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Universal Health Coverage: Financing and the structural causes of poverty

Guest content
13 December 2017

We all support the aspiration to achieve ‘Universal Health Coverage.’ Who could possibly argue against a world in which everybody has access to the high quality health services they need, without incurring financial hardship? The problem is how we can possibly turn such a lofty ambition into reality.

The scale of the challenge is daunting. Recent figures from the World Health Organisation (WHO) show that for Low-Income countries (LICs), the annual cost of meeting UHC targets by 2030 would be $112 per person — significantly higher than the commonly-cited figure of $86. This would leave LICs facing an annual funding gap of up to $35 billion.

The WHO estimates that LICs will need to spend up to 20% of GDP on health in order to bridge this gap — yet we know that during 2000–2014, public funds from domestic sources to finance health actually stagnated in these countries. (And we shouldn’t forget that these UHC targets — set out in the SDGs — fall some way short of the universal access envisaged in the WHO definition, paraphrased in the opening paragraph above.) 

The inescapable conclusion is that for low- and middle-income countries to make real progress towards UHC, there needs to be a fundamental revision of the global macroeconomic policies that currently deprive them of the necessary financial resources. For example, World Bank statistics show that governments of sub-Sahara African countries paid $18 billion in external debt service in 2015; and lost a further £34.4 billion, that same year, through the repatriation of profits by multinational companies.

These are significant amounts of money — but it is the figures relating to illicit financial flows that provide the starkest evidence of the urgent need for reform. The scale of annual global tax abuse is $600-$650 billion or 25% of corporate tax revenues. A Tax Justice Network study estimated that the profit shifting of US-headquartered multinationals resulted in around $130 billion of revenue losses in 2012 (compared to estimates of just $12 billion in 1994, highlighting the exponential increase in this phenomena over just two decades).

Taxation is the largest contributor to government revenue in Low and Middle Income Countries (LMICs) at around 70%. As well as providing revenue for schools and hospitals it is critical to cement state citizen relationships. Corporate income tax is a very important component of government revenue, especially in LMICs where the tax base is narrow due to a relatively large informal sector. It is clear from the sequential leaks, including the Panama Papers (2016) and Paradise Papers (2017) that illicit tax behaviour is industrial in scale and a change in approach to fiscal policy, financial secrecy legislation and global cooperation and oversight is urgently needed.

Delivery of UHC needs to be underpinned by international and domestic tax data transparency supporting public accountability in LMICs and shaping progressive policies that can deliver UHC. Providing data privately to tax authorities, for instance, is insufficient and offers no opportunity for public oversight of progress towards tax compliance. High income countries must no longer remain passive regarding corporations headquartered on their territory which avoid tax and thus breach the rights of citizens living in LMICs to UHC.

Three policy solutions — the ‘ABC’ of transparency — facilitate accountability:

  • Automatic Exchange of Information: TJN advocates for a global, comprehensive system of exchange of tax information between jurisdictions.
  • The establishment of public registers of beneficial owners: Where companies as well as trusts and foundations have to register on a public database who their real beneficiaries are.
  • Country by Country Reporting: Multinational companies should have to publicly report their key economic data, for example, the number of employees they have, the number of sales they make and the profits they declare in each country where they have a presence. This would shed light on corporate use of tax havens and accounting devices such as profit shifting for the purposes of avoiding tax.

There is, then, a range of outflows from LMICs that need to be reduced, cancelled or reversed, in order to provide revenues for UHC (not to mention other social services provision). There are also other ways in which the existing global political economy works to deprive LMICs of revenue — not least the significant financial impacts of unfair trade policies. If we don’t address these structural factors, then UHC will remain a worthy, but unattainable, aspiration.

Further resources

On December 12, join a global coalition calling for universal health coverage: universalhealthcoverageday.org  

The UHC Coalition on Medium.com

Financial hardship linked to inadequate health coverage policies - WHO/Europe

Original source: Medium.com