IMF Weighs in on Health Care Reform

Reforms to health care systems needed, as costs continue to rise

Private sector can play a role in the financing and provision of health care

Expanding health care coverage important for many emerging economies

According to IMF analysis released earlier this week, reforming health care systems should be high on the list of priorities of governments as they continue to work on cutting deficits and debt.

Health care costs have skyrocketed over the past few decades with the introduction of new and very expensive technologies to treat patients. Aging populations are also contributing to cost increases. Faced with uncertainty regarding longer-term recovery prospects for the global economy, governments may soon be in a difficult spot if they fail to make the necessary reforms to health care systems.

“We enjoy a higher quality of health care today, but we have to find a way to finance it,” said IMF Deputy Managing Director Min Zhu. Zhu addressed officials, journalists, and academics gathered at a special seminar to discuss the findings in a new book The Economics of Public Health Care Reform in Advanced and Emerging Economies.

“This new book brings forward a lot of the challenges we face today. Across the world, countries are seeing aging populations, rising costs of health care, or both. We have to take action today in a clear, strong, determined way on a global basis to address these issues,” said Zhu.

Ultimate good is health, not health care

Advanced economies can expect large increases in public health spending—to the tune of 3 percent of GDP over the next 20 years and 6½ percent of GDP over the next 40 years. A third of the cost increase will be due to population aging, with the remaining portion attributed to non-demographic cost drivers, the IMF said.

Though things are less pressing in emerging economies, where public health spending is projected to increase, on average, by 1 percent of GDP over the next two decades, there is scope for health reform to improve the efficiency of health care spending.

University of Southern California Professor Dana Goldman delivered the keynote address at the event. “There is a sense that we might not be getting much value for what we’re spending. The ultimate ‘good’ we want is health, not health care. This realization can have profound effects on health policy,” he said.

Private sector role

There is no one-size-fits-all approach to determining the appropriate role of the private sector in...