WHO: 20 to 40 percent of money spent on health wasted, more funds needed to be wasted

Health care systems worldwide are wasting up to 40 percent of their funds, but more money is needed to boost their capabilities, according to a new report from the World Health Organization.

In an analysis of how countries pay for health and what they get in return, the United Nations agency concluded that despite these losses even more funds need to be invested in health care.

This article by AP reporter Maria Cheng on the WHO’s newly released 2010 World Health Report explores some of the biggest inefficiencies in global health spending.

Of the approximately $5.3 trillion the world spends on health care every year, about $300 billion disappears in mistakes or corruption, according to European Health care Fraud and Corruption Network, quoted in the report. Up to a quarter of the money governments are supposedly using to buy drugs are somehow lost along the way, costing developed countries up to $23 billion a year, the report said.

WHO says some countries pay almost double what they should for drugs and that, and that at least half of the medical equipment in poor countries is unusable. Much of the medical equipment donated to developing countries is also useless, it said.

“In some countries, almost 80 percent of health care equipment comes from international donors or foreign governments, much of it remaining idle,” the report says.

It said most of the medical equipment shipped to the Gaza strip after 2009 simply sat in warehouses.

The AP article also quotes Bill who points out the irony of asking donors for more money when it’s clear so much better use could be made of the funds already spent:

“How do you make an impassioned plea for spending more money when we’re wasting so much?” asked William Easterly, a foreign aid expert at New York University.

He said much of the problem in developing countries is that while donors have spent billions on things like drugs, vaccines and malaria bednets, little has been spent on the health workers needed to distribute them.

“Medicines and vaccines don’t administer themselves,” Easterly said.

He also criticized U.N. agencies and major donors like the Bill & Melinda Gates Foundation, who have mostly avoided investing in health systems, preferring instead to build separate programs for illnesses like malaria, polio and AIDS.

“That is like doing aerial bombing at 35,000 feet without knowing what you’re hitting on the ground,” Easterly said. “But investing in medicines for AIDS and malaria makes for much better publicity than investing in health systems.”

Read the whole article here.

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Tax break for employer health plans a target again

WASHINGTON (AP) — Job-based health care benefits could wind up on the chopping block if President Barack Obama and congressional Republicans get serious about cutting the deficit.

Budget proposals from leaders in both parties have urged shrinking or eliminating tax breaks that help make employer health insurance the leading source of coverage in the nation and a middle-class mainstay.

The idea isn’t to just raise revenue, economists say, but finally to turn Americans into frugal health care consumers by having them face the full costs of their medical decisions.

Such a re-engineering was rejected by Democrats only a few months ago, at the height of the health care overhaul debate. But Washington has changed, with Republicans returning to power and widespread fears that the burden of government debt may drag down the economy.

“There is no short-term prospect of enactment,” said former Senate Majority Leader Tom Daschle, a leading Democratic adviser on health care. “However,” he said, “in a tax reform (and) deficit reducing context in the long term, the prospects are much better.”

He opposes repealing the tax break by itself, but says he would be “willing to look” at it with other changes that improve access to quality health care while reducing costs.

Labor unions believed they had squelched any such talk. Now, they’re preparing for another fight.

Tampering with health care tax breaks is “a terrible step in the wrong direction,” said Mary Kay Henry, the new president of the Service Employees International Union, which represents many hospital workers.

Employer-provided health insurance is part of a worker’s compensation. Unlike wages, it isn’t subject to income and payroll taxes.

Repealing the tax break would raise several hundred billion dollars a year, depending on how it’s done. Many economists believe employers would boost pay if they didn’t provide health care. Proponents of repeal usually call for a tax credit to offset part of the cost of individually purchasing coverage.

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