Medical spending and health outcome in Nepal: problems with technology or its distribution?

Notwithstanding the great improvements in medical technology , such as oral rehydration therapy, diarrhoea is still one of the leading causes of childhood morbidity and mortality in Nepal. Although easy-to-implement medical technologies help to reduce the health burden of many diseases, the experience in Nepal indicates that how a health system works in terms of fair distribution of such technologies and financing perhaps matters most. Childhood mortality in many developing countries remains higher among poorer people and the gap between rich and poor has grown, which indicates not only the uneven distribution of the benefits of improved medical technologies but also the extent of the economic consequences for households in the event of childhood illness. We argue that unless a national health system addresses distributional problems, the benefits of medical technologies can never be realized fully. To justify our argument , we present a small part of the results obtained from our analysis of the 1996 data of the Nepal Living Standard Survey. The design and implementation of the survey are described elsewhere (1). We estimate annual out-of-pocket spending on medical care for children aged р15 years in Nepal at 0.8% of gross domestic product, which accounts for about 16% of the country's total expenditure on health. Health outcomes could have been different if this substantial amount of funds was organized in a more appropriate way, such as through insurance. For example, the care of ill infants and children aged р5 years costs households, on an average, twice as much as the care of older children (aged 6–15 years), but the former consumes nearly eight times more of household's annual budget than the latter. Although our study underestimated the real economic burden because the analysis took into account only direct treatment and travel costs, households with younger children face a substantial hurdle to financing the medical care of their children. Large out-of-pocket expenditure simply means less use of medical care given other needs, which in turn implies less than optimal health outcomes. Importantly, our analysis showed that diarrhoea was the second most frequent condition among children for which medical care was sought (the first being unspecified fever). Although oral rehydration therapy does not influence the occurrence of diarrhoea, it does influence the course, duration, and outcome of diarrhoea by preventing dehydration — the most common cause of death associated with diarrhoea. In the absence of the fair distribution of oral …