Could Myanmar fund and deliver universal health care (UHC) for its population?

In 2012 its health system was scored as the second worst in the world by WHO, but in the 1950s it was one of the pioneers of free primary care.

With transformational change ongoing in the political and economic spheres after decades of isolation, Myanmar has once again declared a commitment to universal health provision by 2030, but how realistic is this aspiration?

This short presentation is aimed at interested observers of the country, outlining the funding gap and some of the structural challenges which will need to be overcome in order for Myanmar to generate the necessary resources, and spend them wisely. It also briefly looks at the main opportunities for Government to raise income which could be used for this project, before concluding that yes, developing and financing a sustainable system of UHC is a realistic aspiration for the Myanmar economy over the next 15 years.

The following slide presentation is a week 4 assignment for the World Bank MOOC on Financing for Development, December 2015.

COULD MYANMAR FUND THE PROVISION OF UNIVERSAL HEALTH CARE ?

A digital artefact for the World Bank MOOC on Financing for DevelopmentDecember 2015

Contents:

1. Background

2. A story of under-investment, lagging development and inequality

3. The funding gap

4. Systemic challenges to financing & development

5. Systemic challenges (2)

6. But opportunities abound for financing to be raised

7. Potential sources of government income

8. Conclusions

9. References

Background• In the 1950s Myanmar pioneered free primary health care, but

social sector investment has since collapsed, leading to health indicators now lagging far behind the rest of the region.

• In 2000, Myanmar’s health system was rated by WHO as 190th out of 191 countries in the world.

• Since 2012, government health expenditure in Myanmar has doubled to around US$4 per person per annum, still far short of the US$34 average for lesser developed economies as a whole, and the US$60 average figure required to implement a basic level universal health system.

• The country is rich in both resources and economic potential. If handled properly, the country could quadruple GDP over the next 15 years.

• Recent political and constitutional changes, if followed through, are leading to steep increases in FDI and ODA along with rapid growth of the ‘consumer class’ and DDI sources within the country.

• As part of its national development plan, Myanmar once again aspires to develop a strategy towards universal healthcare for the country by 2030.

How realistic is this aspiration?

A story of under-investment, lagging development and inequality of access………..

• Serious under-investment in health has led to Myanmar lagging behind its neighbors on most health indicators, especially mother and child health, life expectancy and malaria and TB.

• In a country with the highest rates of out-of-pocket expenditure on health in South East Asia, serious disparities in wealth around the country are compounding inequality of access to services.

US$2.4 billionAnnual funding gap between Myanmar’s current

expenditure on health and a minimal UHC system.US$3 billion if Myanmar reduces the out of pocket element of health

funding to LDC average of 17%This is equivalent to 6% of current GDP,

or 12 times current Government health expenditure

 

The funding gap:

US$14Current per capita health expenditure in Myanmar (1.8% of GDP). Only US$4 is invested by Government, with most

of the rest as out of pocket (OOP) expenditure by patients.

Average per capita health expenditure in LDCs = US$34

 

 

0.5%Percentage of GDP spent by the Myanmar

Government on health.

Average for south-east Asia = 3.4% of GDP

 

US$264Per capita expenditure on universal

health care by neighboring Thailand.

Cambodia’s system prioritizes funding access for the poorest, at a

cost of US$76.

A generally accepted figure for the most basic form of Universal Health

Provision is US$60

Systemic challenges to financing & development:

Political environment• After years of isolation, political stability

and transparency is a requirement to attract international investment and good will.

• There is a danger of the country’s regions taking advantage of the political reform process to assert greater autonomy, potentially adding fuel to existing ethnic conflict.

 

Infrastructure• The World Bank Logistics Performance index places Myanmar’s

infrastructure at 133 out of 155 countries in 2012 • Myanmar’s infrastructure gap is US$320 billion over the next 15

years, to develop its economy and social provision. • Current infrastructure spending is US$160 million per year• ODA investments in infrastructure increasing, but bulk will need

to be funded by private sector.• A crucial role for development partners to develop private

sector participation through political risk insurance (MIGA), regulator planning and implementation capacity development, direct financing of feasibility assessments and backing government guarantees on payment obligations.

Governance capacity• The Government is making good progress in a number of areas, but regulatory reform and

strengthening is required in almost every sector. Without substantial technical assistance from development partners, there is a danger that this could overwhelm local capacity, leading to failure.

• Huge disparities currently exist between the different regions on almost all social and economic indicators. Inclusive growth will require decentralization of decision making (with accompanying systems and capacity building) from the capital to the different regions.

Macroeconomic stability• To attract foreign investment, Myanmar must strengthen its financial

system, align to international standards (extractive industries, water usage etc), unify its exchange rate, develop the free trade environment with regional partners (eg ASEAN).

• State owned enterprises, which dominate the formal sector, must be modernized an integrated into a liberalized economy.

• A clear role exists for growing involvement by the MDBs as guarantors of stability, mediators and as capacity-building partners.

 

Skills gap• Myanmar currently has one of the lowest rates of schooling in

the world, averaging just 4 years in formal education. • Government expenditure on education is under 1% of GDP,

compared to a regional average of 2-3%. • Without substantial investment, Myanmar could lack up to 50%

of the skilled and semiskilled workforce it requires by 2030.

 

ILLICIT FLOWS & INFORMAL ECONOMY

• Around 20% of the country’s GDP is lost through illicit flows and capital flight.

• Around 55% of economic output in Myanmar is through the underground (illegal) and informal economy.

 

Public procurement

• Current system lacking in transparency• Most public tenders awarded through a small

number of ‘preferred’ local intermediaries, leading to a lack of competitive efficiency.

• In preparation for a scaling up of public expenditure, Government is now working closely with the World Bank to modernize its financial management and public procurement systems.

DataSystemic under-

investment,conflict and isolation

of the regions, censorship and lack of capacity have all

compounded a lack of reliable baseline data for use in policy and

decision making.

UrbanizationThe population of large cities is set to rise rapidly, from 13% of the total

today to 35% in 2030The cost of upgrading infrastructure

to accommodate urban growth is US$150 billion over the period.

Urbanization is changing the pattern of disease: 40% of the disease

burden is now NCDs associated with urbanization

Systemic challenges (2):

But opportunities abound for financing to be raised

• Myanmar is blessed with a wealth of opportunities to rapidly expand its economy, if it makes the right choices. Its natural resources include gas, oil, gems and semi-precious stones and a large endowment of arable land and water. It has a working-age population of around 40 million, a low population growth rate, and a consumer market of around 0.5 billion people on its doorstep, as well as strategically important deep-water harbors for international container freight. By 2025, 40% of the world’s consumer class will live within a 5 hour plane ride from Myanmar.

• McKinsey estimates that a focus on rapid development in 7 key sectors of the economy, along with labor productivity, could more than quadruple the size of the economy by 2030, and take a further 18 million people (out of an estimated 22 million) out of extreme poverty.

Potential sources of Government income

    

Thanks to continuing economic and political reforms, the country’s GDP is currently growing at 8.5%. It is on track to quadruple the size of its economy over the next 15 years.

FDICurrent Foreign Direct Investment in Myanmar in 2015 was around US$8.5 billion (17% of GDP), up from less than US$1 billion in 2010. If economic reform and liberalization stays on track it is estimated that FDI could increase 6-fold, bringing over US$650 billion in new financing to Myanmar over the next 15 years.• The MDBs have a substantial role to play in encouraging the inflow of FDI, through capacity building and regulatory assistance, and

through risk-mitigation strategies, particularly in relation to infrastructure investment. Strengthening of the country’s investment promotion agency (DICA) is a key priority. FDI can create substantial Government revenues towards health sector financing, through both investment and taxation. Infrastructure, quality of supply and cost efficiency could all improve.

Domestic consumptionDomestic economic activity is likely to rise in line with the growing economy. On current growth, Myanmar’s consumer class (earning >US$10 per day) will increase eight-fold by 2030, to 17.5 million people . • Technical assistance is required (from MDB and private sector partners) to modernize and liberalize local economic output, and remove

state monopolies. A larger consumer class suggests potential viability for health insurance schemes to start playing a greater role in healthcare financing. This has significant benefits for improving both healthcare access and overall finance availability to the sector.

ODAPolitical reform is bringing Myanmar out of isolation: net ODA inflows grew from US$375 million in 2011 to around US$4 billion in 2013, and are still on an upward trend• ODA is particularly crucial at this early stage to provide a social safety net and priority investment in health and education. Moving forward

it can be used strategically to de-risk strategic areas for private sector investment, and to fund feasibility studies and other common bottlenecks for infrastructure growth.

Tax RevenuesCurrent tax collection accounts for around 7% of GDP in Myanmar, compared to an average of 14% across LDCs as a whole. Just bringing tax collection to the LDC average would add US$4 billion per annum to Government finances today. By 2030 it could be US$15 billion per annum- 50x what the country currently spends on health and education combined.• The removal of fuel subsidies, which account for almost 17% of Government revenues, would also free substantial funding, which could be

re-directed more effectively towards subsidizing essential services for the poor, such as healthcare. However, the current fragile political economy of Myanmar is such that any reform of fuel subsidies at this time could be a threat to wider stability.

Conclusions1. Myanmar’s health system is currently in a state of collapse. Urgent

investments in health infrastructure, management systems and staff skills/retention, particularly in rural areas, is a priority.

2. Government expenditure on health is likely to have to rise to at least 6 times its current level to offer a minimal provision of UHC.

3. Political will exists, and substantial reform in the governance, regulatory and the macroeconomic arenas are leading to substantial growth in the economy and ODA, and substantial new revenue opportunities for the public sector, even though significant challenges persist.

4. Increasing tax collection to LDC average levels alone could raise an additional US$4 billion per annum, almost twice what is required in new investment for health. Removing fuel subsidies and curbing illicit flows would add a further US$2.7 billion and US$10 billion to government coffers respectively, but might be risky in the current political economy.

5. A growing consumer class also offers opportunities to co-fund health services through private or public health insurance schemes, particularly in relation to funding secondary and tertiary care requirements.

6. ODA is likely to have a crucial role to play in developing access to health services for the poor, and in financing health infrastructure, quality and skills for rural areas in particular in the short term, given the variety of challenges and priorities currently faced by the Myanmar Government.

7. Development Partners can also offer technical assistance on capacity building, decentralization of decision making, procurement reform , health information systems and other areas required to build a resilient and accountable health system.

8. It is likely that on current growth and reform trends, it is possible for Myanmar to achieve its objective of developing a sustainable, basic provision of universal healthcare across the country by 2030.

References

1. Road to Recovery: charting the course to universal healthcare in Myanmar. University of Melbourne, Health policy and health finance knowledge hub. No.7, March 2013.

2. Myanmar Country Partnership Framework 2015-2017. World Bank Group.

3. Myanmar’s moment:unique opportunities, major challenges. McKinsey Global Institute, June 2013.

4. Infrastructure in Myanmar. KPMG, 2012.

5. Flight capital and illicit financial flows to and from Myanmar, 1960-2013. GFI, September 2015.

6. Universal Health Coverage in Myanmar. Technical Consultation on issues and challenges. WHO, July 2012.

7. OECD Investment Policy Review, Myanmar. 2014

8. A Regional perspective on poverty in Myanmar. UNDP, August 2013

9. WHO Databank