Highlights and Main Points Made by Individual Speakers and Participantsa
- Health centers in the poorest countries cannot manage basic infection control, often lacking even running water and a reliable supply of soap. Bringing these health posts up to a minimum standard would be expensive; introducing infection response units an order of magnitude more so. (Tappero)
- Financial obstacles affect the ability to pay health workers, establish treatment centers, and fund vaccine research. A system should be in place to pay frontline health workers without distorting the labor market. (Tappero)
- Infectious outbreaks have a different risk profile than other threats, as the cost of response increases if action is delayed. (Woo)
- Life insurers and other businesses hold pandemic risk on their books already, but the risk is not being properly mitigated. (Woo)
- Fast spending is necessary during an epidemic and can be enabled by a prenegotiated plan that delineates ex post and ex ante financing. (González-Pier)
- The delay between donor pledges and funding received introduces inefficiency into development, obliging businesses in aid-recipient countries to use credit to meet their operating
expenses. But procurement often requires cash in hand before placing an order, and manufacturing takes time, further delaying the delivery of goods. (Betru)
- Deficiencies in the health systems of Guinea, Liberia, and Sierra Leone delayed recognition of the outbreak at hand. Funding for outbreaks is less a problem than a consequence of health systems strengthening not being particularly high on any public agenda. (González-Pier, Tappero)
a This list is the rapporteurs’ summary of the main points made by individual speakers and participants and does not reflect any consensus among workshop participants.
The first panel in the workshop gave a broad overview of the unique financial challenges outbreaks present. Four panelists—Gordon Woo of Risk Management Solutions, Jordan Tappero of the U.S. Centers for Disease Control and Prevention (CDC), Eduardo González-Pier of the Mexican Ministry of Health, and Aron Betru of Financing for Development—discussed the financing and risk profile of pandemic events, from the preparation to the response.
Tappero opened the panel with remarks on his experience with CDC’s recent Ebola relief effort. African countries have seen more than 20 outbreaks of Ebola since the virus was discovered in 1976, but the 2014 epidemic was unlike any other in its duration and lethality. Tappero described what would have been necessary to stop the outbreak early: reliable surveillance to identify cases and trace their contacts; isolation facilities to interrupt transmission; laboratory testing to confirm cases; and treatment, which reduces risk of death by 50 percent. Proper management of the outbreak also required changing traditional burial practices, and training health workers on how to use protective equipment and how to follow asymptomatic cases after their release from isolation. All of this was complicated when the recent outbreak started in December 2013 because transmission was happening in remote parts of the Guinea border country, from which the virus eventually spread to Liberia and Sierra Leone. Three months later, when the world recognized the Ebola outbreak, there were already too many chains of transmission to break easily. By July 2014, the virus had reached the densely populated capital cities in the affected countries. At that time, the charity Doctors Without Borders (Médecins Sans Frontières, or MSF) was the only medical nongovernmental organization (NGO) working against Ebola. Tappero explained that MSF came up against a problem of capacity: the organization would have needed more staff, more beds, and more partners to halt the outbreak.
Around the same time, commercial airlines stopped service to affected countries, causing foreign health workers to reconsider volunteering for the response. Tappero saw the September addition of the U.S. military to the response effort as a turning point in the crisis, encouraging other governments to join in the effort, in addition to providing logistical support, air transport, and treatment units. He also pointed to the counterexample of Nigeria, where Ebola infections were promptly controlled, a fact he attributed to the incident management system in place for polio eradication and a cadre of more than 50 trained field epidemiologists.
When asked about the financial obstacles to an efficient response, Tappero cited payment of the local workforce as his first concern. Early in the Ebola outbreak, there was concern that, even as health workers put their lives at risk by continuing to practice, they might not be paid promptly. In an effort to improve the incentives for these workers, the governments increased their pay. But eventually the danger pay inflated salaries to beyond what the medical NGOs could offer, creating a chaotic situation where staff were moving between employers. Tappero thought one of the main financial lessons from this outbreak was that there should be an emergency payment system in place for frontline health workers, and that danger pay should be designed to reward the bravery of health workers while minimizing competition in the labor market. Better financial planning could also avoid concerns about the costs of medical evacuation, thereby reducing barriers to involving foreign volunteers.
Tappero explained that it would cost money to bring health centers in the poorest countries to the point of managing basic infection control; many lack running water and a reliable supply of soap. Mounting an infection response with isolation units and Tyvek suits would be, he acknowledged, an order of magnitude more expensive. But at the same time, the problem could have been controlled more cheaply if response had started earlier. Ebola treatment facilities—relatively simple structures made of plywood, plastic sheeting, and PVC pipe—might have been built with local resources. He also speculated that funding for vaccine research for hemorrhagic and SARS1-like illnesses could have done much to speed response.
Gordon Woo built on Tappero’s discussion of Ebola, agreeing that if action against pandemics does not happen early, the cost of response goes up. He likened the virus to a loan shark—someone who, if not paid back rapidly, demands exponentially increasing repayment. While President Barack Obama and Prime Minister David Cameron put their countries’ resources to bear in fighting Ebola, other countries were slow to commit. Woo commented ironically that the world leaders might have done better
1Severe acute respiratory syndrome.
financing Ebola response from an actual loan shark, at least avoiding the delay of persuading other partners to contribute.
Woo went on to explain how pandemic response has a different risk profile than other kinds of threats. He described the Great Fire of London in 1666, an early impetus for the development of the modern insurance industry. At that time, each insurance company paid for their own fire brigade and was responsible for putting out fires at their clients’ homes. In much the same way, he maintained, today’s life insurers stand to lose from a major epidemic and would do well to mitigate that risk.
With natural hazards, there are secondary perils to account for. Tropical cyclones are not particularly lethal in themselves, but the damage to property and the water supply increases vulnerability to waterborne outbreaks of typhoid or cholera. And even typhoid and cholera outbreaks do not carry the same international risk as pandemics. Woo emphasized that there are many stakeholders who carry pandemic risk on their books already, and the Global Health Risk Framework initiative would ideally help engage them to take financial measures to mitigate that risk. He saw room in this endeavor for public–private partnerships and gave an example of such a partnership from his work on veterinary surveillance in Singapore.
Eduardo González-Pier expanded on the same topic, sharing experiences from the influenza epidemic that hit Mexico in 2009. He entered the Institute for Social Security soon after the epidemic and dealt with the immediate aftermath as chief financial officer. The lessons learned during that outbreak were all relevant to the 2014 Ebola crisis. During outbreaks, González-Pier explained, having a funding mechanism in place does not guarantee an effective spending response. In the timeline of response, the first stage is the alert, when the epidemic is officially declared. This is followed by the spending stage and, finally, by the resolution.
The 2009 influenza outbreak probably started in March, González-Pier reasoned. The Pan American Health Organization and the ministry of health confirmed the outbreak by April 6 and reported it to the World Health Organization (WHO) as a possible public health emergency of international concern. By April 23, CDC and Canadian government confirmed that the virus was H1N1. The next day the Mexican health council issued an emergency decree, and 4 days after that, procurement was taking place. By the end of the outbreak in August, $600 million had been spent, with 72,000 cases and 1,300 deaths confirmed.
The response was quick, even though the world was going through an economic crisis. Mexican gross domestic product dropped 6.8 percent in 2009, and the ministry of health was facing budget cuts. But the response worked well because it relied on monies from Social Security and a ministry of finance insurance program. When fast spending is necessary, González-
Pier encouraged negotiating a plan where some financial problems are solved in advance of the emergency, and others are solved later.
The Mexican procurement law has provisions for catastrophic spending, some of which were automatically triggered by the national emergency decree. González-Pier saw these provisions as the most important part of the process, though he acknowledged that there were trade-offs, with the decree hurting the travel and tourism industry. Any given administration might not be aware of all the funding contingencies, and in some countries, the provisions might not have been made, but he encouraged making these provisions and mapping them as much as possible.
Aron Betru continued to develop González-Pier’s point about the importance of the tools and processes that bring money to bear in an emergency. Outbreaks do not align with budget cycles; the delay between pledges being made and funding being received can be between 6 months and 2 years. Betru referred to a Brookings Institution paper that quantified the consequences of this inefficiency and estimated that about 28 cents is wasted for every development dollar spent because of delays in reaching its target. These delays oblige businesses to do something called receivables financing, involving credit from commercial banks to meet payroll and other expenses.
Financing for Development’s Pledge Guarantee for Health2 was designed to help mitigate this problem. The program places a guarantee with private commercial banks to fill in funding cycle gaps. Because the guarantee is borrowed against for only short times, always less than 12 months, the transactions are described as “non–balance sheet transactions,” cash management tools that require no parliamentary approval.
Betru praised the Mexican government’s management of the 2009 H1N1 outbreak, with the declaration of the emergency triggering funding and some reconciling happening later. In poorer countries, however, cash flows work differently. Procurement officers need cash in hand before they can place orders with manufacturers. Then the manufacturers need time to fill the orders, and it takes even more time to deliver the goods. If funds could be mobilized more quickly and manufacturers given advance warning of surge orders, much greater efficiency could be introduced, he reasoned. Session moderator Olga Jonas extended his point, observing that northern cities contract snow removal before it snows so that, when there is a blizzard, the plows can be out immediately.
The subsequent discussion gave some attention to problems with coordination during pandemic emergencies. George Gao of Chinese Center for Disease Control and Prevention shared his observation that the 2014 Ebola
2Supported by the U.S. Agency for International Development, Swedish Sida, and the Packard Foundation.
response would have benefited from better coordination on the ground, and he asked the group to consider who should be the leader in such situations. Tappero built on his point, saying that he had a good opinion of the Ebola response on the ground after WHO declared a public health emergency of international concern. He had more concerns with the deficiencies in the national public health systems that allowed the outbreak to go unnoticed for as long as it did, including the lack of a surveillance and specimen-testing system that would have detected an emergency at hand. This point invited some discussion of how different organizations might help pay for such tools, though González-Pier pointed out that funding is not the direct problem; it is rather a consequence of the problem of health systems not being a particularly high priority on any public agenda.
González-Pier continued that the Mexican government was criticized for having overacted to the H1N1 outbreak, but they were able to counter that all their decisions had been made in close collaboration with the international authorities. Betru supported this observation, saying that the fear of overacting is a serious deterrent to many countries facing outbreaks. He suggested having several sets of triggers, including a soft preemergency trigger that could allow the moving of some resources with minimal signaling of an emergency.
Moreover, as Milan Brahmbhatt of the World Resources Institute pointed out, Mexico is an upper-middle-income country with a developed health system and strong institutions. Building similar systems in poor countries would require a steady funding stream, streams that are distinct from the emergency response funding. He reiterated a point made by several of the speakers that there are two financial problems to solve: the problem of emergency response and the problem of health systems building. Victor Bampoe of the Ghanaian Ministry of Health agreed, adding that donors have been generous about investing in health in his country. Still, he asked the group to consider what kinds of incentives might be helpful in encouraging health systems building. He found that this is a difficult proposition to sell to people in the ministries, even when the donors are willing to pay for it, because they do not see it as an emergency.
As for emergency funding, Adam Bornstein of the Global Fund to Fight AIDS, Tuberculosis and Malaria (hereafter, the Global Fund) explained that donor mandates, which come from governments or the United Nations or whoever is organizing the donation, can prevent organizations from using their funds and systems during emergencies. It could be helpful to negotiate the terms of a blanket mandate that would allow organizations like the Global Fund to use their capacity and their programs in countries for emergency response. On the other hand, Tore Godal of the Ministry of Foreign Affairs, Norway, was not enthusiastic about that suggestion. He explained that his country had made prompt and generous donations
to Ebola response through MSF, WHO, and the Red Cross. Perhaps there are inefficiencies in that system, but he saw some inefficiency as preferable to having the Global Fund or the United Nations Children’s Fund deviate from their missions.
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