Latin America and the outbreak of Covid-19: a chronicle of multiple crises (I)
In this article, we analyse how the Covid-19 outbreak is affecting Latin American countries and their ability to respond to the health emergency in an effective and equitable way.
By María José Romero (Eurodad), Jasmine Gideon (Birkbeck, University of London), Patricia Miranda and Verónica Serafini (LATINDADD)
This is the first of two articles analysing how the outbreak of Covid-19 is affecting Latin American countries. In this article, we explore the nature of the region’s health systems, including its gendered dimension, the recent austerity policies implemented in several countries, and the challenges posed by the increased participation of the private sector in healthcare through, for instance, public-private partnerships (PPPs).
The outbreak of Covid-19 is a global health emergency that is likely to trigger a global economic crisis, impacting on countries and citizens around the world. Latin America is a region that is experiencing a rapidly evolving situation. Covid-19 did not feature much in the news in early March in Latin America, as few countries were impacted. However, as the map below indicates, the picture has taken a dramatic turn. All countries across the region now have cases of Covid-19, and the numbers are increasing on a daily basis. Given the low investment in health (both public and private sectors) per capita, Latin American countries could be heavily hit by Covid-19.This health emergency will have short and inevitably long-term impacts, showing multiple crises to tackle.
Covid-19 cases in Latin America - as of 22 March 2020
Source: Johns Hopkins University
Note: The number of cases may not be an accurate representation of the reality of Covid-19 in each country, as this depends, among other things, on the criteria for testing people and on the availability of tests.
Weak health systems are under increasing strain
Universal Health Coverage (UHC)* is one of the most ambitious and prominent global health goals and it requires a high level of investment. A pandemic like Covid-19 can threaten the capacity of Latin American countries to meet these goals. As the International Monetary Fund (IMF) has argued, very few countries in the region are prepared for the pandemic.
In Latin America, most national health systems were transformed under the influence of the Washington Consensus, driven by the Bretton Woods Institutions. This reform process emphasised the liberalisation of the health sector and the contraction of the public health system. Structural adjustments have left health systems vulnerable to shocks and have compromised countries’ ability to provide basic healthcare to all citizens.
Since the early 2000s, there have been major improvements in the number of people enrolled in public insurance schemes, in key health indicators and in the level of financing as a proportion of Gross Domestic Product (GDP). However, in most Latin American countries, out of pocket expenditure in healthcare remains high across the region. This indicates clear shortcomings in the insurance enrolment systems in terms of providing financial protection, and in terms of guaranteeing timely access to quality health services, which are at the core of UHC.
According to the Pan American Health Organization (PAHO), health systems in Latin America are characterised by segmentation and fragmentation – a combination that gives rise to inequities and inefficiencies, which in turn compromises universal access and quality healthcare provision.
Four key points are worth considering when it comes to the ability of countries across Latin America to respond to Covid-19 in an effective and equitable way:
Firstly, given the fragmentation of health systems in Latin America, the spread of Covid-19 across the region will present some crucial challenges. While wealthier citizens will have access to high-quality private healthcare, those in the public system will face different challenges when seeking protection and treatment, increasing the overall risk of an accelerated pandemic spread.
These differences are evident, for instance, in terms of who has access to Covid-19 testing kits. Although in many Latin American countries access to testing is free in the public sector, the unprecedented scale of the virus means that there are not enough tests to match needs. In Chile, those with resources can pay for the test but prices fluctuate significantly between healthcare providers and are often dependent on an individual’s level of coverage in their health insurance plan. This mirrors practices in the UK where criticism of private providers profiting from the sale of tests is growing.
Another point is the marginalisation of much of the region’s indigenous groups from health services. Critics have argued that discrimination on the grounds of ethnicity remains deeply embedded within regional health systems. A further pressing concern is the urban bias of most hospital provision – for example, in Peru 90 per cent of public hospitals and health clinics are located in urban areas. This poses an immediate challenge for many people trying to seek care, particularly where transport links may be limited.
Cost of care
Secondly, out of pocket expenditure (OPE), i.e. direct payments made by individuals to health care providers at the time of service use, is an immediate cause for concern, particularly when it comes to elderly people, who are most vulnerable to Covid-19. Transport costs are likely to pose a considerable burden on those needing to travel long distances to access hospital care. In addition, women are often less likely than men to have access to their own transport so there are significant gender implications to consider.
Data has shown that OPEs vary across the life course, but older women in particular are already the most negatively impacted. In Bolivia, for instance, OPEs are greatest for women and men in the 65+ age group, but it is in the age range of 45-65 that women are likely to spend twice the amount on OPE compared to men.
Pre-existing difficulties in the procurement of medicines could also worsen in the event of Covid-19, as prices of hygiene products are going up dramatically – and this in a continent where many people lack clean water and soap to prevent the spread of the virus. For instance, in Argentina, the price of alcohol in gel increased almost 50 per cent in just 20 days and the government decided last week to impose regulations.
It is clear that without active public policies, the price of hygiene products will be prohibitively expensive for many. Again, the impact of these additional OPEs is likely to be highly gendered given that women are frequently assigned primary responsibility for healthcare expenditure within households and so can be hardest hit by any increase in the cost of medication or health-related goods. This can lead to or exacerbate poverty.
Thirdly, public health systems in Latin America are highly gendered and the outbreak of Covid-19 is likely to accentuate this. The region has a higher concentration of female workers in the delivery of healthcare services, compared with their share of employment in the economy as a whole and there is a large gender gap in wages. Figures from the World Health Organization (WHO) show that in Latin America 86 per cent of nurses are female and only 14 per cent are male, and on average women in the health sector earn 28 per cent less than men.
One pressing concern is the impact of Covid-19 on unpaid care work such as childcare and elder care frequently assigned to women, particularly in times when governments across the region have closed schools and childcare facilities. While this creates potential challenges for all families, it can be a source of tension for female healthcare workers who are also under extreme pressure to continue with their paid work in very challenging and exhausting conditions.
Fourthly, recent austerity policies implemented in several countries in the region, including in Argentina, Brazil and Ecuador, have further undermined the capacity of public health systems, already constrained by other diseases such as tuberculosis and dengue. These policies have also negatively impacted on social protection mechanisms that reach the most vulnerable. In Ecuador, for instance, an IMF loan included reductions in public employment and lower government wages, which resulted in 2,500 health workers being fired. These kind of austerity measures have risked compromising UHC, and have weakened vital public health systems.
Health public-private partnerships (PPPs) can make things worse
Over recent decades there has been increased participation from the private sector in the provision and financing of healthcare, both globally and in Latin America. PPPs as policy and financing tools have been increasingly promoted as a way to finance infrastructure to expand the service networks and consequently to make health services more accessible.
In 2007, the first health PPP was launched in Mexico, and since then, Brazil, Chile, Colombia and Peru have implemented hospital PPPs, with the support of some multilateral actors and banks, such as the World Bank and the Inter-American Development Bank. The most recent World Bank Group’s strategy, called Maximizing Finance for Development approach, is a clear indication of the priority role that the institution gives to private finance, including in healthcare, as governments are encouraged to prepare the ground for private care providers and health insurers through regulatory reforms, and are advised to engage in health PPPs.
However, the experience of health PPPs in both developed and developing countries indicates that there is very little empirical evidence that PPPs are able to address the challenges that countries face in delivering UHC, including fragmentation and inequalities within health systems. On the basis of the evidence available, civil society organisations (CSOs) and academics have repeatedly warned that health PPPs emphasise commercial imperatives, which might undermine the right to health.
The adoption of PPPs in the health sector highlights important challenges for how countries, and health systems as a whole, are able to respond to a health emergency like Covid-19. At this moment of crisis, many of the core problems of the PPP model have been exposed in developed countries and should serve as a red flag for Latin American countries as Covid-19 spreads across the region. For instance, the Covid crisis is revealing the myriad ways in which resources have been diverted from the public health sector into private funds. In the UK, hospitals are facing critical shortages of intensive care beds and in some instances hospital trusts – which have organisational oversight of hospitals – are being pushed to negotiate with private developers to finish hospital construction projects that were never completed as hospital trusts wanted to save cash payments on private finance initiative deals. In addition, the health crisis has forced the UK public sector to broker deals with private hospitals in order to secure additional beds, ventilators, healthcare staff and other vital inputs.
In the Spanish capital, Madrid, the inability of PPP hospitals to respond to the challenge has become exceptionally clear. The Covid-19 crisis has revealed the complexities of PPP financial arrangements as many hospital PPPs are being managed by vulture funds that have not delivered the amounts of beds stated in the contracts. In some cases, governments are being forced to pay for beds that do not exist while at the same time they are struggling to provide the additional beds that are urgently needed. Interestingly, the Spanish government recently decided that under the current circumstances they would take over the control of private hospitals to ensure the provision of healthcare services.
Furthermore, as hospital PPPs usually operate under very inflexible contracts, this emergency situation could have a detrimental impact on the fiscal costs of hospital PPPs. As the empirical evidence shows, the demand risk – i.e. the potential for a loss due to a gap between forecast and actual demand of a service – almost invariably rests with the public sector and if underestimation of the demand for health services is commonplace in normal times, one can only imagine what this means in times of a pandemic. This can increase the cost of the project for the public purse, with a knock-on effect on already hard pressed public finances.
Read the second article, where we analyse the economic and social impacts of the health emergency, including on women, and explore the way forward to tackle this devastating crises.
The authors would like to thank Camila Gianella Malca, from Pontifical Catholic University of Peru, for her valuable comments and inputs into these articles.
* Universal healthcare (UHC) is recognised as a unifying platform for making progress on Sustainable Development Goal 3 for health.The authors would like to thank Camila Gianella Malca, from Pontifical Catholic University of Peru, for her valuable comments and inputs into these articles.
** Vulture funds refer to private equity funds that invest in companies or properties that are performing poorly and may therefore be undervalued.