Guatemala: The economic burden of illness and health system implications

Abstract

Objectives

To assess the economic burden of ill health in Guatemala, the characteristics of Guatemala's health system that potentially explain this burden, and to identify policies to help ameliorate it.

Methods

Data from the 2000 and 2006 Living Standard Measurement Surveys are used to assess levels of financial burden from ill health, along with information on health system characteristics of Guatemala and recent reform experiences of several middle- and low-income countries.

Results

Despite some gains over the period from 2000 to 2006, there continues to be both a high level and inequitable distribution of financial burden associated with ill health in Guatemala. Low levels of insurance coverage, a heavy concentration of the uninsured among the less well off and rural populations, as well as their low levels of access to public services are important drivers of out of pocket spending on health. Households with older members also appear to be at increased risk for out of pocket payments.

Conclusions

High levels of catastrophic health spending and poverty co-exist with significant economic inequality and poverty in Guatemala. With health system features and a large informal sector similar to many other developing countries, recent international experience can provide useful lessons to help Guatemala devise innovative financing and payment mechanisms to address these concerns.

Introduction

This paper has two goals. The first is to describe the economic burden of ill health on Guatemala's population and to highlight the characteristics of its health sector that likely explains this burden. Our focus on Guatemala derives from the fact that it is the country with the highest population in Central America, and among the poorest in the Latin America and Caribbean region. With a population of about 13 million, Guatemala accounts for nearly one-third of the seven countries that comprise Central America. The share of its population living below the poverty line of $1.25 (PPP adjusted) is considerably greater than the average of 8% for Latin America and the Caribbean region as a whole so that Guatemalans are likely to be more vulnerable to the financial impact of health shocks, whether in the form of out of pocket spending, or income losses. This risk is further underlined by its relatively low levels of government spending, as a share of GDP, on health in the country – at 1.9% of GDP, public spending on health in Guatemala is the second lowest in the Latin American and Caribbean region [1], [2]. The second goal is to use recent health reform efforts in several developing countries to highlight lessons that Guatemalan policymakers can use to formulate strategies to address the economic consequences of ill health for their population.

This paper contributes to an emerging literature in poor countries that links health system characteristics to the risk to their populations of catastrophic levels of spending on health and of falling into poverty on account of ill health [3], [4]. Much of this literature has focused on Asia, and the paper helps fill an important gap in the literature on the economic burden of ill health and its links to health system characteristics by analyzing the case of a major Central American country. To be sure, this is not the first analysis to focus on the Guatemalan health system. In recent work, Macq et al. [5] analyzed the impact of public sector contracting of external health care providers on equity and efficiency in the provision of publicly funded health care, and more generally, on governance in the public sector in Guatemala. The authors concluded that contracting in Guatemala may have had a positive impact on equitable provision of health services, but negatively on efficiency. Another study found that close to 40% of Guatemalans do not have ‘access’ to health care services or pensions and most of these fall into the category of poor or extreme poor [6]. However, we believe ours is the first paper to undertake a careful examination of illness-related economic outcomes in Guatemala and health system factors that likely explain these outcomes, along with associated policy implications.

We find a high level of financial burden due to ill health on Guatemala's population as well as an inequitable distribution of this burden. Both the size and the distribution of this burden are linked to health system characteristics that are described in the next section, including a low level of insurance coverage and a heavy concentration of the uninsured among the economically worse-off and rural populations. The situation is likely exacerbated by the poor quality and low levels of physical access of subsidized public services to the poor. There is also some evidence of rising treatment costs over time for hospital stays. A key finding is that even though overall health expenditures are financed primarily by the rich, a combination of low access to public services and relatively low ability to bear even small levels of spending by the poor leaves them highly susceptible to catastrophic financial implications of ill health and impoverishment. We conclude by drawing upon lessons emerging from the recent efforts of several developing countries that have sought to address similar challenges.