Why we need a global social protection scheme for health

Last week, I was asked to present my ideas on a global social protection scheme for health, at ISGlobal. Here they are, in brief.

A global social protection scheme for health would not replace the national social protection schemes of the participating countries. It would build on and support national schemes, with agreed minimum national efforts and cross-subsidies between countries.

For example, it could be agreed that low-income countries like Mozambique should have a government revenue of at least 20% of the country’s economic activity (gross domestic product of GDP). At present, the government revenue of Mozambique stands at 22% of GDP already, but until recently it was lower and most low-income countries are still below this threshold (as you can find here, on page 98). The GDP of Mozambique is getting close to $500 per person per year (as you can find here, on page 91), which makes a theoretical budget – excluding deficits and grants – of $100 per person per year. If the international agreement would also stipulate that 15% of the budget must be allocated to social protection for health, that would give a budget of $15 per person per year.

That budget, $15 per person per year, is not enough to finance a minimum level of healthcare, or universal health coverage. According to the World Health Organization (WHO), universal health coverage costs at least $60 per person per year (as you can find here, on page xii). So there’s a gap of $45 per person per year. The other part of the international agreement would be that the international community covers that gap. According to my estimates, that would cost about $40 billion per year (for all low-income countries), or the equivalent of 0.1% of the combined GDP of all high-income countries. Spain, for example, would have to contribute $30 per person per year.

This global social protection scheme would be designed to stay – forever. Over time, the percentages and amounts would be adjusted, and the net contributors and receivers of cross-subsidies would change. That would be the main difference with present ‘development assistance’: cross-subsidies would be more reliable than in the long run than development assistance is, and therefore easier to integrate in long term planning. Furthermore, under this scheme, there would be no ‘donors’ and ‘recipients’ of aid, only participants, and being a participant would come with rights and obligations.

But why would Spain, or Belgium (where I’m from) or any other country participate in such a scheme? Only because it could, one day in a distant future, become a net receiver?

My main argument is that health is a human right, and that entails duties that rest upon humanity. Sure, the first duty-bearer remains the national government towards its inhabitants, as the scheme I propose confirms, but the duty-bearer next in line is the international community. So we need a scheme to regulate where these duties meet.

But I am convinced that it is also a matter of enlightened self-interest. Humanity is becoming increasingly interdependent, across the borders of states. In a global integrated economy, it becomes difficult for wealthier states to uphold their present levels of social protection, as investment and economic activity moves to places where production costs are cheaper. To some extent, that will reduce inequalities between countries, but lowering social protection standards is becoming part of the competition strategies of states, and in the long run all common people everywhere will suffer from that. To avoid this, international agreements on minimum thresholds are required, and I cannot imagine them without cross-subsidies: we cannot convince emerging economies to raise social protection for the sake of protecting the inhabitants of wealthier countries if there is no willingness to share a modest part of income across borders.

Furthermore, I cannot imagine a global environmental policy – which is something all states need – in the absence of a global social policy. Wealthier countries will have to reduce their greenhouse gas emissions substantially, and that will involve stricter norms for manufacturing plants. But if these plants simply move to low-income countries – to export from there to the rest of the world – nothing is solved. And how can we convince low-income countries to keep out high polluters, if they desperately need more economic activity to increase government revenue, to realize the right to health (and other social rights)? That will take a global social policy, including cross-subsidies.