Market failure of health care systems in conflict areas
James Antoon writes on the underlying economics of health systems affected by conflict.
The effect of war and conflict on local health care systems can be devastating and is often difficult to quantify. Areas such as Iraq, Sudan, Palestine and Timor, where conflict is long term, all show a failure of the health care system to compensate for the increased need of medical care. Unfortunately, the inability to survey and monitor as a result of violence and political posturing makes obtaining accurate heath care data difficult. Qualitatively analyzing the effects, however, is not quite as challenging.
Health care demand is influenced by a number of factors including health status, population demographics, cultural values, and economic standing. The health of a patient usually determines whether a patient will seek health care services. Poor preventive care, injury, or disease can all affect a person’s health. Demographics of a population can indicate the overall health care demand of a population. For example, an aging population will generally require more health care treatment than a young population. The ability to pay for treatment can also affect whether that person will seek care. Finally, physicians inherently affect demand by recommending and prescribing treatment. For example, a doctor can prescribe further exams, tests or office visits to be administered by his or herself. They are in a unique position that allows them to create demand for their own product. Health care supply relates to the number of resources available to provide treatment. The number of physicians, medical facilities, medical supplies, ambulances and other health care service providers influence supply. A change in the number of any of these will affect the supply of health care. (1,2)
To study the effects of a conflict we must consider two health care markets: the market for acute (emergency) care and the market for primary (non-emergency) care. Primary care deals with non-life threatening conditions that do not require immediate medical attention. Non-acute issues include mild illnesses, injuries and preventive care issues. Let us assume that the demand in this market is a function of a person’s health status, demographics, and economic standing. Furthermore, let us assume that supply is a function of physicians, medical supplies, medical facilities, and the number of health care providers in general. (3)
The crisis that disrupts local economies in conflict areas decreases per capita income. The percentage of people covered by health insurance also drops, mainly because most of the workforce received insurance through their employer. These changes in economic standing have decreased demand for non-critical care. In other words, people would rather spend their money on food and other necessary goods than, for example, preventive care. Increased demand induced by the growing population is overshadowed by the decreased demand due to lower income and loss of health insurance. This overall decrease in demand has caused the demand curve for primary care to shift left.
Due to the hazardous environment, restrictions on work permits and limited secondary educational system, the overall numbers of doctors (primary and specialty) per person decrease. In addition, closures, roadblocks and checkpoints frequently prevent medical personnel from reaching their workplaces. Violence often inadvertently damages primary care medical facilities, doctors’ offices and physicians’ homes. These factors decrease the amount of medical care available, and shift the supply curve left.
Figure 1
The overall price effect of the supply and demand shocks in this market is ambiguous. As illustrated in Figure 1, quantity of care provided decreases, but the price change depends on the magnitude of the supply shift relative to the size of the demand shift. If the supply shock is greater than the demand shock, then price will increase (P3‘). However, if the supply shift is less than the demand shift price will decrease (P1‘). Finally, if the supply and demand shocks are equal in magnitude price will not change (P2‘). Yet, no matter the price, the quantity of health care provided declines to some degree.
The supply shift in the emergency health care market is similar to that of the primary care market. The number of physicians has also declined for the same reasons as in the primary health care market. The demand effects, however, are quite different. The decrease in the overall health status of the population has created an increased demand for emergency care. Malnutrition is often a problem and conditions (poor water supply, decreased health) are ripe for the spread of disease. Since demand for primary health care has decreased, preventive care has dropped and people are more apt to wait until they are extremely sick to receive care. These factors, along with the increase in violence increase the demand for emergency care. Unlike the primary care market regardless of the magnitude of the shocks, price increases and quantity decreases.
The overall effect of conflict on health care is simple: increased price and decreased quantity of health care provided. This decline indicated in Figure 1 is very disturbing because essentially those who need health care the most cannot get it, no matter how much they are willing pay. In conflict areas, it is not only warring sides but more often civilian bystanders who are those in most need of health care. However, there are several measures that the international community can take in a conflict zone to help minimize the negative impact on the health sector. The first is to artificially increase supply by providing doctors, nurses and emergency services. Doctors Without Borders has shown that medical care workers can make an impact, often with both sides agreeing to this intervention. Furthermore, the governments, foreign or domestic, must try and keep up basic care. This includes preventing malnutrition, providing adequate vaccines to prevent epidemic outbreaks, ensuring safe access and movement to health care when possible, and making safe drinking water available. (4) It is the responsibility of the international community to ensure that everyone, even those in conflict areas, have adequate access to health care.
James Antoon, 3rd year MD/PhD student at the Tulane University School of Medicine, New Orleans, USA
(1) Arrow, Kenneth, “Uncertainty and the Welfare Economics of Medical Care.” American Economic Review, 53(5), Dec1963, 941-973.
(2) MacWilliam, Leanard. “Measuring the Health of the Population.” Medical Care. 33(12), Dec 1995, 21-42.
(3) Henderson, James. Health Economics and Policy. Southwestern Publishing, 2nd Edition, 2002.
(4) World Health Organization. “World Report On Violence and Health”. October 2002.