Who should pay for global health, and how much? Lessons from Kyoto. L.R. Carrasco, R. Coker, A.R. Cook National University of Singapore Singapore [email protected] Global Health: A Public Good without a Collective-Choice Rule • Global health is a public good: ill health in one part of the globe has consequences elsewhere. • Donors benefits: reduction of communicable disease emergence and transmission and macroeconomic interactions, trade, travel, migration, food security, environmental degradation. • Despite the benefits: global health continues to be underfunded. • Extra US$36 to US$45 billion needed annually to meet the health MDGs. Global Health: A Public Good without a Collective-Choice Rule • Exacerbated by the ongoing global financial crisis. • Absence of a mechanism to encourage— or enforce—any expected contributions from each country: tragedy of the commons. • Only few contribute but all benefit. • Other global commons are climate change mitigation. The Kyoto protocol is an example of a collective-choice rule to establish the expected contributions from each country. Parallels with Tradable Carbon Permits: Global Health Permits? • Humanity faces new challenges to manage global commons and only one planet to experiment with. • Important to draw lessons from other successful strategies on global commons management. • Market-based systems of tradable carbon emission permits. • Cap-and-trade mechanism: carbon emissions of countries are capped and as a result countries need to buy permits that compensate for their emissions in excess of the cap. Parallels with Tradable Carbon Permits: Global Health Permits? • It is much cheaper to cut emissions in low-income countries. Likewise it is much cheaper to reduce disease burden in low-income settings. • Potential for parallelisms? • For carbon markets the currency is avoided tons of carbon. • Suitable metric for global health? disability adjusted life years (DALYs). • Many ways to set the cap-and-trade rule. We base it on health expenditure, GNI and cost-effectiveness. Parallels with Tradable Carbon Permits: Global Health Permits? • Perspective of a hypothetical global social planner aiming to reduce global disease burden: the greater the investment on low cost-effectiveness interventions in high- and middle-income countries, the more inefficient the allocation of resources to reduce global disease burden. • System encourages compensation for the resulting inefficiency by requiring the support of highly costeffective projects in low-income countries. • Currently cost-effectiveness threshold different for each country. Parallels with Tradable Carbon Permits: Global Health Permits? • We propose a global health cost-effectiveness threshold (GHCET): 3GNI of the threshold that defines low income countries. • Interventions in middle and high-income countries that do not meet the GHCET need to buy DALY credits from low-income countries. • Straightforward at the project level. In the interim, at the global level: difference between the hypothetical DALYs averted domestically and those that could be averted in a low-income setting based on GNI and health expenditure of each country. Carrasco et al. (2013) PLOS Medicine How does it work? Global approximation • To estimate expected contributions, we define: CHi CHi Ei 3 GNI 3 GNI LI i • where Ei denotes the “force of expected contribution to global health” by country i; CHi is the annual health expenditure. E i Fi N V DHi E i i 1 where Fi > 0 indicates the annual level of defaulting; V is the total volume of the necessary increase in global health contributions to meet the health MDGs; and DHi are the total health commitments of country i per year. How does it work? Project level Carrasco et al. (2013) PLOS Medicine How does it work? Project level Carrasco et al. (2013) PLOS Medicine Results Results • The greatest defaulting countries per capita to meet the health MDGs were the US (US$22–US$33) and several affluent European countries (e.g., Switzerland, US$23–US$31; Austria, US$21– US$27; and Germany, US$18–US$24). • Only a few countries contribute more than expected: Ireland, the UK, Denmark, the United Arab Emirates, Luxembourg, and Norway. • high-income countries would account for 74%–77% of the remaining US$36–US$45 billion. Results • 19%–28% of the total increase, or US$6.8–US$10 billion, would come from the US, 5%–6% from Japan, 4%–6% from Germany, 3%– 4% from France. • Middle-income countries would also contribute substantially, with 6%–7% from China (i.e., US$2.1– US$2.7 billion), 3% from Brazil, 2% from India. Discussion • Incentive to buy permits from more cost-effective projects: more efficient, ranking of allocation priorities. • Many implementation challenges: attract the attention of a nucleus of countries (UK, Norway, UEA?). • Kyoto-style binding agreement. Who to run market, assign credits? Risk of free riders. • Cap-and-trade systems for climate change mitigation have shown the potential for the market to grow rapidly (from US$11 to US$140 billion from 2005 to 2011). Feasible for global health? Conclusions • Experiences from carbon permit markets are encouraging: efficiently raise resources to help manage global commons. • an analogous tradable DALY credits market could scale-up global health commitments. • We need to be ready to implement the most powerful strategies to manage global commons. A DALY tradable credit market offers unexplored promising potential. Many thanks! [email protected] Carrasco LR, Coker R, Cook AR (2013) Who Should Pay for Global Health, and How Much? Plos Medicine 10: e1001392.