Alternatives for the financing of health care in Latin America and the Caribbean

Abstract

Latin America and the Caribbean (LAC) countries are experiencing both an economic crisis and a crisis in the public sector. As a result it is impossible to increase the amount of resources available to the health sector, unless there is a drastic restructuring of the way in which financing occurs. The measures so far referred to in the economic debate -user fees, cost recovery, privatization - at best represent partial solutions. Given the magnitude of health problem in LAC countries, they are unable to generate the amount of money needed to cover the deficit of financial resources for medical treatment. The central idea behind this article is that in order to cover the deficit of resources for medical treatment it is necessary to utilize fiscal resources. It is shown that it is possible to increase the amount of financial resources available for medical treatment either through increases in taxes and/or through an increase in the proportion of the government budget dedicated to medical treatment. Increases in taxes collected provide a feasible alternative. In some of the poor countries of Latin America and the Caribbean, the proportion of the Gross National Product that goes for the payment of taxes is well below the figure for that proportion found in developed countries. To increase the proportion of the government budget dedicated to medical treatment is a political decision that depends solely upon the discretion of the governments concerned. The potential of Social Emergency Funds and debt swaps to finance innovations in the production of medical treatment services, thus maintaining the current level to activity in the sector, is discussed.