Risks of trade in health services and the impact of privatisation

 

Nina Tellegen, Director Wemos

 

The growth in international trade has direct consequences for people's health in developing countries. In theory such globalisation of trade should reduce poverty with positive effects on health. In practice free trade often threatens the right to health, creating greater social inequalities and additional health risks.

 

Today developing countries are under more pressure than ever to open up areas of health care to the private sector. But there is increasing evidence that international agreements to liberalise trade, such as the General Agreement on Trade in Services (GATS), are denying access to basic care for the poor and vulnerable. Health policy in developing countries is influenced by, and depends on, many international institutions and donors such as the World Trade Organization (WTO), the International Monetary Fund (IMF), World Bank, and the World Health Organization (WHO). The IMF and the World Bank have over the past couple of years, put developing countries under great pressure to privatise public sector services, often by foreign commercial providers.

Furthermore, the WTO's GATS has driven the privatisation of health care. In 1995 the WTO ratified the GATS with the aim of further liberalising world markets in services. The GATS was intended to apply to commercial services such as telecommunications and tourism. Services wholly provided by governments, public services, were excluded. However few countries have completely government-run health services, so, strictly interpreting the WTO rules, they fall within the terms of the GATS*.

 

Liberalisation

In its submission to the World Health Assembly in 2003 Wemos said that according to the WTO secretariat 42 countries have already committed their hospital services to GATS. Medical, dental and nursing services are also included under the GATS heading of "professional services". GATS too covers insurance, including "health insurance". Now 78 countries have committed these to liberalisation under GATS. In cases such as Kenya this commitment was made without realising it included health. Yet health still remains one of the sectors with the fewest GATS commitments, reflecting many countries fears that liberalisation could damage their health care system. For example, the Association of South East Asian Nations (ASEAN) health officials meeting in Jakarta in 2002 concluded that developing countries should refrain from health commitments under GATS.

But health remains a target. The WTO continues to see opportunities for further liberalisation of what it considers as tradable public services. Meanwhile developing countries are in a weak negotiating position and may not feel able to protect their vulnerable public sectors from pressure to open their borders from rich, often donor, countries. The effects of privatisation in health care are now becoming clear. Field studies, such as that which Wemos conducts with its partners in Kenya, demonstrate health care privatisation leads to a decrease in access to basic health care, especially for the poor and vulnerable. 

 

Private hospitals

In Kenya many health care insurance companies are now under private foreign ownership. This liberalisation of services has led to 'creamskimming', selecting the healthiest patients while refusing to cover the chronically ill, those who are HIV-positive or have Aids. Those remaining must be covered by the public health sector. This in turn becomes more expensive so many Kenyans remain uninsured with no access to the health system.

Meanwhile private hospitals established in countries such as Thailand and South Africa are shifting to more lucrative care, mostly for the wealthy urban population or foreigners, such as dental care or cosmetic surgery. This is more likely to generate profits but usually these are not then reinvested in the national health system. Foreign patients may also limit the access to care for domestic patients because their care will consume public funds needed for the domestic population. For example countries such as Nigeria have seen expensively trained health staff being poached from the public sector. There are examples from Kenya too that private hospitals discharge patients who cannot afford further treatment, make them work in the kitchens or gardens to pay off their bills, or even chain them to their beds until bills are met. All these developments threaten a proper delivery of basic primary preventative care such as immunization, oral re-hydration and malaria treatment. The public sector has less money for them, while the private sector is not interested in them. The quality, especially of rural services, suffers as several health facilities are cut back reducing access to care and exacerbating health inequalities between different population groups within a country.

The presence of high tech private hospitals, sucking in the most experienced staff and affluent patients, may threaten the very integrity of the whole health system. Far from promising greater choice to the population, the WHO's World Health Report 2000 arguedprivatisation leaves an impoverished public sector unable to benefit from cross-subsidisation and risk pooling on whichsustainable health systems are based. Another trend negatively affecting access to health care is that valuable staff are leaving for private sector hospitals abroad such as in the US, Australia and the UK. The Philippines, South Africa and Nigeria have experienced a loss of valuable health staff. In 2001 alone 2,114 South Africa health care staff left to work in the UK. This in turn reduces the proportion of doctors to inhabitants in developing countries further limiting access to care. The WHO believes thereshould be a minimum of one doctor to every 5,000 people. But in countries as Malawi, Mozambique and Tanzania the figure is 1 to 30,000.

 

Fundamental right

It is therefore important that national governments take steps to guarantee access to health care for all. During multilateral and bilateral trade negotiations national health benefits are to be put above trade interests. With GATS being part of the in-build agenda of the WTO, Wemos and others have called on WTO members to adhere to their commitments to analyse ex-ante the impact of GATS on health. Wemos argues that article XIX.3 of the GATS agreement requiring WTO countries to make an assessment of the impact of trade in services before entering further negotiations, is being ignored. Each country's health ministry and civil society must be involved in "comprehensive health checks" before any further GATS commitments are made. According to the International Covenant on Economic and Social Rights, and numerous other human rights treaties, everyone is entitled to the best possible health care services, and hence to safe, timely and adequate quality of care. Health is a fundamental human right. 

 

Wemos works for structural improvement in people's health in developing countries

www.wemos.nl

 

* The four GATS modes.

Mode 1) Service provision across borders: remote medicine and tele-diagnosis, as when a doctor provides a medical consultation by e-mail.

Mode 2) Consumption abroad: patients who travel to another country for treatment.

Mode 3) Commercial presence: companies construct or acquire hospitals in other countries.

Mode 4) Movement of health care personnel: doctors and trained nurses recruited in developing countries fill the staff shortages in the west.