‘Sin Tax,’ Currency Levy Could Help Fund Health-Care

Raising taxes on tobacco and alcohol and introducing a levy on foreign exchange transactions could help pay for health-care for millions of people worldwide who can’t get or afford it, the World Health Organization said.

Governments worldwide should also increase the proportion of health-care costs they cover to reduce out-of-pocket expenses for patients whose illnesses can subject them to “financial catastrophe,” the Geneva-based agency said in its annual World Health Report today. About 100 million people a year are pushed into poverty because of health-care costs, the WHO said.

Aging populations, increasing rates of chronic disease such as cancer and diabetes and more expensive treatments are driving up health care costs globally, the WHO said. Raising more funds, reducing direct payments and improving efficiency would save millions of lives and keep millions more from poverty, it said.

“For many, health services just don’t exist, for others they’re not affordable,” David Evans, the WHO’s director of health systems financing, told reporters in a telephone briefing. “You either choose not to use them, or you suffer severe financial hardship for long periods of time because you actually use them and pay for them.”

A 50 percent increase in tobacco excise taxes would generate $1.4 billion in 22 low-income countries, and a levy of 0.005 percent on currency transactions in India alone could raise about $370 million a year, the WHO said.

“So-called sin taxes have the advantage of raising funds and improving health at the same time by reducing consumption of harmful products such as tobacco or alcohol,” the WHO said.

Between 20 percent and 40 percent of health-care resources globally are wasted through inefficiency, the WHO said.

“Paying too much when you purchase medicines is one of the major causes,” Evans said.

To contact the reporters on this story: Simeon Bennett in Singapore at sbennett9@bloomberg.net Dermot Doherty in Geneva at ddoherty9@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.