"Key Messages and Recommendations"
Final Version, 8 March 2002 World Health Organization International Consultation on Assessment of Trade in Health Services and GATS: Research and Monitoring Priorities 9-11 January 2002 Geneva, Switzerland Executive Summary In January 2002, WHO held an international consultation to identify research and monitoring priorities for assessing trade in health services and the impact of the World Trade Organization‘s General Agreement on Trade in Services (GATS). Although international trade in health services appears to be increasing, and GATS and other forms of service liberalization are on the rise, there remains a dearth of empirical evidence on their health or economic impacts. The meeting convened experts from three professional fields – trade, health and statistics – to develop a focused research and monitoring agenda in this area. Participants developed specific recommendations for conducting more rigorous analyses of the health, economic, and development impacts of health services trade, and of service liberalization policies. They agreed that country descriptive studies of the extent of trade in health services, while helpful, are inadequate to understand health system impacts. To facilitate cross-country comparisons, and ensure that health services trade is accurately reflected in international services trade statistics, efforts are needed to standardize data collection on the value or volume of such trade across countries. The meeting produced three sets of recommendations on: 1) content -- a set of key policy questions around which research and data collection in this area should focus; 2) process – methods and approaches that should be used to conduct sound research and data collection in this field for each of the four modes of health services trade, and in general; and, 3) WHO role – how WHO can support and promote research and data collection to support policy development. These recommendations are highlighted below, and explained further in the summary report that follows. 1. Key public policy issues and questions on which better information, data and research on trade in health services should be focused: What are the net effects of trade in health services, i.e. can its effects on the health system be weighed or measured against trade or economic effects through a composite measure of general welfare or health? Are there any effects of health services trade, or trade liberalization policies, common to countries at the same level of development, in the same region, or with similar health system features? How can trade in health services be used to improve health and health systems, and contribute towards the goal of providing universal access to health care? What are the effects of liberalization on trade in health services under different types of regulatory systems, and which regulations are effective in mitigating any harmful effects on the health system? What are the health system effects attributable to health services trade, as distinguished from those due to GATS or other trade liberalization, and those due to related domestic processes such as privatization and de-regulation? Final Version, 8 March 2002 What are the magnitude and direction of the effects of health services trade across modes and between health services trade and trade in other service sectors? 2. Recommendations on approaches to be used in conducting research and monitoring of trade in health services and impact of GATS or other trade liberalization: Consider both positive and negative impacts, health and economic effects of trade in health services, and trade liberalization Take into account interactions among modes in trade in health service (see page 11 for definitions of the four modes), between trade in health services and trade in other service sectors, and between GATS and other international or regional agreements. Differentiate among the multiple dimensions/types of health services trade within each mode, which may have different implications on health systems, and will have varying significance for exporting and importing countries. Examine the broader context and developments influencing trade in health services; GATS is but one of many influences (see discussion on conceptual frameworks in the summary report for further explanation). Develop measures that distinguish among the degree of trade liberalization in different countries. Look beyond existing trade-in-services statistics for data that may be relevant to trade in health services; because such data are likely to be country-specific, it remains important for statisticians and researchers in different countries to collaborate in developing compatible data collection methods. To increase the value of country case studies and situation analyses, conduct comparative multi-country data collection and research to determine which factors, and which regulatory schemes, are effective in maximizing benefits, and minimizing risks of trade in health services and trade liberalization. Specific recommendations by working groups for research and data collection in each of the four modes of health services trade are on pages 12-15 of this report. 3. Major recommendations to WHO on how to promote sound research and monitoring of trade in health services and trade liberalization to support policy development: Support research projects that are consistent with the meeting recommendations, via letters of support to donors/funders, steering funds to national institutions, selected technical assistance, periodic meetings and brief reports to inform policy makers of new research findings, and further research agenda-setting exercises. Serve as a clearinghouse and catalyst of continuing dialogue, debate, and cooperation to facilitate comparative multi-country research and data collection, based on the recommendations of the working groups. Promote partnerships and work with other international organizations to improve data collection on trade in health services. Organise or support similar meetings at the regional and national level, to identify local research and policy priorities, and facilitate collaboration by professionals from the three key disciplines (trade, health, and statistics). 2 Final Version, 8 March 2002 WHO International Consultation on Assessment of Trade in Health Services and GATS: Research and Monitoring Priorities 9-11 January 2002 Geneva, Switzerland Summary Report and Recommendations Introduction The February 2000 launch of World Trade Organization (WTO) negotiations to further liberalize trade in services under the General Agreement on Trade in Services (GATS) has highlighted the need for information about the risks and benefits of trade liberalization in various service sectors. In the health sector, there are virtually no empirical studies on the impacts of trade in health services, or of trade agreements, on the availability of health services, equity in health financing, or access to and quality of care. Also lacking are valid, reliable, and internationally comparable data on health-related service trade. It is generally believed that health-related services trade is growing, but by how much is unknown. WHO‘s commitment to the promotion of evidence-based public health policy led it to attempt to fill this gap so that countries can make more informed decisions about trade liberalization as it affects health. WHO organized an international consultation of experts to develop recommendations on the type of research and monitoring that would be most useful to policy makers, and how to conduct valid studies and collect more accurate statistics. In organizing the meeting, it was recognized that the interdisciplinary nature of the subject required the participation of individuals with different backgrounds and perspectives. Thus, invitees to the consultation included health, trade, and statistics professionals, as well as representatives from government health and trade agencies, intergovernmental organizations, 1 academic institutions, civil society and the private sector. See the Participant List* for names, affiliations, and contact details of those who attended the meeting. Objectives The consultation had three objectives that formed the basis for the program agenda (see Agenda and Meeting Objectives* for full details): Identify public policy issues and questions – at the national and international level – on which better information, data and research on trade in health services should be focused. In line with these public policy issues, propose multi-country, regional or global research projects to assess the health system impacts of trade in health-related services, and of GATS commitments and other forms of trade liberalization. To support research, propose strategies for comparable data collection across countries on trade in health-related services, and on health system impact measures. In addition, WHO organizers solicited ideas on how it could support the implementation of the meeting‘s recommendations, and what other action it might take to promote research and monitoring of trade in health services to support policy development on these issues. 1 Important Note: A star (*) means that the document or individual‘s presentation can be accessed on the web page: http://www.who.int/health-services-trade/ 3 Final Version, 8 March 2002 Related WHO activities This meeting is part of a broader set of WHO activities addressing globalization and its implications for health and health systems. As explained by Dr. Nick Drager*, Coordinator of Globalization, Trade and Health in WHO‘s Department of Health and Development (HDE), WHO assists countries in assessing the opportunities and risks to health posed by cross border trade and promotes collective action in maximizing the benefits or minimizing the risks of such trade to health. This meeting focused on international trade in health services as one element of cross-border flows, and GATS as an example of new global rules that increasingly affect health and health systems. Current Policy Issues in Health Services Trade To ensure that research and data collection in this area was driven by policy concerns, the meeting began by discussing issues and questions that confront public policy makers regarding international trade in health services, and current trade rules or negotiations. In general, cross-border trade in health services comprises a very small percentage of total services trade, and health services that are traded are a small fraction of total global health expenditures. But in some countries, health services trade is a much greater share of total services trade or health expenditures, or the absolute value of health services trade is considerable or growing rapidly. In other countries, commercial interests are pushing governments to reduce barriers to trade in health services. In some areas, trade in health services presents some conspicuous risks to the health system. In such cases, and because the launch of the GATS negotiations has raised the profile of international services trade, the policy issues raised by trade in health services are more pressing and governments are trying to respond. The issues and responses look different, however, depending on the type of health services trade, the country‘s level of development, and whether one is an exporter or importer of services. Some examples of these policy issues are found in the Background Briefing Note *, and others that were highlighted in the meeting‘s presentations and discussions follow. Country Perspectives Dr. Srivinas Tata*, Deputy Secretary, Department of Health, India Ministry of Health & Family Welfare, explained his approach to preparing India‘s position on health services issues in WTO GATS negotiations. It involved quantifying, where possible, the import and export of health services trade in which a country engages, by mode, and trying to assess the benefits and costs. He identified some of the sources of information in India, and where he encountered gaps in data. This information should help to determine what to request of other WTO members, based on specific barriers to trade in health services that a country wants lowered or eliminated to gain market access and promote certain types of services trade. At the same time, countries must consider the types of concessions they could be asked to make by other countries, and what advice health officials would give to trade negotiators in response. For example, if India wants to ―export‖ more nurses on a temporary basis, it may have to consider allowing more health professionals into India, or permitting more liberalized foreign investment in the health sector in exchange. With regard to temporary (out)-migration of professionals, he noted that India stood to benefit from such trade if it was really temporary, as health workers would return with greater skills. But those who leave often become permanent migrants, raising concerns about loss of investment in their training and worsening of health professional shortages in rural areas. Dr. Tata noted that India has a fairly liberal policy regarding private sector investment already. If it were found to have harmful effects on equity in health access or financing implications, he believed that India‘s response should be 4 Final Version, 8 March 2002 to improve the quality and service provided in the public health system, rather than halt private sector investment. Similarly, while the promotion of health tourism (Mode 2 ) could lead to lower quality of public services, so far, it has been too small to be harmful. Speaking on behalf of Canada, Mr. Jake Vellinga*, Senior Policy Analyst, International Affairs Directorate, Health Canada, explained his country‘s approach to deciding its GATS negotiating position with respect to health services. Domestic health policies and objectives were the most important factors in determining Canada‘s position. In Canada, health care is treated largely as a public good, and all residents are entitled to necessary health services. International trade agreements, in contrast, are essentially about opening up commercial markets in health services and providing market access and national treatment to foreign service suppliers. Thus, Canada has decided not to negotiate its health services, and that it will protect its health services in negotiations on other GATS service sectors in order to maximize its policy flexibility to respond to present and future health care needs. Dr. Suwit Wibulpolprasert*, Deputy Permanent Secretary, Thailand Ministry of Public Health and Director of International Health Policy Programme, Health Systems Research Institute, emphasized that many factors converge to determine market opportunities for foreign direct investment, and to influence trends in international and internal health professional migration. These factors include global market forces, as well as domestic health and economic policies. He sounded a note of caution regarding the expected benefits of investment in private hospitals. In Thailand‘s experience, private hospitals whether financed with or without foreign capital are often inefficient, as evidenced by very low occupancy rates. The mushrooming of private hospitals supported by low interest foreign loans during the economic boom (19911997) has resulted in severe internal brain drain. Thailand sought to stem the migration of health professionals from rural to urban areas, and from public to private facilities, with strong financial incentives in addition to other social and educational incentives. The economic crisis in 1997, which caused a downturn in private hospital use, prompted some private hospitals to seek foreign patients, which may have resulted in a second wave of internal brain drain. Trends and developments in one mode of health services trade can have important influences on other modes, he added. And, trade in goods or services outside the health sector can influence the volume or direction of health services trade. Such interactions must be taken into account in assessing future trends in health services trade. Mr. Sergio dos Santos, Second Secretary, Permanent Mission of Brazil to the United Nations/World Trade Organization in Geneva, commented that developing country concerns about GATS at the time it was negotiated -- that it would require them to adopt more liberal policies than appropriate -- did not materialize because the GATS agreement is sufficiently flexible to allow countries to liberalize in line with their economic and development objectives in any given sector. Flexibility to change policies is constrained only if a country makes a commitment in any sector. He emphasized that countries need to put in place sound regulations before making commitments on market access and national treatment. He believed that sometimes, phenomena are ascribed to GATS, when GATS is just exposing some underlying problems. For example, GATS commitments in mode 4 govern temporary, rather than permanent, migration of professionals. If health professionals do not return to their home country, it is not GATS‘ fault as permanent migration does not fall under the remit of GATS. He stressed that collecting more accurate statistics on trade in services is not an academic exercise, but is critical to an objective assessment and evaluation of whether the purposes of the agreement are being met. Other Perspectives on Current Policy Issues Mr. Hamid Mamdouh, Director of the Trade in Services Division at WTO, acknowledged that GATS can be difficult to understand, but is among the most flexible of WTO agreements by providing a wide range of policy options to governments to allow them to choose the sectors to be liberalized and specify the conditions for such liberalization. GATS‘ purpose is not liberalization per se, he stated, but to facilitate trade in services as a tool for economic 5 Final Version, 8 March 2002 development. The applicability of GATS rules to health services is limited to private services, he said, through Article I:3b, which excludes ―services provided in the exercise of government authority.‖ At the same time, nothing in the GATS requires governments to privatize any service. If a country allows trade in any services sector, the general obligations of mostfavoured nation and transparency apply, but there is no market-opening obligation in any particular sector, unless countries make specific sectoral commitments. Among over 150 proposals submitted by WTO members in the GATS negotiations so far, none relate specifically to health services, although health may be affected by some horizontal proposals, or those in other sectors. John Hilary*, Trade Policy Adviser, Advocacy Unit, Save the Children UK, summarized the organization‘s views in ―The Wrong Model: GATS, Trade Liberalisation, and Children‘s Right to Health‖ (http://www.scfuk.org.uk/development/global_pub/wrongmodel.pdf). Save the Children UK is concerned that GATS treats health services as commodities for trade on international markets. To prevent trade and increased private sector activity in the health field from undermining public health objectives, he believes close regulation is essential. Yet, certain GATS provisions could undermine countries‘ ability to regulate its health services, e.g. restricting domestic regulation in order to remove ‗unnecessary‘ trade barriers (GATS Article VI:4b) could drive down regulatory standards rather than raising them to protect public health. For example, attracting foreign health care patients may not make health equity worse, but shouldn‘t it be used to make health system better? He urged governments to ensure that public health concerns are given precedence over the economic aspects of services trade. Hervé Bourel, Head, International Department Health, Allianz Group, asserted that the discussions so far had not paid sufficient attention to patients‘ needs and perspectives. In assessing the value of international trade in health services, he believed that the key issue is whether it helps health markets and regulatory frameworks work to the benefit of patients. Allianz wants free access to markets to offer consumers more choice, and free access to data and to providers, so they can negotiate with the best practitioners in any given market. David Diaz Benavides,* Chief, Trade in Services Section, UNCTAD stated that decisions to liberalize trade in health services should be seen in the context of how globalization can be used to help poor countries develop economically and socially. Countries can help to maximize the advantages of health services trade by considering linkages with other service sectors, and by reflecting the needs and views of private operators in national policies. To benefit more from health services trade, developing countries might push for greater portability of health insurance coverage, recognition of health professional training programs, access to medical technology and distribution channels, and use of telecommunications. Key questions that should be addressed in a thorough assessment of the benefits and risks of health services trade and trade liberlization: 1. What are the net effects of trade in health services (since any particular type of trade may have both positive and negative effects), and how should health effects be weighed or measured against trade or economic effects? 2. While effects of trade in health services, and trade liberalization, may be country-specific, are there effects common to those at similar levels of development, or in the same region? 3. How can trade in health services be used to improve health and health systems, and contribute towards the goal of providing universal access to health care? How can the costs of trade liberalization, which often occurs alongside privatisation, on the health system be minimized or avoided? 4. What are the effects of liberalization on trade in health services in the presence or absence of domestic regulation, or under different types of regulatory systems? 6 Final Version, 8 March 2002 5. To distinguish between effects that are attributable to GATS or other trade liberalization, versus those that are not, it is important to assess the effects of trade in health services: a) with and without trade liberalization, b) if under trade liberalization, via GATS commitments or unilateral policies, and c) if GATS commitments need to be modified later on and compensation must be paid to affected trading partners. 6. In view of substantial interaction between trade in health services in the four modes and between trade in health services and trade in other service sectors, what are the magnitude and direction of cross-mode and cross-sectoral effects? Evaluating the Health Effects of Services Trade and Trade Liberalization – Conceptual Frameworks and Research Challenges The starting point for sound research – a well thought-out analytic framework -- is itself a work-in-progress. Frameworks for examining the effects of services trade reflect varying objectives and disciplines. Trade policy analysts tend to emphasize the economic costs and benefits. Health policy analysts focus on the costs and benefits to the health system and objectives related to equity in access or financing, quality of care, and efficiency. Development policy analysts might take a broader view, examining the economic and social effects of services trade, while seeking to understand the relationships between service sectors and the synergies between trade in services and trade in goods. David Woodward*, a development economist in WHO‘s Department of Health and Development, Globalization, Trade and Health Team, presented a conceptual framework for assessment of international trade in health services that systematically lays out the linkages between trade in services, country policies affecting it, and international rules and institutions that influence it. The framework (see Figure 1) encompasses both the indirect effects (shown in black arrows) on health, operating through the national economy and household economies, as well as more direct effects on the health system (shown in red arrows). Similarly, trade in health-related services such as education, water and sanitation will have health effects through these sectors, and trade in services generally through effects on national and household economies. He then discussed issues in examining health services trade as distinct from other service sectors, including unique features of health markets, factors that promote or constrain such trade, and health system effects that should be assessed. Figure 1 TRADE IN HEALTH SERVICES opening to trade in health services GATS and other international agreements trade in health services world “market” for health services foreign exchange, fiscal and human capital effects risk factors household economy health services HEALTH Debra Lipson*, a health policy analyst in WHO‘s Department of Health and Development, Globalization, Trade and Health Team, discussed some challenges in measuring health system impacts of trade in health services and trade agreements. She identified the pros and 7 Final Version, 8 March 2002 cons of using various measures and indicators for health system impacts, and said that the selection of appropriate indicators should take into account: 1) the mode of health services trade being examined; 2) intended and unintended, as well as positive and negative effects; 3) availability of valid data, or that which can be obtained; 4) the strength and influence of policies and regulations affecting trade in health services or the health system effects; and 5) broader political and economic factors that influence trade in health services, and the health system effects of interest. She concluded that country-specific studies could shed light on the pathways of influence, but that multi-country studies are needed to assess the relative importance of these factors in different environments and types of health systems. To help ground these conceptual and measurement issues in reality, Dr. Indrani Gupta*, Associate Professor, Health Policy Research Institute, Institute of Economic Growth in New Delhi, explained how she conducted a study of the impact of foreign direct investment in India‘s hospital sector. In the 1990s, India liberalized FDI in almost all industries, including the hospital sector, through autonomous policies and through binding its commitment in a GATS commitment for health services in mode 3. The study compared the performance of foreigninvested hospitals to large corporate hospitals owned wholly by domestic entities. It found the two groups of hospitals did not differ greatly in services offered and a consumer survey found no strong preference for foreign collaboration hospitals. Does this mean that foreign investment has no significant benefits or risks in the Indian health market context? To answer this question more definitively, she suggested a number of improvements in the study design, in the measurement of certain indicators, and by conducting a much larger study over a longer period by a multidisciplinary team. In discussion, participants offered some ideas to get around the difficulty of conducting empirical studies of cause and effect. One suggested the use of simulations to predict some effects, but this requires a series of assumptions that need to be grounded in valid studies. Another suggested that because of the problems in collecting valid data on specific indicators, at this stage it might be better to identify the broad dimensions of effects. It was also noted that it might not be appropriate to use the same indicators for developed and developing countries. International Trade in Services – Trends, Measurement, & Data Collection Mr. Guy Karsenty*, Chief, Trade in Services Section, Statistics Division of the WTO, addressed first the general question of what is known about the level and trends in international trade in services. Most of the data on this Figure 2 Selected data on exports in health-related derives from balance-of-payments travel expenditures (BOP) statistics compiled by the International Monetary Fund, which Of which, Travel Share measure the value of trade in expenditures Health-related services, rather than the volume. The 1999 statistics indicate that traded services (billion $) (million $) (%) United States 89 1300 1.5 grew faster than traded goods Italy 28 367 1.3 worldwide over the past 20 years, Canada 10.2 62 0.6 although services remain less than Belgium-Luxembourg 7.3 93 1.3 one-fifth of total world trade. As BOP Mexico 7.2 98 1.4 Poland 3.2 7 0.2 statistics do not account for one Croatia 2.5 36 1.4 GATS mode -- commercial presence Tunisia 1.8 9 0.5 -- a new statistical domain was Brazil 1.6 6 0.4 created: Foreign Affiliates Trade in Slovenia 0.9 5 0.5 Lithuania 0.6 4 0.8 Services. Because it is still new, the Romania 0.2 6 2.4 data are not yet reliable. Commercial Senegal 0.2 2 1.2 presence is the most important mode Total for above countri es 153 1995 1.3 of supply for many services. However, this is not the case for health services, where Mode 2 (consumption abroad) appears to be the dominant mode of supply. Health-related travel from BOP statistics provides information 8 Final Version, 8 March 2002 on this mode of supply. A rough estimate of health-related travel is around 1.3% of total travelrelated expenditures, based on information from a dozen or so countries that report this line-item in IMF BOP reports, which would approximate $6.5 billion in total– see Figure 2. But, he believed this is likely to be an underestimate. Mr. William Cave*, National Accounts Division, Statistics Directorate at the OECD, explained the origins of the Manual on Statistics in International Trade in Services. Established by the UN Statistics Division, and convened by the OECD, the core group of manual developers also includes representatives from the IMF, WTO, UNCTAD and Eurostat. The manual sets out a coherent conceptual framework for statistics of trade in services, based on widely accepted international standards. It attempts to get more detailed breakdowns and descriptions of trade in services and takes a broader view of trade in services, not just balance of payments, by seeking to reflect (approximately) GATS modes of supply. With regard to health services, the Manual recommends separate identification of trade in health services within the broad categories of: 1) personal travel, and 2) other personal, cultural or recreational services, and 3) foreign affiliate trade. The problem of measurement of mode 4 trade is discussed only in general terms and will require further methodological development work for health services. Health services are defined fairly generally and he acknowledged that improvements might be needed to make the definitions more consistent with current health policy and practice. He welcomed health professionals‘ involvement in this endeavour. The Manual is now available at: http://www.oecd.org/std/trade-services and it will soon be published by UN. Mr. Masataka Fujita*, Officer-in-Charge, Investment Trends Section, Division on Investment, Technology and Enterprise Development, Investment Issues Analysis Branch (DITE/IIAB) at UNCTAD, provided an explanation of statistics on foreign direct investment in the health sector. Relative to some other industries, there has been relatively slow growth of FDI and trans-nationalization of health services, either because of the nature of the services, many health facilities are publicly owned, or the existence of regulatory barriers. Statistics on healthrelated FDI are very incomplete, as data is generally available for only a small number of countries. Nevertheless, he presented some data on the operations and investments for the largest foreign affiliates in health-service industries for 2000, based on private databases purchased from Dun and Bradstreet, as well as some information on mergers and acquisitions (M & As). See Figure 3 (or see Fujita‘s presentation on the web page, slides 13 and 14). Figure 3. Cross-border M&As concluded in health services, 2000 By Seller Figure 3. Cross-border M&As concluded in health services, 2000 By purchaser b) B purchaser y a) B seller y N umber 40 35 13 30 25 20 5 15 10 15 5 0 39 cases 100 3 3 Others Australia Argentina U nited Kingdom U nited States Value ($ m illion) 800 Number 40 35 Value ($ million) 800 700 600 Others France 4 5 Others 500 400 300 200 12 100 0 34 cases $499 million* 385 27 13 74 Ireland France United States 700 600 500 95 77 Others C anada 216 U nited States U nited Kingdom 30 13 25 20 15 10 400 300 200 340 Canada United States 5 0 0 $728 m illion* 13 of 16 Source: UN CTAD, cross-border M&A database. * On the basis of the deals whose transaction value is disclosed. 14 of 16 To improve the data, he suggested more disaggregation to be able to identify foreign investment activity in the health services industry, and greater attention to non-equity forms of investment, such as management contracts. Greater study is also warranted on the advantages of trans-national companies over domestic firms in the markets where they invest, the attractions of particular host countries for foreign investment, and the influence of government regulations. In response to requests for the data presented, Mr. Fujita said he 9 Final Version, 8 March 2002 would try to accommodate enquiries concerning their databases, but staff resources were quite limited. He mentioned the World Investment Directory as a possible source of data; the next one will focus on developing countries. Mr. Julian Arkell*, Consultant in International Trade and Services Policy, devoted his remarks to problems that hamper the collection of accurate foreign affiliates trade in services data, related to GATS mode 3 commercial presence. For example, he cited the fact that different ministries often do reporting of BOP, FATS and FDI data, and other indicators of globalisation, in uncoordinated ways. Even within one ministry, data is often based on surveys and information from different sources: company accounts, tax registers, returns from banks and insurance firms, etc. -- each differently utilised for estimating inward and outward FDI. Estimates of FDI are often unreliable because it is difficult to reconcile accounting amounts with market valuations when stock market prices are volatile. There are also many problems in defining basic units of measurement: the entity, employees, types of services, etc. Thus, it may be a very long time before FATS data can be regarded as reliable. Regional Initiatives in Collecting Health Services Trade Information MULTILATERAL INTEGRATION AGREEMENTS IN THE AMERICAS Dr. Cesar Vieira*, Program Coordinator, Public Policy and Health, Division of Health and Human Development in PAHO, believed that in order to maximize the positive implications of trade in health services (THS) and minimize the negative ones, the health sector must have active, informed participation in trade negotiations. The American countries are currently involved in the negotiation of several trade and/or integration agreements in addition to GATS that may have implications for trade in health services like FTAA (professional licensing); MERCOSUR (several issues related to health services); SICA (shared services); Andean Community (portability & licensing); CARICOM (shared services) and NAFTA (professional licensing). See Figure 4. FTAA WTO NAFTA ACS CARICOM EUROPEAN UNION APEC CAC M ANDEAN COMMUNITY ALADI MERCOSUR ADA MERCOSUR-AC Most data on trade in health services in the Americas is anecdotal, scant, incomplete and not comparable, leaving press reports as a major source of information. Several country studies on THS have been carried out, and of these, a few have national data on imports or exports, e.g. the US (services export and professionals import); Cuba (exports of services and professionals) and Costa Rica (services exports). He cited several possible sources of additional data for each mode, with the best prospects being large institutional traders (e.g. government agencies, social security, private health insurance, private institutions and private voluntary organizations). The region also has some promising initiatives in trade information systems and databases (OAS/SICE, IADB/INTAL, ALADI). The representative from Cuba, Dr. Raul Gomez Cabrera, Director del Grupo Nacional de Turismo y Salud, reported that 2500 doctors currently work in foreign countries, while Cuban medical schools train thousands of people from other countries. Many thousands of foreigners travel to Cuban to obtain health services, spending approximately $35 million USD a year; there are special arrangements for providing care to Venezuelan patients. Dr. Than Sein*, Director, Department of Evidence and Information for Policy, WHO Regional Office for South-East Asia (SEARO), contrasted the few health sector GATS commitments 10 Final Version, 8 March 2002 made by countries in the region with the growth in traded health services, although data on the actual magnitude is scanty. Tourism-related health service trade seems to be increasing, while the negotiation of new regional trade agreements, including ASEAN, SAARC, and BIMSTEC could ease the way for further trade in health services. WHO SEARO has received requests from member states for policy guidance on foreign commercial presence in the health sector and so has initiated research in India, Indonesia and Thailand on its effects. SEARO is also sponsoring greater exchange of experience and information across the region to strengthen health officials‘ ability to address the health implications of trade, and to support research on the issues to generate better evidence about the health effects. Ms. Laura Maclehose*, Research Officer, European Observatory on Health Care Systems at the London School of Hygiene & Tropical Medicine, commented on the health implications of accession to the EU, which raises a number of issues that are similar to those presented by GATS and other trade agreements. For example, on movement of patients: what do the recent ECJ judgements mean for accessing health care in other EU member states? Will many patients travel to candidate countries in seek of less expensive health care? What are the current movement patterns? Are there economic opportunities for some candidate countries in some health specialties? Will increased patient movement across member state borders mean that a form of ‗common EU health package‘ may be needed? In terms of the movement of health professionals, will accession bring about a large movement of health professionals across member state borders? Some current EU member states have severe shortages of doctors and nurses. Will they seek to recruit staff from candidate countries? What are the implications for training of health staff? Other issues related to accession include: communicable disease control, maintaining public health standards in the free trade zone, and pharmaceutical trade. These are among the issues the Observatory is studying. For more information, see: www.observatory.dk Working Group Reports and Recommendations Charge to Working Groups* Four working groups, one for each of the four modes of health services trade (see box below for definitions), developed recommendations around two sets of questions: 1. Health System Research Priorities – What types of research are most important to address key policy questions concerning the effects of international trade in health services, and trade policies affecting it? Which approaches and methodologies, e.g. theoretical or empirical research, could be used to conduct such research? How can research distinguish the effects of trade or trade policy on the health system from other factors that also affect its performance or functions? Are there particular health system effects that are important to assess in each mode of health service trade, and if so what are appropriate indicators of those effects? 2. Data Collection/Monitoring -- How can the volume and value of trade in health services in each mode be better monitored, and how can the reliability and comparability of country data be improved? Do particular countries or regions have more potential or interest than others in improving data collection? Which data sources are most promising for monitoring trade or trade effects for each type of health service trade? Brief summaries of the working group discussions and recommendations follow. Related presentations and notes are on the web page for this meeting. Then, some cross-cutting themes and issues across the four working groups are highlighted. 11 Final Version, 8 March 2002 Working Groups were divided according to the four modes of health services trade, as defined by the WTO in the General Agreement on Trade in Services (GATS): Mode 1: “Cross border supply” -- trade that occurs when neither supplier nor consumer moves across a border -- e.g. the service is delivered via telecommunication Mode 2: “Consumption abroad” -- trade that occurs when consumers travel across borders to obtain health services in another country Mode 3: “Commercial Presence” -- trade that occurs when companies make foreign investments in the health service sector in another country Mode 4: “Presence of Natural Persons” -- trade that occurs when health professionals travel across borders to deliver health services on a temporary basis Mode 1 Working Group* Leader: Alwyn Didar Singh, Secretary, Health and Family Welfare, and NRIs and Industrial Liaison, Govt. of Punjab, India This group addressed matters relating to ―e-Health‖, in which health information, education, services and goods are transacted online over the Internet. E-Health is conducted over an open, transparent network, whereas telemedicine and telehealth are characterised more by point-to-point information exchange. E-Health also includes public health services delivered over the Internet, and use of electronic networks for health management and information systems. In addition to further clarifying the term e-health, the group identified the key research questions as: From a health perspective, how should e-health be classified – as trade in goods, trade in services, in the realm of intellectual property rights, or something else? How will GATS or other WTO agreements on e-commerce affect trade in health services? What are impacts of other treaties, e.g. International Telecommunication Agreement? Where is the highest impact – domestic or international trade? Is it in sum positive or negative for health? How does e-health impact and transform health services trade in other modes? What are the barriers to e-health and how can they be overcome? With regard to research methods, the group recommended country situational analyses that examine infrastructure, policy and strategy for e-commerce, legal, regulatory and human resource frameworks, and the e-health business environment. They also recommended a multi-country survey in a developed country, a middle-income country, and a least-developed country to compare and contrast these factors. Collecting tracking data in this area will be difficult but some advances can be made by identifying key stakeholders, focusing initially on provider-to-provider transactions, working closely with government, gatekeeper, or certification bodies that are tracking related data, and learning from those institutions that compile e-commerce data. In the context of GATS negotiations, insights and possibly data may be obtained by interviewing countries that have export or import interests in this area. 12 Final Version, 8 March 2002 Mode 2 Working Group* Co-Leaders: Dr David Warner, Professor of Public Affairs, LBJ School of Public Affairs, University of Texas, and Jean-Pierre Poullier, Head of National Health Accounts Unit, Department of Health Financing and Stewardship, WHO This working group developed a taxonomy of different types of consumers who cross borders to obtain health services, because their varying reasons for doing so can have different implications on source and host countries. One group includes consumers who travel abroad to seek cheaper or more culturally appropriate health services, or care that is unavailable in their own country. Other groups include: a) retirees, b) tourists who incidentally need health care, c) foreign workers living abroad, d) residents in border regions whose health systems are interconnected, and e) cross-border commuters. A special category includes health professional students and trainees, who are often counted as consuming education services abroad, but are also considered to be part of the health system. Studies in several countries could yield important information about the numbers of people, and value of services, associated with each of these categories. Additional research that the group deemed important are studies of public and private insurance coverage policies that reimburse for certain services obtained abroad, to determine the cost implications. It might be useful to systemically assemble information on OECD countries‘ current public and private insurance policies regarding retirement health benefits, and estimate the potential impact that portability of coverage for certain services would have for other countries. For instance, what is the cost impact on the UK‘s NHS of its current set of contracts for care in other EU countries? Case studies in developing countries, including Tunisia, Thailand, Brazil, and Mexico, would also be useful to see how greater insurance portability could benefit the health industry that provides services to those from other countries. Such studies would help to inform GATS negotiators about whether to push for insurance coverage in mode 2 commitments by developed countries, for example. A related research priority was what it means practically to be bound under GATS mode 2. For example, if insurance coverage is not explicitly excluded as a limitation on a country‘s mode 2 commitment, would a country be vulnerable to claims by other countries for reimbursement of health services consumed by its residents? What are the economic costs, and losses to the health system, of allowing free movement of a country‘s consumers abroad via GATS mode 2 commitments? An assessment of which types of health care utilization indicators best capture consumption abroad might be useful. Other questions for potential research include: does the promotion of health tourism stem brain drain, whether external or internal (e.g. public to private)? What are the benefits of countries working together to rationalize health services at border regions? To collect more accurate data on health care consumption abroad (both exports and imports), surveys are absolutely necessary to understand the nature of its actual or potential benefits, to forecast physical and capital requirements(including human capital), and as an input to analyses of health and economic gains and losses. More specific information is needed on the characteristics, motivations, location, income status, and spending/coverage patterns of those who enter/leave the country to obtain health services. The results of the surveys can be fed both into national accounts of international trade in services and into national health accounts. Three types of surveys were identified: 1) population sample surveys, to assess the prevalence of cross-border health care use generally; 2) payer surveys, to provide better data on expenditures and aggregate spending; 3) provider surveys, to capture better data on types of services provided (and which may have better response rates if the information is used to promote provider business). 13 Final Version, 8 March 2002 Mode 3 Working Group* Co-Leaders: Dr Wattana S. Janjaroen, Programme Director, MSc. in Health Economics Programme, Faculty of Economics, Chulalongkorn University, Thailand, and Masataka Fujita, Investment Trends Section, UNCTAD Rapporteurs: David Woodward, WHO and John Hilary, Save the Children UK This working group focused its discussion on two sets of key research questions: 1) What are the health impacts of foreign commercial presence (as a subset of issues relating to privatisation and commercial presence more generally) in different country situations, in terms of health systems, economic conditions, etc?, and 2) What are the policy implications at the country and international levels? They identified 7 sets of more specific questions around which research should focus (see full report for the dimensions or specific types of effects corresponding to each set of questions): How does FDI enter (or leave) the country? Where does foreign commercial presence occur? What are the effects of foreign commercial presence on health services in public, non-profit and for-profit (foreign and domestic) sectors on coverage of services, equity of access, efficiency of service provision, quality of services, and human resource availability/cost? What are other social effects of commercial presence on poverty, workers‘ rights, and democratic accountability? What are the economic effects of FDI? How are governments‘ ability to meet public health goals, and to fulfil their responsibilities in the health sector, affected by foreign commercial presence? by national regulations on foreign commercial presence? by international agreements concerning foreign commercial presence? and by political/economic pressure to open to foreign commercial presence? Are public funds used to support foreign commercial presence, e.g. from the World Bank Group (IFC, MIGA, etc)?or from bilateral export credit guarantee agencies? It was agreed that retrospective comparative research would be needed, covering a range of countries; and that countries should be selected to reflect the diversity of economic conditions and health systems and situations, in order to identify mediating factors contributing to more positive or more negative effects. See report for specific countries suggested. Discussion on specific indicators was planned to be continued electronically. Mode 4 Working Group* Co-Leaders: Mr. Tim Martineau, Lecturer in Human Resource Management, International Health Division, Liverpool School of Tropical Medicine and Barbara Stilwell, Human Resources for Health, Department of Health Service Provision, WHO Rapporteur: Simon Walker, Human Rights Officer, Research and Right to Development Branch, UN Office of the High Commissioner for Human Rights The group first decided that from a health system perspective, migration is more than the narrowed GATS definition (―temporary‖) and includes permanent migration. Secondly, they agreed on several factors that influence the decision to migrate and the extent of migration, including : the structure of the labour market characteristics of ―flows‖, e.g. types of skilled health professionals by speciality as well as by quantity, and length of stay barriers such as lack of information, refusal to recognize similar standards of training impact of particular flows remittances mechanisms to compensate donor countries for the loss of investment in training whether the country in question is a net importing or exporting country. 14 Final Version, 8 March 2002 The group characterised the key research question as: What is the short-term and long-term impact in sending and receiving countries on the health system, the economy and society. To address this question, several variables should be considered: Whether the country in question is a sending or receiving country Factors that might have mitigated particular effects of trade in health services – for example, human resource strategies, economic strategies/incentives, etc. General characteristics of study countries, e.g. size, political/economic situation Structure/features of the health system Studies on the health impact of migration should address: 1) the effects of trade and trade liberalization in health services generally, 2) effects of GATS – as one of the factors influencing trade liberalization – on trade in health services, and 3) the ramifications of different positions in GATS negotiations. Specific indicators were suggested and possible data sources were identified to conduct such studies: census data; an array of information from hiring institutions, recruitment agencies, migrant associations, professional registers, unions, and immigration departments; and industry surveys. Caution was advised in interpreting data; it should be put in the broader context of international labour market and salaries; provider performance; the state of private practice in the country; working conditions; and social security coverage. The group suggested several study countries, which may have useful data and could be good case studies on the impact of the liberalization of trade on health systems. Importing and exporting countries should be ―matched‖ so that conclusions could be drawn on the effects of trade in health services under mode 4 of GATS on both sending and receiving countries. Cross-Cutting Themes from Working Group Reports Consider both positive and negative impacts, health and economic effects of trade in health services, and trade liberalization Interaction among trade in health service modes, between trade in health services and trade in other service sectors, as well as between GATS commitments in the health sector and other international or regional agreements. While each sector is different, GATS horizontal principles help to see the links among sectors, so it is essential to examine the links across modes and sectors. Multiple dimensions/types of health services trade within each mode means that there may be different implications of each one on health systems, and may vary for exporting and importing countries. Important to examine broader context and developments influencing trade in health services. GATS is but one of many influences, and for most trade in health services, GATS commitments do not appear to be a major determinant (at least not yet). Need to develop standard measures of the degree of trade liberalization in different countries Need to look beyond existing trade-in-services statistics for data relevant to trade in health services; however, the sources of such data are likely to be country-specific – making it difficult to perform cross-country comparisons. Important to encourage country case studies, as well as multi-country research in order to determine which factors are important for maximizing benefits, or minimizing risks of trade in health services and trade liberalization. 15 Final Version, 8 March 2002 WHO Role in Supporting Recommendations on Research & Monitoring WHO staff asked participants for suggestions on how WHO could support the working groups‘ recommendations. Three Options* were presented, describing possible levels of WHO support: Low, in which WHO would publish and disseminate recommendations arising from the meeting and serve as liaison between researchers and donors. Medium, in which WHO would support research projects that are consistent with the meeting recommendations, via letters of support to donors/funders, selected technical assistance, periodic meetings and brief reports to bring research findings to the attention of policymakers, and further meetings to identify new research priorities. High, in which WHO would seek to establish a research grant program involving: raising substantial funds from donors (at least $250,000); issuing a call for proposals; identifying funding priorities for research and monitoring; organizing and managing professional peer review of proposals; administering grants; providing/arranging for technical assistance to grantees; organizing periodic meetings to review policy relevance of preliminary and final research findings; and, issuing short research updates to research/policy communities on a regular basis. Most participants supported the ―medium support‖ option. Given the urgency to conduct research and monitoring on the topic, this option makes it possible for WHO to work with or through donors to quickly solicit and support promising research and data collection/ monitoring proposals. Some participants endorsed a high level of support from WHO, and believed that WHO should seek support for it from other international organizations, including WTO, UNCTAD, and OECD. But most believed this higher level of support should be regarded as a long-term objective due to the lengthy time required to raise funds and establish a full-fledged grant program. In addition to the activities listed under medium support, WHO was urged to: Build support for additional funds to support research and monitoring in this area, but channel the funds to national bodies to handle administrative arrangements. Serve as a clearinghouse and catalyst of continuing dialogue, debate, and cooperation among meeting participants, and other interested parties. WHO can make a strong contribution to further advancing knowledge in the field by facilitating comparative multi-country research, while countries should be encouraged to conduct their own assessments for policy development purposes. To begin this process, WHO can use the recommendations of the working groups to foster joint efforts by participants, and seek the interest of others, in conducting the type of research and monitoring that was recommended. Promote partnerships and work with other international organizations to improve data collection on trade in health services, e.g. with the UN Statistical Department, and OECD/Eurostat to improve/revise the definition of health services used in the collection of trade-in-services statistics by countries so that it is more consistent with the realities of modern health care systems) and with the International Organization on Migration (IOM) and ILO on monitoring health professional migration. Organise or support similar meetings at regional and national level. Participants emphasized the value of international networking and exchange, allowing countries in different regions and different levels of development to learn from each other, and fostering interdisciplinary interaction among health, trade and statistics professionals. 16 Final Version, 8 March 2002 Develop a short “checklist” on GATS and health to assist country trade negotiators and health advisors quickly identify the health implications of a range of proposals in the current GATS negotiations—those that may be related to the health service sector, to other sectors that affect health, and the interpretation of GATS rules. The checklist would be most helpful if completed by June 2002 when the GATS negotiations have set a deadline for country requests (country offers are due by the end of March 2003), so that national health advisors can evaluate their own trade negotiators‘ requests, as well as those from other countries. This might benefit from WTO Secretariat input on examples of country GATS health service commitments. Consider how GATS affects WHO’s own commitment to universal health coverage, how GATS will affect the potential for greater cross-country solidarity in financing, and how it will communicate its position and concerns to WTO. Widely disseminate the meeting report and relevant research, e.g. by distributing this meeting summary report to Geneva WTO representatives, and by encouraging a special issue on trade and health services for the WHO Bulletin. Concluding Thoughts on the Significance of GATS for Health Systems Some participants were surprised that the meeting did not focus more on an examination of the health system impact of country GATS commitments on trade in health services. Only one of the working groups, Mode 3-foreign commercial presence, discussed the subject in-depth, perhaps because there are more GATS commitments in this mode than others, or greater liberalization reflected in those commitments. The issue may not have been more prominent because GATS commitments do not appear to be a major influence on trade in health services at present. This prompted one participant to advise caution in making either overlyoptimistic or overly-pessimistic predictions of GATS‘ effects, as neither had yet been proven. Nonetheless, the need to examine the implications of GATS rules, over and above specific country commitments in health services, was emphasized in regard to: 1) how they affect market access and national treatment requirements generally; 2) how domestic health regulations are now, or may be, affected by Article VI; and, 3) how other sectoral commitments affect health, such as alcohol or tobacco advertising and distribution. New GATS rules on subsidies and government procurement, or GATS negotiations that proceed via service ―clusters‖, also may affect health services and should be closely examined. These types of issues should be included in the ―checklist‖ for GATS negotiators. This also points to the need for research to examine the impact of trade in services and GATS on the broader determinants of health, not just health care systems. While the health service sector has among the fewest GATS commitments of all sectors, they have generated some of the strongest concerns among workers and in the media, suggesting the need to be vigilant. In this regard, WHO was urged to work with and communicate more with consumer/patient groups to understand these concerns and incorporate them into its own research and analysis of the issue. In addition, there is a need for guidance on how governments can foster national dialogue on these sometimes complex issues to develop policy in the best interests of the country. Given the different agendas and interests between the trade and health communities, deciding what is in the national interest can be difficult. GATS‘ greatest significance, concluded some, may be that it prompts national health policy makers to understand better how health systems function in the context of global markets for goods, services, capital, and labor. Even if at present GATS does not represent a serious threat to health systems, that may be so because countries still can control foreign entry into domestic markets. Understanding how countries at different levels of development are able to control foreign entry, contain the risks of privatisation of public health services, or expand riskpooling across socio-economic groups, are important lessons that are likely to have greater significance as trade in services grows or is liberalized. 17