WHO: Global Health Expenditure Rising But Public Outlays Lag In Low Income Countries

Global health expenditure is rising worldwide, and the pace is most rapid in low- and middle-income countries where growth in all forms of spending (public, private and donor aid) is now averaging 6% annually as compared to 4% in high-income countries, according to a World Health Organization report released today.

The report is entitled Public Spending on Health: A Closer Look at Global Trends.

Middle income countries are weaning themselves off of reliance upon external aid and are spending more domestically on health – but in the world’s lowest income countries, the trends are reversed and increased external aid may have even led to a reduced level of funding from domestic public and government sources, says the report, which analysed trends in health spending from 2000 to 2016.

“Overall health spending is growing much faster than the economy, all over the world, and at 6% in low income countries, that is very rapid,” WHO’s Agnes Soucat, one of the report’s lead authors, told Health Policy Watch. Middle income countries and emerging economies also are supporting somewhat higher shares of public spending on health, while the proportion of out-of-pocket expenses is decreasing.

But in the world’s lowest-income countries, trends are not as positive, and increased health spending by donors may have even led to decreased government outlays, she added.

“The middle-income countries are on a trajectory to join the higher income countries, even though they have a long way to go,” Soucat said. “Whereas the low income countries, which is a shrinking number of countries, around 30-35, they are experiencing a decrease in public domestic financing in health.”

In 2016, total spending on health from all public, private and donor sources amounted to US$ 7.5 trillion on health, representing close to 10% of global GDP, says the report, which followed trends since the year 2000.

Average per capita expenditure globally was US$ 1000 – although half of the world’s countries still spend less than US$350 per person a year, according to the report, based upon data collected from countries worldwide by WHO’s Global Health Expenditure Database.

That yawning gap can be explained, at least in part, by the lag in public health spending in low- and lower-middle income countries – the costs that government pays for directly or indirectly.

In low-income countries, public health spending remained stagnant as a proportion of gross domestic product (GDP) between 2000-2016, representing only 1.5% of GDP in 2016. In contrast, public health expenditures accounted for 6% of GDP in high income countries and over 3.5% of GDP in upper-middle income countries.

“In low income countries, more attention is needed to prioritizing health in domestic budgets and to better exploiting economic growth to increase health spending as countries transition from external aid,” the report finds.

The report also examines what types of health services get the most funding, finding that low and middle-income countries devote more than half of their total health spending just to primary health care services.

And yet, on average, less than 40% of primary health care costs are funded by government or other domestic public sources – meaning that either donors or users have to pay out of pocket for many of the most basic health services essential to prevention and treatment, such as vaccines or maternal and new-born care.

Inpatient and outpatient curative care and medicines also account for 70% of total global health spending, leaving little money, public or private, for prevention, which gets only about 12% of total spending and 11% of public funds.

Low-income countries face a particular challenge in building up and expanding health systems organically so that they can absorb new sources of funds – so that increased donor aid can enhance, rather than “displace” of government finance sources, observed Soucat.

“There is a need to invest in primary health systems so that they can absorb external aid and increase their domestic financing.”

“When you are a low-income country, you may not have the systems to absorb extra money. We need to build up those health systems to make sure that external financing doesn’t displace domestic financing but provides an incentive for government to spend.”

 

Image Credits: World Health Organization.

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