is extremely difficult to institute radical financial reform of education, health, and other public services since low wages impede any attempt to establish a co-‐payment system for health insurance, for example. In turn, low contributions lead to the overburdening of the system in the long term. In addition, the large number of Egyptians employed in the informal economy means that a large percentage of the population falls outside the umbrella of health insurance. If the state covers them, this only exacerbates inefficiency and inequality. While it is difficult to estimate the size of this segment of society, its productivity, and its income, it places additional burdens on the system while also partaking of health services to which it did not contribute. This highly centralized nature of the political system and local councils’ lack of authority additionally puts the burden of supervision on the central government in the capital. It is therefore important to strengthen the role of the governorates and local councils in supervising health service providers, as a step toward the 12 Khairy, 2009. delegation of planning and provision responsibilities. This will facilitate a higher degree of cooperation, responsiveness, trust, and sense of ownership in health services. Health should not be a commodity provided only to those who can afford it. The health-‐services market cannot regulate itself to ensure high quality standards, and the economic, political, and human costs of failure in the health market are too considerable to be dismissed. When designing a new system, it should be considered that the government is not always the most efficient actor and its ability to provide services may be limited. Therefore, instead of relying primarily on the private sector, we can embrace a new concept that has some prior currency in Egypt: non-‐profit organizations. NGOs are run as efficiently as the private sector with the only difference that they do not seek profit. Many religious institutions in Egypt employ this model of service provision, and the same model is common in Germany and Denmark, which both heavily rely on the non-‐profit sector to provide many services fairly and efficiently. FINANCING THE SYSTEM Designing an efficient, fair health system depends directly on available resources. A country’s level of economic and social development also circumscribes potential financing options. There are four common approaches to financing health services: public revenue, social health insurance, private health insurance, and out-‐of pocket payments in clinics and hospital. Of course, any funds allocated for health expenditure come originally from the pocket of the average citizen, whether directly or indirectly through taxes or health insurance premiums, both social and private. The objective of any health system is to ensure the highest degree of efficiency and fairness for the funds allocated to health for everyone. The advantage of the social insurance system is the ease of collecting revenue and directing it to health sector development. This is normally done in a manner commensurate with competence, efficiency, and technical capabilities.13 This system, adopted by countries such as Sweden, Britain, and Canada, provides the highest level of shared risk. Social health care systems need a developed economic and administrative system to ensure the collection of premiums without evasion, which is difficult in Egypt due to the large informal sector and smaller enterprises’ lack of compliance with accounting standards, on the basis of which revenue can be monitored. This type of 13 Christian A. Gericke, M.D., M.Sc. (Econ), D.T.M.H. Financing Health Care in Egypt: Current Issues and Options for Reform. Berlin University of Technology, March 2004, p3. system relies on the premiums of stakeholders and business owners. Although it covers nearly all its costs, it is often at the expense of lower wages to health workers, which consequently affects their performance and the quality of services provided.14 In turn, the price of premiums must be raised to improve the level of service, which then often clashes with the low nominal wages of individuals working in premium-‐collection bodies. Private health insurance systems provide advanced health services in return for high costs and a low level of shared risk, while out-‐of-‐pocket systems have the advantage of no risk sharing. Egyptians pay around 60 percent of their health spending out of pocket, which is mostly spent on private clinics (40 percent) and medicine (33 percent). The distribution of out-‐of-‐pocket spending per service provider15 Type Ministry of Health and Population Training hospitals % 3.5 Type Private clinics % 41.9 3.1 3.2 Other hospitals Hospitals owned by the Health insurance Agency Private hospitals 0.9 0.8 Ministry of Health Clinics Pharmacies (medicine) Transportation (and other) 0.9 33 4 Following from the foregoing analysis, attempts by the state to avoid restructuring the health system by relying on public revenue (taxation), due to a commitment to an extreme liberal agenda, and attempting to expand state coverage as part of its reform policy will only lead to bigger failures for the system as a whole, as this approach disregards the fundamental issue—namely, the wide gap between finance and infrastructure. The World Health Organization (WHO) recommends increasing public spending on health to 15 percent. Regardless of how reasonable this percentage is, the problem in Egypt is the current low taxation level (20 percent)—one of the lowest worldwide—which does not permit the government to fulfill its responsibilities. This low level of taxation concords with the explicit social contract under the old regime while breaching the implicit contract, which represents the nature and direction of a successful regime. 14 Khalil, Muhammad. Ba’d thawrat 25 Yanayir: I’adat bina al-‐nizam al-‐sihi (After the 25th of January Revolution: Rebuilding the Health System). Al-‐Ahali; (http://www.al-‐
ahaly.com/?option=com_content&view=article&id=5074:-‐25-‐&Itemid=43) 15 Al-‐Hala al-‐sihiyya wa al-‐khadamat al-‐sihiyya fi masr: dirasat tahliliyya lil-‐wad’ al-‐rahin wa ru’a mustaqbaliyya, p. 161. The solution entails allocating funds to increase salaries, training, maintenance, and expansion and guarantee access and service delivery in rural and peripheral areas. This proposal is further supported when we consider that 84 percent of inpatient care take place at facilities affiliated with the Ministry of Health, Public Health Insurance, and teaching hospitals, while 55 percent of outpatient care is delivered at private clinics. Developing outpatient and health centers will consequently reduce health spending a great deal while increasing the quality and ensuring a fair health system for many individuals who have been marginalized by the current system. Such reforms will increase the level of trust in the health system and government services in general. They will also help create standards for service providers, foster coordination between them, eliminate waste and corruption, increase the level of efficiency and quality, and ensure the fairness of the system. International taxation levels16 Country Egypt Denmark Germany USA Turkey South Korea Highest tax percentage on individuals 20 62 45 35 35 35 Highest tax percentage on companies 20 25 29 40 20 24 In the subsequent stage, and in tandem with improving the quality of state services, health insurance services must be developed to rectify quality and administration dysfunctions in order to gain citizens’ trust and convince them to buy in to the system, thus ensuring its sustainability. There is no way for the state to assume its duty of bringing prosperity to citizens—a commitment that has been breached for decades—without raising taxes and adopting a progressive tax system. Other demands for increased funding for education, infrastructure, and other spheres of human development were also sidelined by the previous regime. All of these can be addressed through a new social contract based on honesty, responsibility, and the seriousness of all parties, instituted through a transparent, democratic process, in order to provide dignity, justice, and prosperity to the Egyptian citizen. 16 Taqrir al-‐itijahat al-‐iqtisadiyya and al-‐istiratijiyya , p. 70.