Economic Reform and Health Sector Policy

Lessons from Structural Adjustment Programs

Published in: Social Science Medicine, v. 43, No. 5, 1996, p. 823-835

Posted on RAND.org on January 01, 1996

by John Peabody

From a purely economic perspective, structural adjustment programs (SAPs) and economic reform policies are viewed as short-term austerities that lead to long-term growth and development. However, these intertemporal trade-offs, are not always acceptable in health. Unique biologic events such as intrauterine development and neural development cannot be postponed even for a short period. This article argues that health policymakers need to understand the expected and unexpected impacts of economic reform on health outcomes in individuals and on the population. The interactions are complex, involve multiple sectors, and can be better understood by looking at the experience of developing countries over almost fifteen years of SAP experience. Health care budgets may be vulnerable to reduced government spending, quality of care will deteriorate, nutrition will suffer more likely in urban areas, and cost-effective preventive programs may stop if labor and capital are not properly matched. Health outcomes overall do not appear to suffer, but a more detailed look, with better data, shows that the incidence of preventable diseases rises and irreversible deterioration in health status does occur within countries. To prevent this from happening in the future, health policymakers need to take a multidisciplinary focus to first understand the effects of economic reform and then to plan a coordinated response. Better data, alternative financing, and strong political leadership are also important lessons.

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