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Executive SummaryHealth conditions in the Asian and Pacific region have dramatically improved over the last 35 years. The under-five mortality rate declined 60 percent, the most rapid rate of decline observed in its history. Improved health status has been accompanied by a 47 percent decline in the total fertility rate. Despite the impressive progress, there is much more that needs to be accomplished. Infant mortality rates (IMRs), particularly in South Asia, are higher than in any other region in the world, except Sub-Saharan Africa. The region is home to more than 75 percent of the malnourished children in the world. The poor, women, and indigenous peoples bear a disproportionate burden of this ill health. The poorest-income quintile suffers an IMR that is about 2.8 times higher than the wealthiest quintile, and the poor face more grave economic consequences as a result of being sick. Almost half of the financial crises faced by the poor arise from meeting medical expenses. Women also face a high burden of disease as witnessed by high maternal mortality ratios that have changed little in the last 20 years. In most countries, indigenous peoples suffer an infant mortality rate that is about twice that of the general population. Despite progress in making modern contraception available to couples, there are still countries and regions with such high fertility as to interfere with their economic and social development. In addition, there is a rapid increase occurring in the prevalence of smok-ing, HIV/AIDS, and use of illegal drugs. The Policy for the Health Sector is intended to make the Bank’s efforts in addressing these challenges more effective and efficient. While health and population activities are inextricably linked, population issues are not examined in detail in this paper as they are addressed in the Bank’s Population Policy (approved by the Board in 1994). Similarly, this paper does not explore nutrition interventions in detail, as these are being examined under a regional technical assistance project and will be addressed in a forthcoming policy paper on nutrition. The financial crisis in Asia is undermining the social progress made over the past several decades as millions of people are being thrust deeper into poverty. The poor and the newly unemployed have been forced to reduce spending on health at the same time as the cost of pharmaceuticals and other inputs have been increasing. Decreases in health insurance coverage and a significant shift from private to public health care facilities is putting additional stress on the public health care system. The financial crisis highlights the role of the government in ensuring that the poor, women, and other vulnerable groups have access to basic affordable health care and points to the need for poli-cies that promote access, equity, and system efficiency. Major trends that will have important consequences for the health sector in the region include (i) the epidemiological transition from infectious illnesses to non-communicable conditions at the same time as threats from infectious diseases such as HIV/AIDS and tuberculosis are emerging; (ii) the demographic transition to low fertility, which will result in a 60 percent increase in the population that is 60 years or older by 2020; (iii) urbanization, which will result in greater health hazards for the poor and more complex health care delivery systems; and (iv) technological advances, particularly in the area of vaccines, diagnostic tests, and information technology. The Bank’s first loan in the health sector was approved in 1978, and 35 loans were approved for a total of $1.2 billion by the end of 1998. Health sector lending as a proportion of total Bank lending averaged 1.5 percent over the last decade; there is no obvious upward trend. This is significantly lower than comparator organizations. The nature of Bank lending has shifted toward primary health care and greater investments in software as opposed to civil works. As judged by postevaluation reports, the performance of health sector loans has been similar to other sectors within the Bank. There has been a lack of objective indicators by which to assess performance, although there have been recent improvements in this area. There also appears to have been an improvement in recent years in the quality of the design of health sector loans. In its health sector operations, the Bank recognizes the importance of close coordination with partner institutions. The Bank has relied on the skills, knowledge, and experience of WHO, World Bank, UNICEF, UNFPA, and bilateral organizations. Formal cofinancing with multilateral or bilateral organizations has taken place in 34 percent of health sector loans; levels of cofinancing were substantially higher in the last six years compared with previous years. The key issues confronting the health sector are (i) the health of the poor, women, and indigenous peoples; (ii) setting clear priorities to ensure the most efficient use of resources; (iii) mobilizing resources for the public health sector; (iv) building managerial capacity; (v) testing innovative approaches; (vi) introducing effective new technologies; (vii) focusing on functions which constitute public goods such as research, health education, and regulation; and (viii) collaboration between the public and private health sectors. Assisting the health sectors in its developing member countries (DMCs) provides a means for the Bank to achieve its five strategic development objectives. First, improvements in health support economic growth through (i) increased worker productivity, (ii) increased returns to investments in education, (iii) increased returns to other factors of production, and (iv) freeing up financial resources by preventing disease. Second, investments in health help to reduce poverty. The poor suffer from worse health status and face more serious economic and financial consequences when they become ill. The poor themselves rank access to health services as a highly felt need. Third, enhancing the health of women will improve their lives and status. Improving their access to health services will reduce gender-based inequities and contribute to the well-being of their families. Fourth, investments in health are a key aspect of human development and population planning. Increasing access to integrated family planning and maternal and child health services has a significant effect on both health status and fertility. Finally, investments in health contribute to environmental protection by encouraging slower population growth which will stabilize population pressure on natural resources. Besides accomplishment of its development objectives, Bank assistance to the health sector benefits from the demonstrated effectiveness of health interventions. A growing body of scientifically rigorous evidence supports certain interventions and provides confidence that investments in these will have a dramatic impact. Government and Bank intervention in the health sector is justified because of the positive externalities associated with many important interventions, market failures, and equity considerations. The Bank’s overall approach to the health sector will be to assist DMC governments in ensuring their citizens have broad access to basic preventive, promotive, and curative services that are efficacious, cost-effective, and affordable. The Bank will increase its health sector lending in consultation with DMC stakeholders. Its activities in the health sector will be guided by five strategic considerations outlined in the health sector policy matrix in this report (see page 94).
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