The World Health Organization: A GRID for reform

Lucie Gadenne, Maitreesh Ghatak 30 May 2020

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The World Health Assembly, the annual decision-making meeting of the World Health Organization (WHO), met in May over videoconference. The squabbling over the institution’s funding and political independence that erupted between the US and China highlighted the embattled state of the global public health institution facing its biggest ever challenge – the Covid-19 pandemic.

WHO’s initial response has been heavily criticised, and there is a real risk that without reforms, it will wither into irrelevance (e.g. Buranyi 2020). Yet, the pandemic has also vividly demonstrated why WHO is needed, given the critical role that detecting, tracing, and containing contagion play in saving lives across the globe. 

Economists have been active in helping us think about the appropriate policy responses to mitigate economic damage from the global pandemic, focusing on fiscal and monetary policies, financial regulation, social insurance, industry, and trade (Baldwin and Weber di Mauro 2020).

Here, we take a longer-term view and use insights from public economics and the economics of organisations to think about changes to WHO’s mission and tools that would enable it to deal more effectively with outbreaks of infectious disease that threaten to become pandemics. 

The emerging literature on bureaucracies and public organisations that focuses on incentive and organisation design issues in the context of the provision of public goods offers some particularly relevant lessons ( Dewatripont et al. 1999, Besley and Ghatak 2018). It suggests that diffuse missions, noisy output measures, and task multiplicity make them appear less effective than their private sector counterparts even in the best of times, and potentially disastrous in times of crisis. No wonder, then, that WHO looks weak now, as it did when Ebola struck (Wenham 2017).

Three features distinguish this pandemic from other health risks:

  • First, as with all infectious diseases, an individual’s health depends not only on their own behaviour but on the behaviour of others – that is, there is a large externality.
  • Second, the virus’ contagiousness and capacity to travel means that all are vulnerable if one government (the weakest link) mismanages the crisis: China’s initial handling of the outbreak was very much the ‘O-ring’ of global public health (Kremer 1993).
  • Third, the potential threat to lives and livelihoods is huge, immediate, and visible, making the case for concerted action easier than for other global risks, such as climate change. 

These features require swift and sustained international coordination both to respond to this pandemic and to prevent future ones. They also imply that the absence of global coordination might lead governments to opt for isolationism. Closing borders so that foreigners can’t bring disease in may seem like a reasonable short-term response, but it will have enormous human and economic costs over a longer period (e.g. Trilling 2020 on the situation of refugees, Freund 2020 on the costs of shortening global value chains).

There is another solution. The world has already experienced a ‘trial-run’ for coping with major global risks: airline security in response to 9/11. Like the current pandemic, terrorism posed a grave threat and showed that the international community is only as strong as its weakest member. Significant progress was made in countering this threat by establishing universal air-travel security standards and monitoring their enforcement. 

To reinvent itself to counter the threat of pandemics effectively, WHO needs three things. 

First, a narrower focus. A disease will have to meet three criteria for WHO intervention: large global externalities, high mortality risk, and a ‘weak-link’ aspect to government action. Eradicating malaria, for example, is an extremely worthwhile goal, but the disease does not travel much internationally, making direct intervention (as opposed to financial support of the type given by the Global Fund) by an international institution unnecessary.

Following the model of recent global public health funds with a narrow focus (Sridhar and Woods 2013), WHO must redefine its core mission around the global response to infectious diseases – let us call this hypothetical division ‘GRID’.

Other aspects of public health could be left to WHO’s research and advisory departments. This means a sharp departure from its current agenda, which covers many aspects of global health, from mental wellbeing to obesity, with no clear prioritisation. WHO should focus on aspects of public health for which the externalities are truly global, the potential risks high, and the interdependence in outcomes across countries so strong that isolated national responses won’t suffice. 

The second thing WHO needs is capacity – beyond that granted by the International Health Regulations (Gostin et al. 2015) – to sanction countries that do not follow its rules. The global community gave the WTO powers to impose economic sanctions on its member states. Avoiding another pandemic is at least as worthy a goal as increasing global trade and should be backed with similar sanctioning power. 

Particular care must be paid to how sanctions are designed. Sanctioning a state in which a pandemic starts may sound like a good idea, but is not credible in practice. When such a disaster strikes, GRID’s mission would require it to offer the afflicted country support. This means that GRID cannot sanction countries based on outcomes but on the steps taken to abide by its recommendations. 

Third, WHO needs a budget adequate to the task. WHO’s current annual budget, roughly $2 billion, is not much higher than the budget of the main hospital in its host city, Geneva. Determining the exact amounts needed is best left to public health specialists and epidemiologists, but the current budget is clearly and grossly inadequate. 

Consider, for example, what it would cost to prevent the international spread of a highly contagious disease through air travel. Taking the estimated cost of a Covid-19 test  ($10 according to Romer 2020) and the number of air passengers in 2018 (4.2 billion) as a benchmark, $42 billion would be needed for testing international travellers alone. Airlines may of course be willing to foot some of the bill for these tests if their survival is at stake (and we expect the number of air passengers to fall in the short run). But even half that number is ten times WHO’s current budget.

How would GRID raise money? One option would levy ‘user-fees’ on those benefitting the most from the global movement of people, something that GRID would protect. Multinational corporations top that list. Torslov et al. (2020) estimate that they made $1.7 trillion in profits from their international activities in 2015, a non-trivial share of which is booked in tax havens and therefore subject to little taxation. A 5% tax on these international profits alone would generate $85 billion.

International air passengers and airlines could also be asked to chip in, if only to pay for the testing infrastructure in airports. While clearly ambitious, these proposals are not without real-world precedent. UNITAID, a global health fund, is already partially funded by a tax on international air travel levied by several countries. 

Giving GRID its own sources of funding would free it from relying on voluntary contributions by individual countries and shield it from the undue political influence of powerful countries (e.g. Huang 2020). These new sources of funding would need to raise enough funds to finance GRID’s recurring prevention, monitoring, and research expenditures. In addition, GRID must be given the right to borrow to mobilise funds quickly when a global public health emergency occurs. 

If we neglect the writing on the wall about WHO, the uncoordinated responses of national governments will hurt ordinary citizens across the globe, especially the poorest and most vulnerable. The virus does not respect borders or walls; our response must transcend them as well.

References

Baldwin, R and B Weber di Mauro (2020), Mitigating the COVID Economic Crisis: Act Fast and Do Whatever it Takes, a VoxEU.org eBook, CEPR Press, 18 March.

Besley, T and M Ghatak (2018), “Pro-social Motivation and Incentives”, Annual Reviews of Economics 10: 411-438.

Buranyi, S (2020), “The WHO v coronavirus: why it can't handle the pandemic”, The Guardian, 10 April. 

Dewatripont, M, I Jewitt and J Tirole (1999), “The Economics of Career Concerns, Part II: Application to Missions and Accountability of Government Agencies”, The Review of Economic Studies 66(1): 199-217. 

Freund, C (2020), “Governments Could Bring Supply Chains Home. It Would Defy Economic Rationality”, Barron’s, 1 May.

Gostin, L, M DeBartolo and E Friedman (2015), “The International Health Regulations 10 years on: the governing framework for global health security”, The Lancet 386(10009): 2222-2228.

Huang, P (2020), “Trump and WHO: How Much Does the US Give?”, NPR, 15 April.

Kremer, M (1993), “The O-Ring Theory of Economic Development”, The Quarterly Journal of Economics 108(3): 551-575.

Romer, P (2020), “Roadmap To Responsibly Reopen America”, 29 April. 

Sridhar, D and N Woods (2013), “Trojan Multilateralism: Global Cooperation in Health”, Global Policy 4: 325-335.

Trilling, D (2020), ‘Coronavirus offers an excuse to close borders. That would be a mistake,’ The Guardian, 26 April.

Torslov, T, L Wier and G Zucman (2020), “The Missing Profits of Nations”, NBER Working Paper 24701. 

Wenham, C (2017), “What we have learnt about the World Health Organization from the Ebola outbreak”, Philosophical transactions of the Royal Society of London 372.

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Topics:  Covid-19 Health economics

Tags:  WHO, World Health Organization, COVID-19, coronavirus

Assistant Professor of Economics at Warwick University

Professor of Economics at the London School of Economics

CEPR Policy Research