After understanding the basics of education, Macro Pakistani readers will be in a better position to understand the state of healthcare in Pakistan. A few of you might be confused as to why we are talking about these subjects within the topic of government expenditure. While this platform focuses on explaining economic concepts relevant to Pakistan, people and their capabilities should be the ultimate criteria for assessing the development of any country. Hence, any debate about government policy should include a discussion on human development outcomes.
Pakistanis aren’t happy
As it turns out, the United Nations agrees. The Human Development Index (HDI) it publishes each year takes into account three key dimensions: decent standard of living, being knowledgeable and a long and healthy life.
Human development in Pakistan vs. regional comparisons
Source: Human Development Indicators 2019; World Development Indicators
To measure a decent standard of living, it takes into account Gross National Income per capita, which we have discussed earlier. For education, it takes into account mean and expected years of schooling, which we have also discussed. To judge a long and healthy life, it uses life expectancy at birth as the metric. There are further variations of the index, which adjust for inequality, gender and poverty that we do not have to discuss for now. The point is that the UN also includes health and education along with economic metrics to judge how well a government is delivering on their main purpose of human development.
As per the latest report, Pakistan ranks lowest across all metrics among its regional peers. It ranked 152 out of 189 countries on the index, lower than not just Bangladesh, India and Sri Lanka but also African countries like Zimbabwe and Angola. The report also compares HDI rank with the GNI per capita rank to compare what level of human development countries have, given their income levels. While most Macro Pakistani articles have painted a bleak picture of Pakistan’s economy, its human development rank is actually 17 points lower than its GNI per capita rank. If you want a visual history of how human development and income levels are linked, watch the short video below:
Literacy is a problem
What is nice about the Human Development Index is that the three factors are also interlinked. In education, we saw the link with income where the rich get better education, which leads to higher paying jobs and perpetuates the cycle of income inequality. Similarly, issues with education trickle down to health care, with infant mortality highest in populations with low level of literacy.
Infant mortality by gender
Deaths per 1,000 live birth
Infant mortality by mother’s Education
Deaths per 1,000 live birth
Source: Pakistan Social & Living Standards Measurement Survey 2018-19
Infant mortality measures how many children, per thousand live births, pass away before their first birthday. On average, infant mortality in Pakistan is 60 deaths per 1,000 live births and is almost the same across both genders. However, the difference between rural and urban populations is quite stark. While the average infant mortality in urban areas is 48 deaths per 1,000 live births, the number rises to 65 in rural areas. Education plays a major role here. If you are more educated, your child is less likely to pass away before their first birthday. Infant mortality rate in cases where mothers have passed more than Class 10 is almost half the national average.
While infant mortality measures deaths within first year of the child’s life, neonatal mortality measures proportion of children who die within their first month. Out of 60 infant deaths per 1,000 live births, 41 actually occur in the first month. A major cause of infant fatality is neonatal tetanus due to unhygienic sanitary conditions during childbirth. Even though this is avoidable through a tetanus toxoid injection during pregnancy, 18% of pregnant mothers fail to receive it. This is a major concern given 36% of births take place at home in rural areas. Every measure you explore to judge the state of healthcare in Pakistan is alarming.
Population is a problem
While the number of deaths from avoidable ailments is concerning, what is even more worrisome is the high birth rate in Pakistan. Lack of education, awareness and family planning has led to Pakistan having one of the highest rates of natural population increase and largest households in the world.
Rate of population increase in Pakistan vs. global comparisons
Birth rate % 2.8 2.1 2.0 1.5 1.7 2.1 2.3 1.8
Note: Natural increase rate is birth rate – death rate; Source: World Population Data Sheet 2020
Quality of healthcare in Pakistan has lagged behind other countries because of its increasingly large population. The 2020 population of over 220 million people is expected to balloon to 287 million by 2035 and almost 350 million by 2050. In the above chart, you will see why that is the case. With a birth rate of 2.8% and death rate of 0.6%, the rate of natural increase of population is 2.2% in Pakistan, which is twice the global average. It is higher than the natural increase rates in other South Asian countries (1.5%) and other low middle-income countries (1.6%).
The rate of growth of population is one of the major reasons Pakistan is unable to keep up with its peers. With a higher population to cater to, resources remain strained. By definition, most of the metrics we discuss at Macro Pakistani are on a per capita basis. If the denominator of population in these metrics keeps on rising faster than other countries, Pakistan will need to deliver significantly faster economic growth just to keep up. Take for example Bangladesh, which we have used as a benchmark several times. Even if both economies start to grow at the same level, the mere fact that their population is increasing by 1.6% while ours is growing by 2.2% will put us at a disadvantage.
We don’t spend enough
In Bangladesh, 59% women use modern methods of family planning, which is higher than the global average of 55%. In Pakistan, only 25% of women between the ages of 15-49 years have access to modern family planning. Raising awareness and improving healthcare in Pakistan requires financial resources, which the country has failed to allocate appropriately in the past.
Public federal and provincial expenditure on healthcare in Pakistan (2014-19)
Source: Economic Survey of Pakistan 2019-20
The increasing population puts further pressure on public health spend, which is already almost three times less than in other emerging markets. Just over 1% of GDP is spent on public healthcare in Pakistan compared to the emerging market average of almost 3%. Where this expenditure goes is also important. In 2019, 86% of expenditure was on running existing healthcare facilities and only 14% on development. When economic growth stagnates, the government’s tax revenues fall short of targets. With limited resources, the government needs to decide if they should allocate what money they have toward current expenditures or development expenditures.
Tax revenues fall short of targets every year. Government budgets need to be reprioritized each year. Current expenditures get priority since existing healthcare facilities need to run before new ones can be invested in. Development continues to lag behind. We will talk about what happened due to COVID-19 later but even before the pandemic, with a strain on resources, the government had continued to deprioritize budgeted development expenditures. Until 10th April 2020, only 48% of the federal development budget for healthcare in Pakistan was spent for the financial year ending in June.
Devolution is mostly good
However, quoting inadequate development spending on healthcare in Pakistan at a federal level is unfair since the subject was devolved to provinces after the 18th Amendment. All provinces have stepped up their efforts to increase health spend per capita with Balochistan struggling in recent times.
Public provincial expenditure per capita on healthcare in Pakistan (2014-18)
Public health expenditure per capita (PKR)
Source: Economic Survey of Pakistan 2018-19; MP Analysis
While the individual performances of each of the provinces can be debated, as a whole provinces have done well to improve healthcare spend per capita after the 18th Amendment. In 2010, no province spent more than PKR 400 per citizen on healthcare. In 2018, however, all spent more than PKR 1,000 with Sindh the clear leader. All provinces are better off in terms of public healthcare spend in 2019 as compared to 2014 with the exception of Balochistan.
The case of Balochistan shows how rising population limits growth. Even though it started off from a smaller base, Balochistan’s population increased by over 15% each year between 2014 and 2018, from 9.7 million to 17.3 million people. During the same time, its public expenditure on healthcare also increased by 15% each year. This meant that its per capita spend actually remained at the same level between those 5 years and its development continued to lag behind.
Need Sehat Sahulat
To compensate for low public expenditure, the private sector takes care of over 60% of health spend out of its own pocket, higher than peer low middle-income countries. This is even higher than the 50% of private expenditure on education we discussed in the last post.
Private sector out-of-pocket expenditures on healthcare in Pakistan (2012-17)
Source: World Bank
However, notice the proportion of out-of-pocket expenditures on healthcare in Pakistan has been falling in recent times. The proportion used to be as high as 78% in 2006, 70% at the time of the 18th Amendment and is now at 60%. If provinces continue to allocate more and more funds to enhance the access and quality of healthcare system, we can expect the private sector to play less of a role in the future.
This is required especially in low income, rural families with limited education. The government actually aims to provide social health protection through the Sehat Sahulat Program, specifically aimed at families below the poverty line, persons with disabilities and the transgender community registered with NADRA. Almost 7 million families have been enrolled in the program with the target of 11 million to be achieved in the next three years. A bulk of that population will be from KPK, which recently announced annual healthcare insurance cover of PKR 1 million for the entire province. With their program, the entire 40 million population is expected to be able to avail free healthcare at over 250 public and private hospitals.
Most importantly, the program includes Maternal Consultancy for family planning, immunization and nutrition. The hope is, this will help reduce population growth and the burden of health spend on the private sector. In turn, this will improve both access and quality of healthcare in Pakistan. We will discuss the expected coverage and efficacy of the program in detail later but for now, it should be encouraged as a step in the right direction. Even after launching social inclusion programs in both health and education, Pakistan only spends 3.4% of GDP on education and health. It has a long way to go to catch up with other emerging markets, which spend 7.6% of GDP on the same. Next time, we will discuss military expenditures, a space where Pakistan does compete well with the rest of the world.