Ways to reduce out-of-pocket healthcare expenses in Bangladesh

The remarkable achievement in the health sector in terms of a few health indicators earned some national and international accolades. Unfortunately, it is in this very sector that a spree of weaknesses and inefficiencies is mounting.

Covid-19 situations have unravelled some of the glaring and frustrating spots in this sector. Even though experts have repeatedly expressed their concerns about many health sector issues including the rising out-of-pocket expenditure (the amount paid at the time of taking services), impoverishment of people due to health costs – especially high expensive treatment type of costs, timely actions have been taken in rare cases. In addition, the country has gradually started realising other missteps taken so far, which has left the urban population almost without a structure for health service.

Now, sometimes it appears that the government is clueless as to what strategies need to be taken to tackle the problem of urban health for which the government was not well prepared.

It is well known that Bangladesh spends a tiny portion of its GDP on health, and the government's role is also on the course of continuous decline. Even that small money is not sometimes utilised properly, and pervasive corruption and efficiency dry up a significant chunk of the pie, leaving a negligible amount for the sector compared to the massive need.

Hence, the result is very clear and expected – out-of-pocket expenses dominate the health financing in Bangladesh and have become the main source of health expenses. This expense, every now and then for many, crosses the threshold of bearable expenses and thus becomes catastrophic, which pushes about five million people into poverty each year. Therefore, unless we can do something in this regard, i.e. in reducing out-of-pocket health expenses, the goal of achieving UHC will be impossible.

While health system overhaul such as through reforming the health system and gearing towards more of compulsory universal pre-payment mechanism (social health insurance) has the potential to solve this problem, it is much easier said than done. The economic structure of Bangladesh – where the informal sector is very large – would make it an uphill battle to introduce social health insurance. On the other hand, the supply side is also not ready, such as the capacity of the government in handling such massive role is extremely limited, and the corporate practice of insurance companies is not conducive either.

Most importantly, massive maldistribution with a high concentration of services in the big cities is also one of the biggest hurdles for reaping the benefit of the insurance mechanism. Therefore, even if the long-run goal could be to ensure a strong pre-payment mechanism either through health insurance or government-led system, the government cannot sit idle now but rather needs to reduce out-of-pocket payments.

While various countries have taken various steps to reduce out-of-pocket payments, some policy recommendations are pertinent for Bangladesh. These are broadly categorised as (a) strengthening stewardship or governance, (b) strengthening service capacity, (c) focusing on innovative financing, and (d) delivering services with strong focus on preventative care.

Due to poor quality care in public facilities, many people take care from the private ones that are poorly regulated, if regulated at all. Without the presence of clear clinical guideline, supplier-induced demand (unnecessary prescription of drugs or procedures) is not unlikely.

Hence, the government can prepare a guideline and ensure that the health workforce follows that guideline. At the same time, the government can set some prices on diagnostics and other healthcare costs. In doing so, the government can categorise hospitals in terms of quality, and then prices can be set accordingly.

In addition, a strong monitoring system should also be established. The current capacity of the hospital director division of the DGHS is not efficient to do so. Hence, strengthening this division is of greater importance.

More than two-thirds of our health expenses are out-of-pocket, and a great majority of those costs are due to skyrocketing prices of some drugs. The pharmaceutical companies produce significantly large varieties of drugs than what the essential drug list of the government contains. If a drug is not on the essential drug list, price increase option remains at the pharmaceutical companies' disposal, and even they produce drugs with sometimes unnecessary modifications so that they can circumvent the regulated prices of essential drugs. This has to be stopped immediately.

Bangladesh has a good infrastructure for health services. Having facility up to the ward level (Community Clinics) is extraordinary compared to even many developed countries, let alone developing nations. However, unless they can provide effective services, having this type of facility is just a number. Hence, a serious attempt is needed to improve service quality in the primary care level. If that can be ensured, many will avail services from this government facility, reducing the out-of-pocket payment.

The same is true for other facilities of the government. With a few exceptions, other related support services at government facilities are dismal. Improving these facilities can attract more people to take the services, which may reduce healthcare costs.

Whenever it comes to financing, Bangladesh has very limited options. The formal and large corporations can be enforced to ensure employer-based insurance. As the starting of insurance with rich segment will further deteriorate the existing inequality in access to healthcare, it however, at least, can improve the risk pooling for some group people. But, this prescription will need to be considered with caution as this strategy will further divide the rural-urban gaps and urban population may have more people in the formal sector. Even though the government can cover the ultra-poor, policymakers often forget the group who are just above the poverty line. They need to be included in the discussion as well. Moreover, the government needs to be more strategic in purchase to reduce costs.

Our health system puts too much emphasis on curative care. Preventative care is not only cost-effective, it can reduce future costs too. The government should engage in preventive care more and more to reduce curative expenses.

The health system is complex, hence, there is no simple fix for this sector. Therefore, understanding the context and adopting policies while keeping the constraints in mind can optimise resource allocation. While a more stable and futuristic robust health system is paramount for the long run, the government can also reduce the problem of out-of-pocket expenses in a significant way if some evidence-based and context specific steps are adopted and executed with good governance.

Shafiun Nahin Shimul, PhD. Sketch: TBS

[Shafiun Nahin Shimul, PhD is associate professor at the Institute of Health Economics, University of Dhaka. He can be reached at shafiun.ihe@du.ac.bd]