Trade Policy Note Final-rev08 - Development

Annex 5F: Health services
The provision of health services to the poor is central to the achievement of MDGs
4,5 and 6. The pressures for foreign participation in health sectors have arisen at a
moment when the impact of the WTO and other trade agreements on health is a
subject of major concern to the international community. Commitments on health in
GATS and other trade agreements can impact the provision of basic health services to
the poor. 155 . As already noted, the 2001 WTO Ministerial Declaration on the Trade-
Related Aspects of Intellectual Property Rights (TRIPS) Agreement and Public Health
was deemed necessary to protect developing countries against bilateral pressures from
powerful trading partners who were undermining their rights to generic access to
medicines. International health experts have strongly and continually cautioned
prudence to developing countries in committing themselves to allowing foreign
providers of health services, including health insurance, companies from entering
their markets.
While the role of the private sector in providing health services varies from country to
country, most WTO members have declined to make commitments in this sector.
Many countries desire the latest medical technology and high-tech hospitals and
training facilities. The existence of such facilities is also seen as an inducement to
foreign investment. However, there is a concern that the foreign private sector will
drain human and financial resources from the national sectors, both public and
private, and lead to a two tier health system, one for the rich and one for the poor. As
the greatest challenge facing developing countries in the health sector is to provide
affordable access to quality services for the rural poor, the presence of foreign private
suppliers could make little contribution to, and more likely frustrate these efforts.
Foreign participation in the health services sector can also take place through the
provision of health insurance. International health experts consider that while, in
theory, greater access for health insurance companies could stimulate competition and
reduce costs, in actual practice, evidence shows that greater competition among health
insurers segments and destabilizes the market in addition to undermining the ability to
build larger, more equitable risk pools that spread costs between rich and poor,
healthy and sick. In particular, it is crucial to prevent wealthier population groups
from opting out of national health insurance schemes. Foreign health insurance should
not operate in a manner that undermines universal compulsory health insurance
systems. The experience of some developing countries with Health Maintenance
Organizations (HMOs), which create a captive supply of medical staff, has been
particularly discouraging 156 International health experts advise that the entry of
foreign suppliers makes it more urgent for countries to create an effective regulatory
framework for the health insurance sector, and that until such a system is in place it
could be harmful for developing countries to make full commitments in the health
insurance sub-sector under GATS financial service schedules. 157
155 For links to the international debate on trade in health services see Choike , Health and Health
Services, Goods for Sale (www.choike.org/nuevo_eng/informes/1007.html).
156 See, for example, “Consensus Paper on Managed Care Organizations”, developed by Association of
Private Hospitals of Malaysia, 10 April 2001 (www.hospitals -malaysia.org).
157 See Lipson, Debra, GATS and Health Insurance Services, Background Note for WHO Commission
on Macroeconomics and Health, CMH Working Paper 4:7, June 2001
(http://www.cmhealth.org/docs/wg4_paper7.pdf).
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