WHO: Spending on Health Increased 6% in 2020; but Detailed Data Mostly Covers Rich Countries
Spending on Health
A new WHO report shows rising health expenditure in 2020, the first year of the COVID-19 pandemic.

Spending on health increased worldwide by 6% on average in real terms in the year 2020, according to the World Health Organization’s latest global review of health finance.

The analysis found that global spending on health reached US$ 9 trillion in 2020, or 10.8% of global gross domestic product (GDP), but remains highly unequal across income groups.

But the 6% global increase is skewered by huge outlays in the United States, which is by far the biggest global health spender, said WHO’s Joe Kutzin, the head of WHO’s health finance team that authored the report.

In real terms, average country growth was more like 4% he noted in a series of Tweets following the reports publication.

And in contrast to previous WHO studies on health spending trends, this latest report only captures more detailed and granular spending patterns for 4 low-income countries and 11 middle-income countries. The remaining 29 countries analyzed are all high-income nations.

This means that global spending trends for health care remain difficult to analyse more granularly, WHO officials speaking at Thursday’s report launch event cautioned. With just 4 low-income countries reporting data, spending patterns in this income group in particular cannot be generalized.

“While we can put this together globally, to look at these patterns and trends, it’s not a substitute for the country-level work and analysis that’s needed,” said Kutzin. “We need to be careful in drawing conclusions about “the average country” given this limitation.

In contrast, a WHO study of data from 2018 found global health expenditures rose by 6% annually but noted that government spending on health in some poor countries was stagnant or even declining, with some pulling back funding due to greater reliance on donors.   A study of data from 2019 also found that high-income countries accounted for approximately 80% of global spending on health. 

Those report had more representative sample of rich, middle income and poor countries. But for the report released on Thursday, the interruptions in routine health system operations caused by the COVID pandemic made it difficult for low-income countries to report their data this year, leading to a heavy bias in findings in favour or rich countries, Kutzin and other panelists at the WHO launch event said.

“What we have for only 50 countries in 2020 is a detailed decomposition of spending by “health care function” (inpatient, outpatient, medicines, etc), and indeed it is skewed towards higher income countries,” said Kutzin in a follow up tweet. This underlines the need to improve data availability as the pandemic’s impacts wane.

More public spending possibly driven by the COVID response

Spending on Health
Government spending was the main driver of the increase in total health spending from 2019 to 2020. Per capita government spending on health increased in all income groups and rose faster than in previous years, according to the report.

In the countries where data was available, the growth in spending was largely driven by increased public expenditure, the report found.

​​”The whole growth of health spending is really driven by government spending,” said Dr Ke Xu, the report’s lead author. “This year it has grown much faster than previous years.”

While vaccines were not yet widely available in 2020, it is likely some of the increase in government spending was driven by the early stages of the COVID response. Early waves led to sharp increases in hospitalizations, a competitive dash for procurement of items from oxygen to PPE, and bidding wars over vaccine contracts.

Spending on COVID accounted for an average of 8% of public spending on health in 2020, but the type of COVID spending varies vastly among country income groups. 

“In high-income and some upper-middle-income countries, you have significant spending on treatment,” Xu said. “In low-income countries spending is mostly on other preventative measures.” 

These discrepancies are related to the capacity of countries of differing income levels to set up testing, contact tracing, and provide access to facilities and equipment capable of treating COVID patients. The data may also be influenced by the different approaches taken by countries to control the outbreak at the early stages of the pandemic when the nature of the virus was still unclear. 

Conversely, out-of-pocket spending per capita fell during the first year of the pandemic, which may reflect reduced health service utilization of out-patient services. Fear of the virus may have encouraged many patients to stay away from hospitals or seek care for basic illnesses, while many health systems were overwhelmed by the weight of the pandemic, leading to reduced capacity to treat other patients.

There was also increased government support for items like free PCR diagnostics for people with suspected COVID, potentially lifting financial weight from individuals. The team in charge of the report stressed that further research is needed to understand the whats, whys and hows behind the datasets provided. 

“We raise issues, and there are clearly hypotheses or questions that might arise from the data,” Kutzin said. “It’s our job to help sharpen those questions, but not really answer policy questions. It is more to provide a foundation so that those questions can be answered.”

Low income countries increased health spending 

While the sample size of low-income countries’ spending was limited to just 4 nations, the report tracks other finance indicators across a larger share of developing countries. Among them, health spending as a share of total government expenditure increased from 2019 to 2020 in all income groups except high income countries. 

This presumably reflects the greater resources countries had to allocate to COVID response. The spending increase is a welcome development, but panelists warned it is not guaranteed to be a sustained one.  “In times of crisis, governments find the money,” Kutzin said. “The challenge is to sustain that over time.” 

And among the poorest countries, private, out-of-pocket spending increases comprised the largest share of the pie. 

Low income countries continue to rely heavily on external aid to finance health spending.

Little change was observed in external aid funding levels, but it continued to play a critical role in funding health systems in low-income countries. The report found external aid accounted for 29% of health spending on average in the low-income countries that provided data, the same as in 2020. 

Per capita health spending derived from external aid increased by US$0.70 to $10.80 on average, slightly higher than government spending in these low-income countries, which sits at $9.20 per capita. 

Health priority rose sharply in low, lower-middle and upper-middle income countries in 2020

The report also noted the continued gap in spending on primary health care versus outpatient care between country income groups. WHO’s 2021 report found primary health care spending for low-income countries sits around 70% of total health spending, while in middle and high income countries, this is reduced to around 50% and 40% respectively. 

“In low-income countries, most of the spending goes to prevention, while in upper-middle income countries outpatient services take a large share of total government and donor spending” Xu said.

Prevention services include population-based services such as information campaigns like brochures or public messaging campaigns, epidemiological surveillance and individual services like immunization, and condition monitoring. 

Study first to include social spending as part of health spending 

Health priority rose sharply in low, lower-
middle and upper-middle income countries in 2020, the report found.

What the WHO finance report lacks in representative data-sets it makes up for in innovation. The 2022 report is the first to consider government spending on social programmes as a factor contributing to overall health outcomes. 

“Government spending on health does not exist in a vacuum,” the report said. “Health outcomes are also shaped by other social spending, particularly on education and social protection.”

The panel defined social protections as in-kind benefits provided to in-need individuals and households. These include standard benefits such as disability, sickness, and child support payments, and transfers and services provided on a collective basis in the form of pension schemes, unemployment assistance or public housing. 

“We saw in previous years that even if the share of health and overall government spending fell, it didn’t necessarily mean that health was losing its priority because social spending is also good for health,” Kutzin said. “For WHO it’s a big challenge, and not typical for us to stop beyond our sectoral silo, but I think this is important.” 

While Kutzin stressed the WHO is not planning to become experts in social protections, the added scope of the report aims to acknowledge that medicines and hospitals are not the only contributing factors to health outcomes in a given country. 

“Health outcomes are also determined by other social and economic sectors,” Xu said. Sometimes, a roof over someone’s head or an accessible education in health literacy can be just as impactful to improving a life as providing disease screening services. 

Updated 9 December 2022 with further clarifications from WHO about the features of the global dataset. 

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