CHAPTER 8: IMPROVING THE EFFICIENCY OF HEALTH EXPENDITURE
It should be recognized that both the diagnostic and recommendations
of this chapter join and reproduce, to a great extent,
our own analyses of the national health system .
—Comments to the Health Chapter of the PER
Ministry of Health, Population and Hospital refomr
This chapter reviews the development of the reform agenda for the health sector. The first section provides a brief overview of the health sector. The second section reviews the institutional context and government strategy. The third section examines expenditure patterns during the past decade. Particular attention is paid to the sources and uses of funds, and their impact in terms of efficiency, equity and cost-benefit. The main findings and recommendations are summarized in the final section.
A. Introduction
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All citizens’ right to health care is enshrined in the Constitutions of the Democratic and Popular Republic of Algeria of 1989, and 1996. This has resulted in a predominantly public-service delivery system with limited, but increasing private participation. The Ministry of Health, Population, and Hospital Reform (MOHPHR) is responsible for the overall management of the public health system, and regulates the provision of private health services.
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The country continues to make considerable efforts to ensure access to health services, but significant challenges remain. Geographic access to health facilities is at 98 percent, and the entire population has financial coverage for health care services, at least in the public sector. As a result, health indicators have improved dramatically. However, the delivery of health care is inefficient; the overall quality of services is less than optimal, and inequities prevail. Delivery is mostly public with very low hospital occupancy rates, frequent drug shortages (especially in rural areas), and equipment shortages. Physical access in rural areas is hampered by lack of equipment, drugs, and medical staff. Most health and nutrition indicators in rural areas, especially in the southern part of the country are worrisome. Maternal mortality varies from 43.3 per 100,000 to 232 per 100,000 among wilayas. Approximately 18.2 percent of children under the age of five suffer from low weight for their age in the south, compared with 5 percent in the north. In addition, the private sector is growing rapidly because of the low quality of public providers. Patients using private providers pay most costs out of pocket, creating a major source of inequity. Financial constraints of the health care system will increase for several reasons—inadequacies in revenue, the extensive coverage of benefits, inefficiency in service provision, the high cost of pharmaceuticals, and the changing burden of diseases related to the health transition.
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In response to these challenges, a global reform is needed. In 2002, MOHPHR started an ambitious reform program. A new law was drafted for consultation in February 2003 (Avant-projet de loi sanitaire.)141 However, the process was not concluded. To manage its health care system, Algeria needs to invest a great deal into capacity building for its human resources and technical infrastructure and in designing an information, monitoring, and evaluation system for decisionmaking.
B. Performance of the Health Sector
Demographic profile of population and health status
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A
Figure 8.1 Population by Age Groups and Dependency Ratio, 1975–2003
Source: World Bank, WDI 2005 database
lgeria is in the middle of its demographic transition. The population is about 32 million. The percentage of Algerians under the age of 15 has steadily declined since 1975, while the 15–64 age group has risen (Figure 8.1). This is very typical for a country that has experienced a significant fertility decline (from 7 children per woman born in 1977 to 2.7 in 2003). With the elderly population (age 65+) hovering at around 4 percent, the dependency ratio (calculated as the ratio of persons in the “dependent” ages, less than 15 years + 65 and over) decreased significantly between 1975 and 2004.
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While health indicators have improved, projected outcomes to reach Algeria’s MDGs are mixed. Life expectancy at birth increased from 53.5 years in 1970 to 71 years in 2004,142 higher than other lower middle-income countries. Similarly, the infant mortality rate (IMR) decreased from 94 per 1,000 children in 1980 to 33 per 1,000 children in 2004 (World Bank: WDI 2005 database).143 This rate is comparable with other lower middle-income countries (Figure 8.2.). In terms of the under-five mortality rate, Algeria has improved consistently, standing at 41 per 1,000 live births in 2003. As of mid 2006, it appears that Algeria may reach the MDG on child mortality if the present trend continues at the same pace.144 However, the MDG on maternal health will not be reached (Figure 8.4).145 The maternal mortality ratio (MMR) has shown slow improvement and is worse than in countries of comparable GDP per capita (Figure 8.3). In 2000, the MMR was 140 per 100,000, down from 160 per 100,000 in 1990 (Figure 8.5).146
Figure 8.2 Infant Mortality Rate, 2002
Source: World Development Indicators 2004
Source: World Development Indicators 2005
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Like most lower middle-income countries, Algeria is in the midst of its epidemiological transition. That makes Algeria prone to conditions that are characteristic of both developed and developing countries. By 2002, noncommunicable diseases had risen to the number one cause of death (55 percent). While communicable diseases have decreased steadily, they still cause 28 percent of deaths. According to a recent study in 12 wilayas, the leading cause of death in Algeria is attributed to the circulatory system (INSP 2005). In addition, the incidence of cancers and traffic accidents is rising rapidly. The number of accidents increased from 27,500 in 1982 to 43,500 in 2003, an increase of almost 60 percent. In response, the government has developed a road safety strategy, including enforcement of seat belt use.
Source: World Development Indicators 2005
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Source: World Development Indicators 2005
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There are relatively little reliable data on the incidence and prevalence of noncommunicable diseases. Noncommunicable diseases are much more expensive to treat. So, the government should seriously invest in its health information system to collect more accurate data on mortality and causes of death. This would help to rationalize investment and improve the projection of future expenditures. This is especially important because noncommunicable diseases, such as hypertension and diabetes mellitus; and risky behavior, such as smoking, are becoming more prevalent (Table A.7.3).
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In general, communicable diseases are on the retreat; and specifically, diphtheria, tetanus, and cholera are under control (Table A.7.4). Nevertheless, there are close to 20,000 tuberculosis cases a year, more than twice the level of 1990, and the incidence is growing despite a 98 percent rate of BCG147 vaccination in 2003. The immunization rates for measles and DTP (diphtheria, tetanus, pertussis) strongly increased from 1985 to 1999 before decreasing over the last few years. The rate of HIV is still low, with 266 new cases in 2004; but it has risen steadily since 2001. The presence of risk behaviors among vulnerable groups as well as the diversity in prevalence rates among regions requires action to prevent further spread of the epidemic.
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The organization of health care services features a dense and highly structured network.148 Before the recent emergence of the private sector, the Algerian health system relied almost exclusively on a network of public health institutions that was highly developed and structured. Even today, the public sector remains dominant. The country is divided into 185 secteurs sanitaires (health districts), which are responsible for addressing all health problems of the populations within their jurisdictions. Each secteur sanitaire normally has at least one general hospital and several polyclinics, health centers, and treatment rooms. These are grouped into sous-secteurs sanitaires. The polyclinics and the health centers deliver primary and secondary care—consultations with general practitioners and specialists, basic examinations, and testing. Some of these facilities have hospital beds. A physician is not generally at hand in the treatment rooms. Only the most basic services, such as injections and the dressing of wounds, are provided. Nevertheless, in regions such as the southern part of the country, where polyclinics and health centers are generally far removed from each other, the secteurs sanitaires have had to “medicalize” their treatment rooms. These facilities are supposed to refer their patients to the local hospital or to a specialized hospital (EHS) or university hospital (CHU) as the situation requires. A total of 13 CHUs and 32 EHSs provide secondary and tertiary care. They draw their patients from several wilayas and, in some cases, from the entire country. The CHUs undertake teaching and research, as well as care delivery. The EHSs include psychiatric hospitals and hospitals specialized in fields such as cardiology or nephrology.
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With 1.77 beds per 1,000 people in 2004, Algeria had one of the lowest ratios among countries of comparable income.149 Algeria generally places better than or as well as neighboring countries. Tunisia’s rate was 1.73 beds per thousand in 2002, and Morocco’s rate was 0.78 in 2004. Despite the rapid growth of the private sector, 96 percent of hospital beds remain in the public sector (2001). A similar general pattern holds for the ratio of physicians to population. The ratio of physicians per 1,000 (1.21) falls short of the average of lower middle-income countries (1.49 in 2004), but it is slightly better than the average of MENA countries (1.18 in 2004). In 2003, there were 23,416 practicing physicians and dental surgeons in the public sector (MOHPR 2003c). Their number has been growing slowly but steadily since the early 1990s. In 1991, there were 19,801 physicians and dental surgeons in the public sector (a figure that rose by 18 percent between 1991 and 2003). The Algerian population rose at exactly that rate during that period, so that the ratio of public physicians per 1,000 inhabitants remained virtually stable (slipping from 0.77 to 0.74). The sharp increase in private-practice physicians (see below), however, raised the overall ratio of physicians from 1.05 to 1.21 per 1,000 people between 1991 and 2003.
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The emergence of the private health care sector is a recent phenomenon. It was only in 1988 that a new law allowed for private clinics (Law of May 3, 1988). While there were only 2 inpatient clinics in 1990, there were 69 by 2004 (Table A.7.9). Previously, the private sector was limited to doctors’ offices, test laboratories, and maternity clinics. Private health care providers have gradually sprung up throughout the country, although they are more numerous in the major cities of the north (Algiers, Oran, Annaba, and Tizi-Ouzou). Algerian authorities have little knowledge of the private sector, however, and data on that sector are scarce and often incomplete. Once a license has been granted, the authorities exercise no control over the licensed facility’s activities or the quality of care that it offers.
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The number of physicians in private practice has surged in recent years. It more than doubled from 7,240 in 1991 to 15,268 in 2003 (an increase of 110 percent). By 2003, 44 percent of specialists and 34 percent of general practitioners were operating in the private sector. The pay gap between the public and private sectors, above all for specialists, is driving more and more health professionals to private practice.
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In hospital beds, the private sector contribution is still low but rising. By contrast, the private sector accounts for a significant proportion of medical imaging equipment, especially the more costly types. In 2000, the private sector accounted for 89 percent of scanners, 45 percent of ultrasound equipment, and 17 percent of X-ray devices in operating condition. It also accounted for 14 percent of surgical units.
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Other health care providers play a minor role. Apart from the facilities operating under the Health Ministry and the private sector, there are health care facilities that are part of other ministries (the Ministry of Defense, in particular) and other public institutions and enterprises. These facilities are dedicated to caring for the staff of the organizations concerned. In 2001, there were 464 “social medical centers” (centres médicaux–sociaux) and 94 occupational medicine centers, embracing 935 physicians and dental surgeons and 949 nurses and nurse’s aids. For its part, the Caisse Nationale des Assurances Sociales des Travailleurs Salariés (CNAS) runs one hospital directly and a network of polyclinics. This network has shrunk considerably since 1987, when it was transferred to the Ministry of Health.
Health care coverage
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In principle, all Algerians are covered by public health insurance. The social security system covers people who meet its eligibility criteria. There are two sickness insurance funds—CNAS and the Caisse Nationale de Sécurité Sociale des Non-Salariés (CASNOS).
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CNAS covers salaried employees, their dependents, and certain categories of the population identified by law as eligible (students, unemployed disabled persons, and indigent recipients of state welfare support). Six million people are affiliated with the CNAS, of whom 3 million are actively employed insurees. Including eligible dependents, nearly 24 million people are covered by the CNAS, or 73 percent of the total population (2004). The system is financed in the first instance by a portion of the 34.5 percent of social security contribution paid by employers and employees.150
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CASNOS covers independent workers such as merchants, artisans, farmers, and the liberal professions, as well as their eligible dependents. The contribution rate is 15 percent, 7.5 percent of which is for sickness coverage. Of the 1.2 million potential affiliates, only 450,000 are up to date in their contributions.
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The benefits package covered by these sickness funds is defined very broadly to cover nearly all curative and preventive care possible (Social Insurance Law of July 2, 1983). The sickness funds cover all care provided to their affiliates in public facilities through a forfait hôpitaux (a lump-sum hospitals grant, described below). Private medical care and reimbursable drugs are paid up to 80 percent of the regulatory rates. This rate is raised to 100 percent in cases such as chronic illness, hospitalization exceeding 30 days, and low-income pensioners. The regulatory rates have not been revised since 1987, so they fall far short of actual fees charged in the private sector—to the point that reimbursements today from the social security system are merely of symbolic value.
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Finally, indigent persons not affiliated with CNAS are covered directly by the state (Ministry of Employment and National Solidarity). Their health care expenses are paid from a portion of the operating grant that the state provides health institutions (see below). No specific benefit package is defined, and all services provided by the public sector are covered. The state does not reimburse any expenses that indigents might incur in the private health sector.
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