Intervention by Dr. Alaa Ghanaam, Expert on health policy and director of the EIPR’s Health and Human Rights Program

Total (social) spending on health in Egypt is the other side of the coin as addressed by Mr. al-Gebali in his talk on public health spending and which lies at the core of ongoing debates over how to fund health care in Egypt.

Some time ago, the Ministry of Health had a planning department, but their work essentially consisted of figuring out another way to divide the cake. They maintained the same budget used in previous years, but allocated 5% or 10% more to investments than the previous year, and most of these funds were spent on projects carried over from previous years. As for strategic planning—the more important issue—in my opinion, it has not been on the Ministry of Health’s agenda since its establishment.

It was against this background that the Health Sector Reform Program was created in 1997. Initially involved in preliminary research, by early 1999 it was developing models and carrying out experimental studies. The program worked on what I see as two major tools for strategic planning in the health sector: the National Health Accounts and a Household Survey on family spending and the use of health services. These two tools were in use since the early 1990s, but they were developed and used to greater benefit after the Health Sector Reform Program was initiated. Fortunately, Egypt was one of the few countries in the region that carried out three surveys of the National Health Accounts (NHA), the first in the early 1990s, the second in 1994 and 1995, and the third in 2001 and 2002, which was published in 2005.
The project was carried out by the Ministry of Health with an international institution that included several internationally recognized experts in health reform. The methodology used in the survey, which is considered a tool of strategic planning, was a comprehensive description of health-care funding channels, the agencies that engaged in spending and the purposes to which spending was put.

The NHA raised several important questions: Is Egypt spending an adequate amount on the health of its citizens? Is total expenditure being put to efficient and effective use? Is spending distributed fairly across different segments of society? Is spending adequately distributed between preventive care, curative care and public health in a way that insures the effectiveness of spending? These are some of the issues raised by the NHA.

It must be said that some experts have raised doubts about the methodology used in these reports, on the grounds that it is descriptive and may include certain biases. The report is available to all, and we at the EIPR prepared a translated summary, although we recommend that all parties interested in health spending in Egypt read the original report.

In brief, the NHA report for 2001 and 2002, published in 2005, found that total expenditure in the health sector in Egypt (including both public and private spending) came to about 6% of GDP. In 1994 and 1995 it accounted for 3.7% of GDP, which means that the intervening years saw an increase in total expenditure of nearly 200%. The report attributes this increase to two principal factors: the rising cost of service and increased demand, particularly in the private sector.

Funding channels include health insurance in all its forms⁷, as well as numerous health-care systems, such as the services offered by the Ministry of Defense and the Ministry of Interior. We have services provided by the Ministry of Health and Population, which, theoretically at least, cover all citizens by constitutional mandate regardless of income. We also have the health-care systems of various trade unions and other ministries, including university hospitals, which are subordinate to the Ministry of Higher Education, as well as the private insurance sector. Finally, we have what is now the most important segment of health spending: out-of-pocket spending by citizens.

We should also note that the data given here is from 2001 and 2002 and published in 2005, which means that we have no data more recent than 2005. Regrettably, these reports—three of them issued over a decade—have not been put to use, though they were issued over the years in which health reform gathered steam in Egypt.

The 2005 report notes that total expenditure on health came to LE23 billion, up from only LE7 billion in 1994 and 1995. This represents a 200% increase in spending. As Mr. al-Gebali noted, Ministry of Health spending accounted for 4.4% of the state budget. Spending on medications and related items accounted for approximately LE8.5 billion—a whopping 37.2%—of the LE23 billion in total expenditure. Of course, a certain degree of estimation is involved in calculating total expenditure since the methodology relies on a collection of available data, followed by a Household Survey conducted on a periodic basis by experts in the field. Although at times these figures may be over- or underestimates, which leads to errors in the sample on which we base our general assumptions, they nevertheless provide a strong indication of private spending when we compare the sources of health-care funding in 2001–02 with 1994–95.

Comparing the data sets, we find that public spending in 1994–95 accounted for 46% of total health expenditure, but only 31% in 2001–02, which means that there were reductions in public spending. In contrast, private sources of funding were 51% of total expenditure in 1994–95, compared to 68% in 2001–02. In addition, donor agencies provided 3% of the funding in the 1994–95 budget, but only 1% in 2001–02.

The resources come from the following sources: 29% from the public treasury, 61% from families, 3% from public companies and 6% from private entities.
Financing agents include the following: the Ministry of Health, which spends and administers 21% of these resources, and the Health Insurance Organization, which spends and administers 10%. Out-of-pocket spending by citizens accounts for 60% of spending. This means that citizens, the Ministry of Health and insurance together administer 90% of these resources. Other ministries administer 7% of resources, public companies 1%, educational institutions 1%, the Curative Care Organization (an agency that includes several self-managed private hospitals that offer treatment services but are supervised by the Ministry of Health) less than 1%, trade unions less than 1% and civic associations less than 1%.

But how are health-care resources used in Egypt? Some 25% go to Ministry of Health facilities (that is, about one-fourth of total health expenditure is used in Ministry of Health facilities). Some 5% goes to social health insurance facilities, 6% to private hospitals, 25% to private clinics and 23% to private pharmacies.

The 2005 NHA report contains an important observation on the role of private clinics and pharmacies in expenditure on medication. Total expenditure on medication constitutes 37% of total health expenditure (LE8.5 billion of LE23 billion). Out-of-pocket spending on medication comes to LE4.6 billion, or 58% of total spending on medication. This is an extremely high rate and very worrying given the lack of any real regulation or oversight on the dispensation of medications in private pharmacies.

The infrastructure of health care consists of 1,250 public hospitals with about 116,000 beds and 1,200 private hospitals with 23,000 beds.

The NHA report also states that citizens visit clinics on average 3.7 times a year and hospitals less than once a year (0.89 visits a year on average). Some 84% of hospital visits take place in public facilities belonging to the Ministry of Health, social insurance and educational hospitals (that is, public facilities), while 55% of clinic visits are to private clinics.

We can summarize the problems of health expenditure in Egypt as illustrated by the NHA report as follows:

1. Egypt spends less than the average on health care when compared to other countries in the same socioeconomic bracket.

2. A comparison of the two NHA reports shows an increase of family out-of-pocket spending on health care, particularly on medication.

3. Funding for health care in Egypt is still not unified, which leads to inefficiency and ineffectiveness.

4. There are imbalances in the distribution of health expenditure and provision of health services, particularly between urban and rural areas and north and south Egypt.

Regrettably, in conclusion, the NHA report simply recommends a restructuring of out-of-pocket spending—which represents more than 60% of total expenditure—in an insurance framework to cover the risks of illness and achieve just and comprehensive coverage. It recommends redirecting public and private health spending to a unified, national insurance vessel such as a national health insurance fund..

Distribution of out-of-pocket spending by service provider

 
- Private hospitals and clinics receive nearly 50% of out-of-pocket spending (41.9% to private clinics and 9% to private hospitals).

- Ministry of Health hospitals: 3.5%

- University hospitals: 3.1%

- Other public hospitals: 0.9%

- National insurance hospitals: 0.8%

- Ministry of Health centers: 3.2%

- Medication: 33%

- Other: 4%

I will conclude with six observations on the report:

1. We must ask why out-of-pocket spending, particularly on medication and in private clinics, has continued to rise.

2. The study shows quite meager sums devoted to curative care as compared to preventive treatment. Why is that?

3. We notice a shortfall in total expenditure as a percentage of GDP when compared to international standards/benchmarks. Other countries spend 9–14% of GDP, and the Abuja Declaration of 2001 requires members of the African Union—among them Egypt—to work toward allocating 15% of GDP to health expenditure.

4. Unfortunately, the report attributes the increase in total expenditure to the rising costs of service and increased demand in the private sector. This point requires a discussion of possible causes. Is inflation one cause? Is the market out of control? Is false demand being created for unnecessary needs in health care in Egypt? Are profits being made in the various intermediate sub-systems within the overall system? These questions require a discussion.

5. When the report observes that 84% of visits to hospitals take place in public hospitals, this means that any encroachment on public hospitals would be tantamount to a crime against the Egyptian people.

6. The report only notes the importance of restructuring out-of-pocket spending but does not mention the need to increase public spending as a state priority or as a major pillar of real development and investment in health in Egypt, as stressed by Mr. al-Gebali in his presentation.

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[7]  More than 52% of all Egyptians are covered by a social health insurance plan that is overseen by the Health Insurance Organization, which both finances and provides the services for the beneficiaries. It offers a full package of services for those insured, at service cost. The beneficiaries under this plan are currently civil servants, pensioners and their widows, schoolchildren and infants.