How Recessions Can Hurt Health Care
There's a saying that when the United States suffers a cold, Latin America gets pneumonia. But what happens in Latin America when the United States comes down with pneumonia? Already, there is a distinct risk that the global financial meltdown is starting to have a negative impact on health in Latin America.
In past economic crises, a common response by many governments has been to cut spending on health, a tempting place to reduce current expenditures. However, cutbacks weaken the health system and will add a health crisis that can have a more long-lasting impact than the economic one. The basic message today, then, must be that the worst thing to do is to cut back on health-care budgets. Governments should focus on cutting out waste and improving efficiency. This is the time when we need more money for health, but also more health for the money.
Past experience has shown that budget cuts across the board are very damaging to the health of individuals and populations. During financial hard times, epidemiological studies in both developed and developing countries show an increase in sickness and deaths among the most vulnerable groups—the poor, the elderly and young children. According to a careful analysis by David Cutler of Harvard University, Felicia Knaul of the Mexican Health Foundation and collaborators, an estimated 7,000 deaths among young children and 20,000 among the elderly can be attributed to the 1995 financial crisis in Mexico. Studies in other countries also show an increase in the rates of several diseases and of suicides.
Why does this happen? Increased unemployment leads to loss of health insurance, so health care becomes unaffordable. When incomes are reduced in a downturn, people cut back or eliminate health care, especially pharmaceuticals and preventive care that is erroneously considered "discretionary." What we get in economic crises are multiple vicious cycles. First, people get sicker and can't work, and that makes them poorer. Then health expenditures become "catastrophic," further compounding income loss. More people become poor, and the poor become even poorer. At the same time, governments cut their budgets for health, and that leads to cuts in the availability of health care.
If epidemiologists could track specific diseases and vulnerable groups, they would see the effects—especially with diseases that require day-to-day care. How do you treat diabetes if you can't afford treatment? How do you detect breast cancer at early, treatable stages if you can't afford mammography? How do you avoid lifelong disability in a newborn if the mother can't find appropriate services for safe pregnancy and delivery? While the effects of an economic crisis can be short-lived, the effects of a health crisis can go on and on. The untreated person with diabetes can go blind or lose a limb. The breast cancer detected at a later stage may be untreatable. The child who becomes disabled doesn't recover the lost capabilities. Those are huge costs, both to individuals and to the health system.
It is a time to be bold and come forth with imaginative innovations, such as conditional cash transfers that protect the incomes of poor families while stimulating long-term investments in children through education and health promotion. Another policy to neutralize the health risks of an economic crisis is to introduce health insurance for the poor, similar to the successful Seguro Popular (Popular Health Insurance) program in Mexico. The Nobel Prize-winning economist Paul Krugman got it right when he said, "The current crisis should not send innovative plans to improve health care to the back burner."
Governments should not address a short-term economic downturn by creating a long-term health catastrophe for families, one from which they will not recover even if the economy does.
