Towards UHC: thinking public - Overview of trends in public expenditure on health (2000-2014)

Past quantitative research on health financing has focused mostly on the level and distribution of total expenditure, with little emphasis on the specific role of public funds, despite their known importance for universal health coverage (UHC). Health Accounts data do not disaggregate public expenditure on health by source of funding. Achieving a better understanding of public financing for health in the context of the macro-fiscal and health financing environment is of fundamental importance to the development of future health financing policy, particularly in low- and middle-income countries (LMICs).

Towards UHC: thinking public offers a comprehensive deep-dive analysis of public financing for health in LMICs by assessing the changing relationship between domestic public financing for health and the economy, the budget and overall sector financing. The analysis reveals that the period (2000-2014) is characterized by reduced sensitivity of public expenditure on health to macro-fiscal expansion, which in turn has contributed to a reduced role for domestic public funds in financing the sector. With the impact of external sources removed, there is no evidence of an effective “health financing transition” from private to public financing for health in low-income countries (LICs). The relative reduction in out-of-pocket spending reflects a combination of an increase in external health aid with stagnation in domestic public funding.

In addition, while the priority given to health in budgets is largely dependent on country-specific policy choices and socio-political imperatives and values, the WHO analysis reveals key drivers of prioritization that were discernible across LMICs over the past fifteen years. The study shows that the level of external aid earmarked to the sector reduces the degree of priority given to health in domestic budgets. Also, while macro-fiscal expansion does not necessarily lead to greater prioritization, it is observed that debt service indeed deters higher prioritization.

In summary, recent changes in the relationship between public financing for health and its macro-fiscal and health financing environment call for a renewed emphasis on domestic public funds as the core of future health financing policy. Looking ahead, the study underlines the importance of tracking domestically funded public expenditure separately from external sources in future data collection and analysis efforts to better inform decision making. This information is particularly important given the transition away from external funding taking place in many countries. The refined classification of health expenditures (SHA 2011) will facilitate this process.