Disease outbreak guarantees: A proposal to build public health capacity in developing nations (rerun)

The Pump Handle is on a holiday break. The following, which was originally published on July 8, is one of our favorite posts from 2016.

by Kim Krisberg

In 2005, the World Health Assembly adopted a revised version of its International Health Regulations, a legally binding treaty among 196 nations to boost global health security and strengthen the world’s capacity to confront serious disease threats such as Ebola and SARS. A decade later, just one-third of countries have the ability to respond to a public health emergency. That’s why Rebecca Katz thinks it’s time to get creative.

“How can we think creatively about incentives for countries to build the required public health capacity under international treaty obligations,” Katz, an associate professor of international health at Georgetown University, told me. “What kind of arguments can be made to make public health infrastructure a core component of development programs?”

One way, she argues, could be through the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA), which provides political risk insurance to help promote investments in developing countries. Basically, MIGA is a public insurance option for high-risk projects that can’t secure private insurance, essentially providing a pathway for direct foreign investment in developing nations. For example, Katz said, imagine a business wants to build a dam in a politically instable country, but no private insurer will take on the risk that the project could be derailed by civil war or expropriation. Instead, the investor could turn to MIGA to insure the project.

And so Katz’s idea is to link MIGA insurance and public health capacity — MIGA would only offer insurance in countries with a decent public health infrastructure in place or in countries making sufficient progress toward such an infrastructure. Katz, along with Richard Seifman, an international health consultant formerly with the World Bank, published their idea in June in the Journal of Health Care Finance, where they wrote:

Virtually all developing countries will need or want increased direct investment, but the intricate connection between high-risk infectious disease prevention, preparedness and external investment financing has not been on the public sector radar, global or otherwise. Countries and the international financing community must identify a means to allay the concerns of external investor(s) that may choose one developing country over another based on external disease threats. …

For example, a mining company may consider a new construction project requiring thousands of workers and in a country that has a weak health care and public health infrastructure, limited to nonexistent capacity to detect or respond to an infectious disease outbreak, and has a high endemic disease burden. The company’s business plan cannot afford an Ebola-like event, which would shut down its operation. The country, however, desperately needs the mining investment but is strapped for public funds to do what is needed to advance its infectious disease capacities and preparedness planning. If a MIGA guarantee premium formula over the life of the private investment could be based on rewarding a country making improvements, it would be a win-win situation.

In other words, Katz said, the new MIGA requirements could lead countries to focus on public health capacity, which would result in a country securing MIGA assurances, which could then lead to more private investment in countries that need such investments the most. The journal article suggests that MIGA’s “Breach of Contract” language could cover a government’s agreement to take “reasonable steps in meeting the (International Health Regulations) core capacities.” In theory, that agreement would be breached if the government failed to build or make progress toward building such public health capacity.

The article lists a brief step-by-step approach to putting the MIGA idea into action, including a three-to-five year pilot phase.

“It’s about making public health and health care a core component of a country’s priorities,” Katz said.

Of course, the countries in question are very often resource-poor and face a number of competing and often urgent priorities. Many just don’t have the resources to build an adequate public health infrastructure, Katz said, and changing the MIGA standards won’t make those resources automatically appear. But she said the cost of building such public health capacity would “almost surely” be passed on to investors and built into project negotiations between countries and private business.

“The entire global health security agenda was built around the idea that we needed a different way to think about funding countries to build (public health) capacity,” Katz told me. “This is just one idea, but these are conversations that have to be had.”

And Katz and Seifman offer a handful of compelling examples about why such conversations are so important, highlighting the severe impacts of recent global disease outbreaks. According to the article, cumulative losses in Guinea, Sierra Leone and Liberia associated with the Ebola outbreak totaled more than $2 billion as of mid-2015; the 2003 SARS outbreak cost Canada and Southeast Asian nations about $50 billion; and Middle East Respiratory Syndrome in South Korea resulted in more than 17,000 people being quarantined and about a 40 percent drop in foreign visitors.

“Given the World Bank’s existing efforts to protect against pandemics, MIGA should be part of the Bank’s suite of activities to provide for a more comprehensive approach to prevent, prepare and react to public health emergencies,” the article states. “No viable private sector insurance options exist in this space, nor is there any private/public mechanism alternative on the horizon.”

But should we be concerned about attaching critical public health capacity in developing nations to private investment? Shouldn’t such public health efforts be well funded regardless? Of course, said Katz, but it’s just not happening to the extent it needs to be.

“I understand that perspective, but we’re talking about parts of the world that desperately need that foreign investment,” she told me. “We have to be pragmatic…we have to think about the whole of society and if (public health) just stays in its own lane then we’re not being creative. There’s just not enough money in our lane to do the type of work we need to get the job done. I wish there was.”

Katz said she and her colleagues have received some good feedback on the MIGA idea from officials at the World Bank. But, at this point, she just wants to “put the idea out there.”

“It’s about getting new ideas out there and getting our community to think of all the different ways we can get the resources we need,” Katz said. “We’re trying to spark a conversation.

For a full copy of Katz and Seifman’s article, visit the Journal of Health Care Finance.

Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for nearly 15 years.