Health and social assistance during economic and financial crisis

Abstract

© W. S. Maney & Son Ltd. 2010. Journal of Management & Marketing in Healthcare. VOL. 3 NO. 1. PP 4–8. APRIL 2010 DOI: 10.1179/175330310X12665775636300 Armin Fidler is Lead Advisor for Health Policy and Strategy in the World Bank’s Human Development Network. Dr Fidler has an MD from the University of Innsbruck; a diploma in tropical medicine and hygiene from the Bernhard Nocht Institute; and a master’s degree in both public health and health policy and management from Harvard University’s School of Public Health. He also has certificates in management from the Harvard Business School and in public finance and welfare economics from the London School of Economics and Political Science. Valerie Moran is a junior professional associate in the World Bank’s Human Development Network. Since joining the World Bank in October 2007, she has worked primarily on issues relating to the financing and delivery of healthcare services in low and middle-income countries. Her educational qualifications include an MSc in health economics from the University of York, an MA (hons) in economics and a BA (hons) in economics, sociology and politics from the National University of Ireland. The global community is in the midst of a financial and economic crisis that has been hailed as the worst since the Great Depression. Europe has not escaped this crisis and the region has experienced contracting economic growth along with rising unemployment and falling public revenues. And while there is already talk about a potential economic recovery in some countries, the damage of the recession will be longer lasting for the social sectors. The poor and vulnerable are most at risk from the negative impacts of the current economic climate which exacerbates the effects of a concurrent food and energy crisis for the poor — exacerbating inequity and inequality — a problem in Europe even before the current downturn. But the middle class is also threatened by unemployment, failing safety nets and exposure to catastrophic health expenditures. The health sector is not immune to the global downturn; health systems and their funding are also expected to be adversely affected in Europe. While very little is empirically known about the impact of the crisis on individual health status, previous economic and financial crises indicate that health expenditures recover to pre-crisis levels much slower than general government expenditures.1 But in low income countries the impact of health budget cuts may not be felt as strongly due to the low budget execution capacity in those countries even during economic growth periods. Fixed costs for installed infrastructure, wages and salaries are difficult to cut due to strong political resistance from trade unions and consumers, giving policy makers few degrees of freedom to reallocate or find savings within the health budget. This implies that investments in capital expenditures and recurrent costs for maintenance are usually the first to suffer. While some countries such as Hungary have implemented a freeze on health professionals’ salaries, other countries such as Finland and Greece have increased the pay levels of health professionals.2 In addition, consumables in the form of vaccines and pharmaceuticals may be put at risk. When social safety nets fail, the middle class will be pushed into poverty in the case of catastrophic health expenditures, further eroding recent gains in reducing health inequalities. Health-seeking behaviour Opinion paper