The healthcare sector in several countries around the world is commonly referred to as being among the most corrupt sectors. A 2013 Transparency International Study reported that more than 50% of citizens viewed their country’s health sector as corrupt in 42 out of 109 countries surveyed. The World Bank has regarded corruption in healthcare as a major barrier to achieving social and economic development.

Corruption and Poverty

Informal payments are a very specific form of corruption prevalent in weak health care systems around the world. Informal payments refer to under-the-table payments to receive services that are otherwise free or which are requested in addition to officially sanctioned required payments.  They are prevalent in the healthcare sector of many countries globally. For example, in Azerbaijan, informal payments account for 73.9% of all medical spending. This form of corruption often arises due to inadequate healthcare management, including inadequate public spending, resource deprivation, governance and human resource constraints and scarcity of providers.

Informal payments negatively affect healthcare at the individual and governmental levels. Due to the secrecy that often shrouds the transaction of informal payments, these payments are often made in cash and do not contribute to the collection of taxes. This translates into less money available to be reinvested in the healthcare system.

Further, informal payments are often regressive in nature, meaning that low-income individuals often tend to pay a larger proportion of their income respective to high-income individuals.  One study in sub-Saharan Africa identified informal payments as being highly prevalent among the poorest segments of society.

Informal payments represent severe barriers to accessing care for those living in poverty. In some cases, informal payments can push low-income individuals to borrow money often with high-interest rates. This indebtedness can lead to financial ruin for low-income families and can potentially push them into the poverty trap.  More concerning is the potentially deadly impact of patients to delay or forego medical care due to the inability to cover the expected informal payments.  Further, the informal nature of these payments makes exemptions to protect those in poverty increasingly difficult to enforce.

The Impact of COVID-19

The COVID-19 crisis can lead to further barriers to accessing care and may bring an increase in the prevalence of informal payments. Overwhelmed, weak health care systems around the world with resource and provider scarcity may push those seeking treatment to use informal payments as a means of accessing better care and at other times may be required to make up for inadequate funding. It is known that informal payments are tied to these scarcities. These factors are increasingly relevant in COVID-19 responses around the world.

There is a high risk of the prevalence of informal payments increasing in reaction to the pandemic. For those who cannot afford the cost of informal payments, the catastrophic virus may cause families to take on a high-rate of debt, pushing low-income families further into poverty. If individuals choose to forego testing or treatment for the virus due to a lack of financial ability to cover informal payments it could impact the response to fighting COVID-19 by accelerating the spread of the disease.  With the number of people living in extreme poverty projected to rise by 71 million due to the economic shocks brought on by the pandemic, there is an urgent need to address the issue of informal payments and broader corruption in the healthcare sector.

How to Take Action

According to the Carnegie Endowment, the spread of coronavirus, with corruption acting as a catalyst, poses a serious threat to U.S. interests and foreign policy objectives. There are a number of ways the U.S. can address the problem of corruption and the prevalence of informal payments around the world through the U.S. Global Coronavirus Response. The Countering Russian and Other Overseas Kleptocracy (CROOK) Act aims to address corruption through rapid action. The act has been introduced in the Senate after passing the House of Foreign Affairs Committee and shares bipartisan support. USAID in partnership with the State Department is addressing the corruption-coronavirus nexus by supporting transparent emergency procurement mechanisms and providing support to anti-corruption law enforcement.

Due to the discrete nature of informal payments and the provider-patient relationship, the U.S. influence is limited in combating informal payments. In low-income countries with weak healthcare systems, the most effective means of mitigating the impact of informal payments on those impacted by COVID-19 is prevention. The United States can help curb the spread of COVID-19 around the world by providing adequate funding for global health security in the next emergency supplemental COVID-19 response.

– Leah Bordlee
Photo: Flickr