Ends and means in public health policy in developing countries

International discussions of public health policy strategies in developing countries have been characterized by strong and conflicting positions. Differences regarding the means of health sector improvement can often be traced to differences about the ends, that is, the goals of the health sector. Three types of health sector goals are reviewed: health status improvement, equity and poverty alleviation, and individual welfare (utility) improvement. The paper argues that all three must be considered in developing health sector reform strategies in all countries. Highly normative policy positions often can be attributed a unidimensional affiliation with one health sector goal and denial of the relevance of the others. The current global interest in using cost-effectiveness analysis to set national health priorities is assessed in light of this eclectic approach. Examples are provided of how a health sector strategy based on cost-effectiveness would give sub-optimal solutions. These examples include situations where a private health care sector exists and provides some degree of substitution for publicly provided services; significantly high income elasticities exist for health care such that higher income beneficiaries may differentially capture public subsidies; and market failures exist in insurance. It is argued that these conditions are virtually universal in developing countries. Thus, rational policy development should explicitly consider multiple goals for the health sector.