Press Release No. 11/354

Press Release: IMF Holds Conference on Public Health Care Reform in Asia

October 3, 2011

At a conference in Tokyo on October 3 jointly organized by the IMF’s Fiscal Affairs Department and Regional Office for Asia and the Pacific, close to 60 senior government officials and leading academics from 11 countries discussed public health reform in Asia. The conference was generously supported by the Japanese government.

Health care reform is an important fiscal issue, including in Asia. In the advanced economies, public health spending is projected to rise by an average of 3 percentage points of GDP over the next 20 years unless additional reforms are undertaken. In Japan, spending will rise at a much lower rate (1 percentage point of GDP). In opening the conference, Mr. Min Zhu, Deputy Managing Director of the IMF, underscored that successful fiscal consolidation efforts in advanced economies will require containing the growth of age-related public spending, including on health. He noted that in emerging economies, there is more fiscal space to increase spending to expand coverage of health services, especially in emerging Asia.

There are several effective policy tools that can be used to contain the growth of public health spending in advanced economies. Effective tools include budget caps and judicious use of competition to foster efficiency. Japan scores high on both of these relative to other advanced economies. Other tools include payment systems that reduce the use of “fee for service” arrangements, and greater reliance on private financing, including through greater use of private insurance. However, the latter must be accompanied by sound regulation. In the emerging economies of Asia, health outcomes are good relative to spending. Challenges include the need to provide universal coverage to the population with a fiscally sustainable package of services. The goal would be to lower high out-of-pocket expenditures to improve financial protection. Assessing the cost effectiveness of health interventions is also a priority for the region.

There are several success stories in Asia that can be drawn upon in forging reform strategies. These include Japan’s success in containing cost growth, which going forward should be complemented by efforts to strengthen primary care. Another example is Thailand’s achievement of universal health coverage in spite of a high degree of labor market informality. The appropriate mix of reforms to draw from the region’s success stories will depend on county circumstances.

The one-day conference is part of the IMF’s efforts to continue its dialogue with country authorities and the public on the key fiscal challenges facing member countries.