Macro Bites

Macro Bite # 14

6 min read

Existing news in Pakistan is broken. At Macro Pakistani, we conduct a lot of data analysis for each article but we also look to past journalism for inspiration. For health, we came across this article, which discussed how Sindh was better prepared to deal with COVID-19. In June 2020, it used health expenditure data from 2015-16 to drive the point home citing unavailability of more recent information. Most readers would not have bothered to see if that was true or not and taken the author’s word for it. However, as we will discuss later, recent data was indeed available and it did have an impact on the key takeaways. If you want Macro Pakistani to continue trying to fix the broken news media industry, do share this email with your networks and ask them to subscribe!

What was the state of healthcare in Pakistan pre-COVID-19?

A few of you might be confused as to why we are talking about healthcare and education within the topic of government expenditure. The reason is that any debate about government policy should include a discussion on human development outcomes. The UN’s Human Development Index measures the following

  • Gross National Income per capita: Income from residents abroad in addition to GDP of the country divided by the population
  • Mean years of schooling: Years of education the average citizen has completed
  • Life expectancy at birth: Average length of time a child is expected to live for at the time of birth

They use this to assess if a country’s citizen will have a decent standard of living, be knowledgeable and have a long and healthy life.

Pakistani’s aren’t happy

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.

Source: Human Development Indicators 2019; World Development Indicators

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. We developed a basic understanding of education in Pakistan last time, so let’s dive into health to figure out why the country continues to lag behind in human development.

Literacy is a problem

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.

Source: Pakistan Social & Living Standards Measurement Survey 2018-19

Out of every thousand births in Pakistan, 60 infants die before their first birthday. Though there are minimal differences across genders, the rural-urban divide here 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.

A major cause of infant fatality is neonatal (within first month of birth) 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.

Note: Natural increase rate is birth rate – death rate; Source: World Population Data Sheet 2020

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. This is expected to increase our population from 220 million to 287 million by 2035 and almost 350 million by 2050. 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.

We don’t spend enough

Only 25% of women between the ages of 15-49 years have access to modern family planning. To tackle the issue of high birth rate, Pakistan needs to expand access to modern family planning in the country. However, this requires financial resources, which the country has failed to allocate appropriately in the past

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%. This expenditure is predominantly focused on running existing healthcare facilities while investment for the long term is deprioritized. Given limited tax revenues, government resources continue to be strained forcing this prioritization.

Devolution is mostly good

Health was devolved as a provincial subject after the 18th Amendment. All provinces actually managed to step up their efforts to increase health spend per capita with just Balochistan struggling in recent times.

Source: Economic Survey of Pakistan 2019-20; MP Analysis

Notice how differently we can paint the story if we only look at the data until 2016, as existing news media would have you view it. However, provincial expenditure on health is available for later years and population statistics can also be found. It is not so difficult to divide the two numbers and measure health spend per capita for later years

While the individual performances of each of the provinces can be debated, as a whole, provinces have done well. 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. Contrary to the article putting Punjab in last place, the efforts of the previous government did help it become the most improved province in second place

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.

Source: World Bank

To address this, the government aims to provide social health protection through the Sehat Sahulat Program, which you can read more about in the full article. Even after launching social inclusion programs, Pakistan only spends 3.4% of GDP on education and health combined. 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.

Read the full article in the link below

What was the state of healthcare in Pakistan pre-COVID-19?

Let’s explore how access to education directly impacts the state of healthcare in

Pakistan, why rising population is a concern and how private sector compensates for low public expenditure.

Read more

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Faiz Ahmed

MBA Candidate at Harvard Business School with prior experience at Bain & Company, International Finance Corporation and State Bank of Pakistan. He is also the Founder of Macro Pakistani.

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