Economic recession, structural adjustment and health

Reports and studies from a number of sources including government health ministries, UNICEF, non-government agencies and even sections of the World Bank, point to significant welfare reversals over the past decade in many countries implementing structural adjustment programmes (SAPs). These reports are contradicted by the World Bank's 1993 World Development Report which maintains that adjusting is more beneficial to health and welfare than non-adjustment, and that any negative impact is limited and temporary. The following statement from the International People's Health Council (IPHC) and the Third World Network outlines the process whereby SAPs are likely to affect health, summarises the empirical evidence for such effects, draws conclusions about the impact of SAPs on health and makes recommendations regarding their future application.

Economic change, health care and health outcomes

ANY examination of the impact of the relationship between macro-economic change, including structural adjustment programmes, and health should be informed by a historical and contemporary understanding of the economic, social and technical factors influencing health outcomes. The disease burden and pattern experienced by the peoples of underdeveloped countries are strikingly similar to those of 19th century Europe, i.e., they are primarily diseases of underdevelopment and poverty, not a feature of warm climates in the tropics. Industrialised and urbanised sections of underdeveloped countries experience disease patterns more akin to those dominant in the industrialised countries.

Historical and contemporary experiences have shown that there is a definite but complex relationship between economic growth on the one hand and health status on the other. In general, sustained economic growth over the long run does lead to improved health and nutritional status: in the now-industrialised countries the large and sustained decline in mortality has been accomplished by reductions in morbidity (disease) and malnutrition, and largely preceded any effective medical interventions.

There is not, however, a direct correlation between health and nutrition indicators and GDP per capita levels, because improved income distribution - even at low income levels - can accelerate improvements in health, e.g. in China and Sri Lanka. In the short term, the inter-relationship is even more complex. There are examples of countries in which high growth has been associated with a decline in health status as reflected by the normal indicators (Brazil), but there are equally cases where severe economic decline has been associated with significant improvements in health status (Chile, Tanzania). An understanding of the relationship requires a fairly detailed study of the particular circumstances in which economic changes take place and of the context within which health status is determined. In particular, issues of access and equity are of primary importance.

Factors influencing health outcomes include economic and environmental influences as well as direct health sector interventions. Thus, it is useful to categorise these factors into two broad groups: those originating outside and those originating inside the health sector. Evidence from many countries shows that income is probably the most important of the outside factors. For example, a Zimbabwean study found that variation in children's nutritional status was explained principally by the socio-economic status of parents (education, economic activities, income and housing status). Since education and housing status are themselves strongly correlated with income, this suggests that income is a primary determinant of nutritional status. Other factors originating outside the health sector include social inputs, such as education; environmental inputs, such as access to clean water; and general economic measures, such as food rationing, subsidies and so forth. Factors originating inside the health sector are the usual range of health care provision, for example, hospitals, health services, health personnel, and immunisations.

Although health sector inputs may be the most obvious determinants, the effects of non-health sector inputs are probably more important. Whilst it is relatively easy to achieve rapid improvements in health measured by standard quantitative indicators (which are in reality disease indicators), sustained improvements in the quality of life are more difficult to produce and measure. For instance, certain indicators, such as infant and young child mortality rates, may be rapidly improved by selective primary health care interventions (e.g. immunisations) targeted at these high risk groups. There is, however, little evidence to suggest that improved nutrition levels, for example, can be maintained by the application of such technical packages in the absence of more general improvements in access to resources.

It must also be noted that different time frames apply to the appearance of changes in both sets of indicators. For example, whilst changes in food prices and health service take-up rates may occur quite quickly and be readily assessed and documented, changes in mortality and morbidity rates, and in nutritional status, are both more problematic to monitor, and become evident only in the medium to long term; short-term changes may thus reflect processes operating before the implementation of SAPs.

Finally, another major problem in assessing the impact of SAPs is the poor quality and often the unavailability of data on mortality, morbidity and nutritional status, especially in the poorest countries where economic decline has often been most severe.

Given the foregoing, it is clear that in assessing the impact of structural adjustment on health services and health status, it is necessary to analyse the impact of factors operating both inside and outside the health sector, and that a range of health outcomes must be examined. These outcomes must be assessed over both the short- and long-term.

The components of SAPs and their likely effects

In general, structural adjustment programmes consist of three sets of components. The first group of structural adjustment policy components are those things which influence the balance of payments. These include:

* Devaluation of the local currency, both formal and informal:

Formal devaluation is carried out by allowing the local currency's value to slide against international currencies such as the dollar or pound.

* Informal devaluation is implemented by lifting price controls and freezing wages, which results in people not being able to buy as much with their money. In effect, wages are lowered.

* Restrictions on borrowing from the IMF.

* Balance of payments controls. Some governments have imposed stringent restrictions on dividends and foreign exchange. The resulting wage cuts and price increases affect a number of factors outside the health sector which influence health, such as how much food a family can buy - the single most important factor - and people's ability to pay for housing and other services. The second group of components are government budget policies, primarily consisting of reductions in public spending on health, education, social services and food subsidies. Reduction in social sector spending means not only reduction in budget allocations to the health sector; it also is accompanied by 'cost recovery', the introduction of user charges. Essentially, cost recovery means that health care that used to be free in many countries is now charged for.

The last component of structural adjustment is called 'trade liberalisation'. Previous restrictions on trade are removed (for example, tariffs are reduced). This together with the devaluation of local currency, is aimed at increasing exports from poor countries to rich. Trade liberalisation also includes incentives for foreign investment, such as rolling back government regulations that restrict the freedom of action of foreign business. At the same time, loans are made available (often through the World Bank) so that poor countries can import goods from the West. The liberalisation of trade opens up markets in the South, and allows the middle class in the South to enter the market.

The impact of SAPs on health

Notwithstanding the limitations described earlier and the methodological difficulties in attributing health changes specifically to SAPs, there is some general evidence of their impact on various indicators. In addition, there is an increasing body of qualitative data which has revealed often unquantifiable effects on people's living conditions, health behaviours and illness experiences.

(i) Impact on Infant and Child Mortality and Morbidity and Presumed Mechanisms

Most observers now accept that adjustment has had a negative impact on infant and child mortality. There is evidence that non-adjusting countries with low levels of debt in Sub-Saharan Africa (SSA) have succeeded in accelerating the rate of improvement of their infant mortality rates during the 1980s; that the rate of progress in severely indebted, non-adjusting countries has remained broadly unchanged; and that progress in severely indebted, intensively-adjusting countries has slowed markedly. UNICEF cites evidence of increases in infant and young child mortality in several SSA countries over the past few years.

The likely causes of these reversals derive from declines in incomes; increases in food prices; and reductions in health sector spending, which have led to the imposition of user charges for health care, cutbacks in preventive programmes' budgets and interruptions in supply of pharmaceuticals to public health care facilities. These have in turn resulted in inter alia: deterioration in both the quantity and quality of diets, and reductions in immunisation coverage and in utilisation of health services for acute conditions, as well as weakening of disease control programmes. Consequently, the incidence (and possibly the severity) of the vaccine-preventable diseases has probably increased together with mortality from diarrheal disease, respiratory infections and malaria. There has also been a resurgence of certain communicable diseases which were previously substantially under control, particularly malaria, tuberculosis and cholera. All of these have contributed to increased morbidity and mortality, especially amongst children and women.

(ii) Impact on Maternal Mortality and Morbidity and Presumed Mechanisms

In addition to the negative impact on women's health associated with the general decline in communicable disease control and health care provision, there is evidence that morbidity and mortality associated with pregnancy has also been aggravated. In a number of countries the introduction of user charges for antenatal and maternity care has been associated with an increase in deliveries conducted at home, as well as those occurring in hospital without previous antenatal care or assessment. The rising costs of transport together with lack of money on the part of poor women have been other contributory factors. Finally, there is evidence, mainly of a qualitative nature, that risk behaviour in relation to HIV transmission has been influenced by deteriorating economic circumstances which have forced an increasing number of women into commercial sex activity.

The above factors have undoubtedly resulted in a sharp rise in already high maternal mortality rates, especially in poor countries and amongst lower socio-economic groups.

(iii) Impact on Child Nutritional Status and Presumed Mechanisms

The UN Coordinating Committee's Sub-committee on Nutrition has documented a deterioration in child nutritional status in sub-Saharan Africa between 1975 and 1990. While nutritional outcomes are a result of a complexity of factors, including disease, diets, droughts and war, there is substantial evidence from a number of countries, particularly in SSA, that child nutritional status has deteriorated after the introduction of SAPs, including in situations where mortality data have stagnated or even continued to improve.

The role of 'safety nets'

In a number of adjusting countries, 'safety net' programmes have been introduced to limit the negative social impact of SAPs. 'Safety net' programmes include the retention of 'self-targeting' food subsidies (on the single cheapest calorie source in the adjusting country), social funds and social action programmes.

While such 'safety net' programmes are helpful, there are several limitations on their effectiveness:

* self-targeting subsidies may reduce the variety of diets and intakes of protein and micronutrients;

* not all adjusting countries have a staple food which fulfils the conditions for a 'self-targeting' subsidy;

* the indirect effects of subsidy reductions on other foods may seriously limit their benefits;

* social sector and structural adjustment programmes have generally been small-scale pilot projects with limited coverage and weak targeting; and

* in many cases, implementation has been seriously affected by critically weak administrative capacity in government (partly as a result of adjustment), and by problems in government-NGO relations.

Some longer-term implications of SAPs

Most of the impact of SAPs on health described above is felt immediately or in the short to medium term. Certain effects, however, will continue to operate and exert their influence on health care and health outcomes over the long term. These can be approached in terms of the framework proposed earlier; namely, factors operating outside and inside the health sector. The most important outside factors include employment and education, particularly of females. With regard to employment, SAPs have already had, and will continue to have a role in aggravating unemployment, especially within poor countries. Workers retrenched as a result of plant closures or cuts in governmental or parastatal bureaucracies will become deskilled over time and, even if employment opportunities later become available, will find it difficult to return to the same jobs. Insofar as education is concerned, there is evidence that maternal education correlates strongly, and independently of socio-economic status, with improved infant, child and maternal health. Consequently, education of young girls is an important provision in its own right, as well as in terms of its later impact on health practice. There is considerable evidence showing that cuts in education budgets brought about through SAPs have resulted in significant school drop-outs, particularly of girls. The impact of this phenomenon on the health of future mothers and children will be felt only in the longer term.

Inside the health sector certain changes resulting from the implementation of SAPs are likely to persist over the longer term. These relate to the erosion of the health infrastructure, both physical and human. The effects of the non-maintenance of buildings, transport and equipment will be felt for many years to come. Also, a significant percentage of those health personnel retrenched as a result of budgetary cutbacks represent a precarious resource likely to be lost from the health sector. The future investment required to replace them will be both expensive and time-consuming, and their loss will exert a long-term negative effect on the health sector and the people's health.

The above is a statement prepared by health experts participating in a consultative meeting on health strategies organised by the International People's Health Council (IPHC) and the Third World Network, held in Penang, Malaysia from 28 November to 2 December, 1994.