By Minal Bopaiah, Communications Manager, PSI
Many U.S. citizens are sighing with relief after filing their annual income tax forms today. And this year, for the first time, a citizen’s registration with a health insurance policy will affect their tax rate.
But while the U.S. has been hesitant to use tax revenue to bolster its health system, other countries are creatively using taxes or other policies to reduce the burden of health care spending on their populations, especially for those at the bottom of the economic ladder.
Just look at these five examples from across the globe:
- In Brazil, half the revenue raised from a financial transactions tax goes straight to the Ministry of Health. A financial transactions tax is a small tax — usually less than 1% — on transactions of stocks, bonds, derivatives, or currency exchanges. It’s much less than investment managers charge their clients per transaction and is usually applied to larger transactions by multinational corporations. The result is typically a steady, daily, significant flow of tax revenue—exactly the kind of cash flow that a health care system needs to function optimally. Brazil joins more than 30 countries already with a financial transactions tax. And they needn’t apply solely to financial products. For example, since 2006, small taxes on airline tickets from nine countries have generated more than $2 billion for HIV and AIDS through UNITAID, and these have also funded the WHO-hosted organization’s TB and malaria treatments, which have saved hundreds of thousands of lives.
- In Ghana, half of health care spending comes from a progressive tax scheme, which taxes the wealthy at a higher percentage rate than the poor—unlike most countries in Africa, where the majority of health care spending is still out-of-pocket. Although access to health care services still remains unequal, favoring the wealthier in Ghana, that’s still an important achievement for a health financing system.
- In Thailand, a payroll tax pays into the country’s universal health coverage scheme. While that’s not the most progressive way to finance a health care system, its coverage has had tremendous success reaching the poorest. 44% of enrollees in Thailand’s national health insurance scheme come from the bottom 40% of the income scale, and since the system’s introduction, poverty caused by illness has declined 75% for families in the bottom 20%—all without increasing total expenditure on health care.
- Julio Frenk, who was just named the new president of the University of Miami, was formerly the dean of Harvard’s School of Public Health, and before that, Mexico’s Minister of Health. In Mexico, Frenk led the design and implementation of a new national health insurance scheme that achieved universal health coverage, covering 58 million additional people, mostly in the informal sector (i.e., citizens with off-the-books jobs or self-employed with no registered business). A majority of informal sector workers live in poverty, and one serious illness in the household can bankrupt the entire family. The key to the scheme was a total restructuring of how the ministry spent funds. That included setting aside funds specifically for public health activities, like campaigns for HIV testing or hypertension screening, which raised demand for diagnostic and preventive services for diseases that are cheaper to prevent than treat. It was no small political feat to get this scheme passed, but it certainly helped that Frenk and his team emphasized data that shows health equals wealth for everyone— not just the rich.
- In India, the world’s most populous democracy, health care financing comes from various sources: taxes, philanthropic funding, and private out-of-pocket spending. While simplifying that system will be important in the long run, a major impediment to providing health care for everyone in ensuring payment to providers. That’s why India is issuing biometric smartcards that store members’ fingerprints and photographs and allows public and private providers to receive payment from whatever combination of state, central, and philanthropic financing has been allocated to deliver approved services. With such a large population, India is hoping a sustainable, long-term financing plan can be constructed using the data provided by so many transactions.
So, while national spending on health care is new to the US, other countries have been innovating to provide universal health coverage for its citizens for some time now. For PSI, the data also supports the mission – universal health coverage reduces the burden of disease while also reducing overall costs and increasing societal health and wellbeing. Find out more about how PSI President & CEO Karl Hofmann thinks the global health community can fast-track universal health coverage in the developing world.
