Our health system which stands on the shoulders of the citizen

A point that always attracts the attention of professional economists is the reports from influential organizations around the world. While analyzing the health system, my attention was drawn to the last year’s World Bank report. The World Bank report on Azerbaijan, “Survive, Learn, Thrive”, published last year, noted that 78.6 percent of medical expenditures in the country are financed by the population. This is a figure that is many times greater than the percentage of developed countries in the world. Such that the World Health Organization (WHO) recommends that this figure be limited to 20 percent.

Another World Bank report released a few years ago noted that there was an eight-fold difference between the 10 percent of the highest-income population in Azerbaijan and the 10 percent of the lowest-income group in Azerbaijan. This means that while a small minority in our country has an extreme level of financial resources to finance health expenditures, the access of a small minority group to health expenditures is very limited.

Then, when we look at the official sources of the Azerbaijani government, we see that after the inflow of big oil money, our health expenditures have increased even more. Given the rapid growth of oil money, mainly since 2003, we can say that budget expenditures on health have increased 12 times since that year. Following this increase, per capita health expenditure in 2013 was $ 95. However, despite the increase in our health expenditures since that year, there has been a decline in per capita spending. Health expenditures in Azerbaijan increased 25 times in nominal terms between 2003 and 2020. Given that the manat was devalued twice in 2015, the purchasing power of our national currency has significantly weakened. This has significantly reduced Azerbaijan's position in terms of per capita health expenditures in dollars.

Average life expectancy and health expenditures

Numerous empirical studies around the world have shown that there is a direct positive relationship between average life expectancy and health expenditures. That is why the state budget constantly increases health expenditures in developed countries. The United States, which we know as a superpower, spent about 4% of its GDP on health in the 1960s but now it is approaching 18%. This shows that in 60 years, US health expenditures have more than quadrupled. According to the requirements of the World Health Organization, in order for the state of health services in the country to be at least normal, health expenditures in the budget should not be less than 3% of GDP. Until recent years, this figure in Azerbaijan ranged from 1-2%. However, if we want to increase life expectancy, we must increase our health expenditures. In this way, the average life expectancy of people in the world is increasing.

Let's take a historical excursion... In 1900, the average life expectancy was 37 years. It is now over 70 years. The Organization for Economic Co-operation and Development (OECD) estimates that while the average life expectancy at birth in the 1960s was 68.2 years, it was 79.5 years in 2009. Improving living standards, a better level of education, and access to quality health services are key factors in the increase.

The increase in life expectancy over the last 50 years is a factor that changes the structure of the population. This change indicates that the world's population is aging. In particular, while the share of the population aged 60 and more in the structure of the total population was 18.7% in the early 2000s, it is expected to be 25.3% in 2025. The aging of the population is associated with lower birth rates and longer life expectancy. It follows that an increase in the proportion of the elderly population will increase the demand for health services, which will lead to higher health expenditures. At this time, we must conduct a demographic analysis of the citizens of Azerbaijan to see whether the aging rate of our population will increase or the number of people dying from heart attacks, suicides, and intolerance to social tensions will increase.

One of the most important questions facing the health system is to find answers to such questions. I do not mean ready answers and "success" stories. I intend to look for practical answers to the questions that concern the government, call for goals and concerns.

Mammed Talibli