Global Health Expenditure Report

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20-Feb-2019: World Health Organization (WHO) releases global health expenditure report

The World Health Organization (WHO), on February 20, 2019, released a new report on global health expenditure, according to which, global spending on health increased in low- and middle-income countries by 6 per cent and in high income countries by 4 per cent. However, worryingly, the report also found that people were still paying too much out of their own pockets.

In low - and middle-income countries, health spending is undergoing a transformation. The reliance of people on public funding has increased. In most regions, reliance on out-of-pocket spending is gradually going down and has also been associated with a reduction in the share of domestic government revenues allocated to health.

While the total amount of aid that middle-income countries receive has increased, aid per capita, has fallen. In 2016, lower- and upper middle-income countries still received close to 57 per cent of global aid, and certain middle-income countries still received large amounts of aid in absolute terms. Therefore, there is an inverse relationship between a country’s income levels and the share of external aid as a health funding source.

The report analyses for the first time, data for a subset of countries not only on the basis of sources of spending but also on how the money was used — on primary health care and by specific disease priority and intervention category.

The roles of external and domestic funding are evolving; however, external funding is declining in middle-income countries. Governments account for less than 40 per cent of primary health care spending. There are huge variations across countries in public spending on primary health care, which is intended to give people access to quality care, including access to medicines, as needed. Governments would be expected to pay for these medicines from domestic sources.

The data indicates that nearly half of donor funds for health and about 20 per cent of public spending on health went to combat HIV/AIDS, malaria and tuberculosis. About one-third of domestic public spending went towards injuries and non-communicable diseases, which received comparatively little external funds.

Public spending on health is essential for achieving the Sustainable Development Goal (SDG) targets for health through sustainably funding common goods and subsidising services to the poorest segments of society. A health system that relies mainly on high levels of government funding, as well as a high share of public sources in overall health spending, generally provides better and more equitable access to services and better financial protection.

Health spending is transitioning globally, with a rapid increase in domestic spending, both out-of-pocket and publicly funded

  • Two years into the Sustainable Development Goals era, global spending on health continues to  rise. It was  US$  7.8  trillion in  2017,  or about  10%  of GDP  and $1,080 per  capita  – up  from US$ 7.6 trillion in 2016.
  • The health sector continues  to expand faster than the economy. Between 2000 and 2017, global health spending in real terms grew by 3.9% a year while the economy grew 3.0% a year.
  • Middle income countries are rapidly converging towards higher levels of spending. In those countries, health spending rose 6.3% a year between 2000 and 2017 while the economy rose by 5.9% a year. Health spending in low income countries rose 7.8% a year.
  • Across low income countries, the average health spending was only US$ 41 a person in 2017, compared with US$ 2,937 in high income countries – a difference of more than 70 times. High income countries account for about 80% of global spending, but the middle income country share increased from 13% to 19% of global spending between 2000 and 2017.
  • Public spending represents about 60% of global spending on health and grew at 4.3% a year between 2000 and 2017. This growth has been decelerating in recent years, from 4.9% a year growth in 2000–2010 to 3.4% in 2010–2017.
  • Aa the health sector grew, it became less reliant on out-of-pocket spending. Total out of pocket spending more than doubled in low and middle income countries from 2000 to 2017 and increased 46% in high income countries. But it grew more slowly than public spending in all income groups.
  • Donor  funding represents 0.2 % of  health spending globally. It continues to be an  important source in low income countries at 27% of health spending and 3% in lower middle income countries.

In countries with fast-growing economies, health spending increased dramatically as they moved up the income ladder

  • Between 2000 and 2017, overall health spending dramatically increased in a group of 42 countries that experienced fast economic growth. On average, real health spending per capita  grew by 2.2 times and increased by 0.6 percentage points as a share of GDP. For most, the growth of health spending was faster than that of GDP.
  • In the 42 fast-growing economies government spending increased by 2 percentage points of GDP on average, yet in a third of the countries, fiscal capacity failed to expand despite economic growth.
  • Most fast-growing countries embarked on the health financing transition, increasing their domestic public spending per capita, as a share of public expenditure and as a share of total health  spending. In 17 of these countries, however, public spending on health fell as a share of current health spending, even as the economy was growing. Giving priority to health – or not – is clearly a political choice.
  • In 2017, total aid to fast-growing countries still represents about 36% of total health aid, close to what low income countries received (40%). The data do not show a specific effect of aid on the health financing transition, with no observable substitution between aid and out of pocket spending.

Health institutions are transitioning from models of social health insurance to functions of health financing

  • The number of countries with social health insurance(SHI) has gradually increased since 2000, with the number of WHO Member States implementing it reaching 126 in 2017, up from 113 in 2000.
  • The spending flowing through SHI schemes accounted for more than 5% of public spending on health in 97 countries.
  • The share of SHI in current health spending varied from 1% to 2% in low income countries, 4.5% to 8.5% in lower middle and 16% to 20% in upper middle income countries.
  • The growth of SHI health spending is greater in the 42 fast-economic growth countries, which moved to upper income status between 2000 and 2017. Their average share of current health expenditure flowing through SHI arrangements increased by 6  percentage points, from 11% in 2000 to 17% in 2017.
  • About two-thirds of countries with SHI use government budget transfers as a funding source.
  • SHI spending has grown, but what that means for progress towards universal health  coverage is unclear. At similar levels of GDP and government health spending per capita,  countries with SHI arrangements do not seem to have better population coverage with health services.

Primary health care is the route to making the financing transition work for universal health coverage

  • Measurement of primary health care (PHC) spending is improving: country-specific data on primary health care spending are now available for 88 countries, up from 50 in 2018; and 45 countries have more than one year of data.
  • Across the 88 countries, PHC spending ranges from 33% to 88% of health spending. Per capita spending is higher in wealthier countries, but PHC takes a greater share of health spending in low and middle income countries.
  • The priority governments give to PHC varies from 42% in upper middle income countries to 55% in lower middle income countries and 65% in low income countries.
  • Yet only a third of total PHC spending comes from governments. The lower the country income, the lower the public share: in low income countries private sources represent half of PHC spending. Across all income groups, governments provide very limited funding for medicines.
  • Development assistance funds 20%–40% of PHC spending in low income countries. This is mostly a consequence of funds channeled through categorical programs, with little funding going through integrated services.