AIDS Treatment in South Asia: Equity and Efficiency Arguments for Shouldering the Fiscal Burden When Prevalence Rates Are Low - Working Paper 161

February 13, 2009

Although the effect of AIDS on poverty, orphanhood, and economic output will be smaller in South Asia than in more severely affected regions (because of higher per-capita incomes and a slower spread of the disease), the deleterious effect of the disease on health care systems may be magnified by the relative lack of a public role in health care and the heterogeneous nature of the private health and pharmaceutical sectors.

The usual argument for using public funds to pay for AIDS treatment is made on equity grounds, in the interest of preventing poverty and orphanhood. Senior fellow Mead Over’s analysis supports this conclusion: public financing of AIDS treatment could help 3 percent of Indians escape poverty, for example. But his analysis points to another reason to support public involvement: data suggest that more public involvement would help crowd out low-quality private AIDS treatment and prevent some of its negative spillover effects on the health care sector in general.

Over concludes on efficiency grounds that the public role in AIDS treatment in South Asia should encompass both regulation of the private sector and support for quality “structured” AIDS treatment in the public sector.

An earlier version of this working paper appears as Chapter 5 of a 2009 World Bank book, HIV and AIDS in South Asia: An Economic Development Risk, edited by Mariam Claeson and Markus Haacker.

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