COVID-19 Reveals Weakness Of Global Health Financing Systems, Says New WHO Expenditure Report
COVID-19 has revealed disproportionate spending in health systems between low- and middle-income countries and high-income countries.

The combined health and economic shocks triggered by COVID-19 have revealed profound weaknesses in health systems, with direct consequences on the future of healthcare, says a new World Health Organisation report on global health financing systems. 

“COVID-19 has revealed [the] underlying weakness of country and global health financing systems. There needs to be a proactive policy response. The year 2020 is the ultimate proof that investing in health is good for people and good for the economy,” said Agnes Soucat, one of the head writers on the new WHO report, Global Spending on Health: Weathering the storm

The global health expenditure report highlights COVID-19’s devastating impact worldwide – describing global patterns and trends prior to the pandemic, the changes in allocation levels in 2020 arising from country responses, and the challenges raised by future health spending and equitable access to healthcare. 

All countries have responded to the health and related economic crisis of COVID-19 with exceptional budget allocations, and yet there have been stark differences in response depending on a country’s income level, the report reveals.

Low-Income Countries Allocated the Least Per Capita – but Most of Their Budgets Channeled Into COVID Response

Per capita, high-income countries spent far more on the COVID-19 response, averaging US$205, as compared to middle-income countries US$20 and low-income countries US$3. But low-income countries allocated the largest proportion of their health budgets to the response. 

Per capita budget allocations for the COVID-19 health response and per capita pre-COVID-19 public spending on health, by income group, constant US$ 2018. Low-income countries allocated the highest proportion of health budgets to the response.

And at the same time, those proportionately higher allocations may not have been used to their full potential due to pre-existing financial management issues that hinder budget implementation – spending authorization delays and difficulty in channelling resources towards service providers are some examples. 

“Health spending has an impact on unmet health needs. During COVID-19, unmet health needs have implications for health equity. Poor and vulnerable populations suffer disproportionately,” said Dr Soonman Kwon, Professor at the School of Public Health at Seoul National University, who also spoke at the launch of the report.

Almost all countries will see economic contraction in 2020, with the rest experiencing a major slowdown in growth. Stringent lockdowns reduce countries’ ability to cope with COVID-19’s economic impact, but other factors include constrained trade, tourism, and remittances, and ongoing fiscal challenges such as low tax revenues, high debt servicing and large deficits. Declining economic activity has increased unemployment and reduced working hours, and unemployment rates are expected to increase. This has the potential to decrease revenues from employment-based contributions, while both economic and health needs rise. 

Low-Income Countries Continue to Spend Far Less, Per Capita On Health – and Much More On Infectious Diseases 

Before the COVID-19 pandemic, global spending on health was rising, albeit at a slower rate in recent years, peaking at $8.3 million in 2018. 

But there have been deep-seated disparities in where and how money was spent. More than 75% of global spending on health in the WHO regions of the Americas and Europe, while WHO’s Western Pacific Region accounted for 19% of global spending, South-East Asia and Eastern Mediterranean regions accounted for only 2%, and the African region only 1%. The differences have continued to grow over time. 

Health spending by World Health Organisation region and country, 2018. Most health spending took place in the WHO Americas and European regions in 2018.

Low-income countries also continue to depend heavily on donor funding. Aid for health per capita more than doubled in real terms from 2000 to 2018, accounting for a quarter of lower income countries’ health spending in 2018. Two-thirds of external aid for health addressed infectious diseases in both low- and middle-income countries (LMICs). In middle-income countries, HIV alone accounted for nearly half the aid for health.

Other key trends in lower income countries include: 

  • Average domestic spending on health was only about about 4.4% of GDP, or US$ 34 per capita in 2018, of which nearly 60% was out-of-pocket. 
  • Average government spending on health was only US$ 9 per capita in 2018, about 1.2% of GDP, and the priority given to health in public spending has been declining between 2000 and 2018.
  • In low-income countries, infectious diseases accounted for half of overall health spending, while in middle income countries, they accounted for one-third. Noncommunicable diseases accounted for about 30% of health spending in middle-income countries and about 13% in low-income countries – even though NCD rates are soaring in LMICs.
Spending disaggregated by disease or programme, by country income group, 2018. Low-income countries spent half their overall health spending on infectious diseases, while middle-income countries spent one-third. Noncommunicable diseases accounted for about 30% of the health spending in middle-income countries and about 13% in low-income countries.

“Equitable allocation of resources needs to remain font and center of any decision-making. Civil society plays a crucial role to demand that spending is geared to community needs,” said Lenio Capsaskis, Head of Health Policy, Advocacy and Research at Save the Children UK.

Opportunity for Financial “Reset” in a Post-COVID World  
The health sector must work closely with finance authorities in public spending especially in the health sector’s role in delivering the COVID-19 vaccine and other common goods for health.

The health sector must work more closely with finance authorities to raise health care spending as a higher priority in government budgets, the report underlines. There is an opportunity for economic ‘reset’ in countries with weak health financing systems following the pandemic, the report advises. Health policy leaders can aim to raise awareness among other government sectors – using COVID vaccines as an example of a “common good” important to health and restarting economies. 

The report puts forward six recommendations that call for a new “health financing compact” for a post-COVID world. 

Secure domestic public spending on health as both a societal and an economic priority – The global GDP loss due to the pandemic is estimated to be approximately US $4 trillion , while needed funding for Common Goods for Health to ensure epidemic preparedness is estimated to be approximately US $150 billion per year. Investing in Common Goods for health should incorporate the implementation of International Health Regulations, epidemic preparedness, essential public health functions, animal health and environmental health. 

Fund Common Goods for Health as step zero of equitable access to healthcare at a country level – The Common Goods for health are core, top-priority public health functions focused on population-based health that require collective action. They can be grouped into five categories: policy coordination; laws and regulations; information (including surveillance); taxes and subsidies; and public health programs. 

Invest in global Common Goods for Health to enable global health security – The global international architecture is not well suited to the current health challenges and has no sustained revenue for the common goods of health. Unified guidance is lacking on using funds for preparedness and on making trade-offs between research and development, regulation, and surveillance and information. A tracking mechanism is needed to identify spending beyond that of any one country. 

Prioritise public funding to ensure equity of access and financial protection through a primarily health care approach – Clear priorities in spending need to ensure access for everyone to essential health services. Public subsidies are needed to ensure universal equitable access. How much governments fund, what health functions and systems they support, and how effective systems are in using public funds will define the role of private health spending. 

Increase the level of aid to lower income countries, but adjust aid modalities  – Lower income countries face severe fiscal constraints that include increasing debts that may limit social sector spending in the future. This is occurring concurrently with the decrease in external aid. Sustained aid in the form of grants, concessional lending and debt relief will be needed to strengthen health systems so countries build preparedness and strengthen public health systems that deliver equitable access to health. 

Fund national institutions for transparent and inclusive tracking of health spending at both country and global levels – Timely monitoring of spending is essential for monitoring health system performance and ensuring transparency and accountability. Given the vast effort and resources devoted to COVID-19 control, real time monitoring is needed to assess how actual spending supports health system performance. This can help governments gain the trust of their population, a proven factor for the effective control of the COVID-19 pandemic. 

Said Dr Michael Borotwitz, Chief Economist at Global Fund, on the report recommendations: “We need to figure out how to fund global public goods, and come together and support WHO in this area. We need to link health security and national health accounts.” 

Image Credits: elycefeliz/Flickr, WHO, Marco Verch/Flickr.

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