Help! Where Has All the Money Gone for Health Care?

The OECD recently showed that one-third of rich countries cut back health spending since the financial crisis. If they can't afford it, what hope is there for others to achieve Universal Healthcare Coverage? Can equity survive in an era of cuts?

In the paper The Challenge of Financing –written for the ISGlobal Think Tank– I argue that many countries have reason to be ambitious. The long-term trend in the growth of spending, large variations in spending between countries with similar incomes, and scope for raising further revenues offer hope in difficult times.

The last 10 years have seen a threefold increase in spending from both domestic and external sources. $5·3 trillion was spent on health care across the globe in 2010. Domestic funding is the predominant source of funding even in low-income countries – contributing on average 72% of their total health expenditure. Aid, or development assistance for health, remains important however: in 25 countries it exceeds 25% of all health spending.

Poorer countries have several options to raise money. One option is to increase the priority that governments give to health when allocating their revenues. Other strategies relate to tax reforms, through increasing compliance and collection efficiency, or introducing new taxes. Improved global governance on tax competition and tax havens, and increasing transparency, especially on payments related to natural resource extraction can all be pursued. Aid is also open to reform and innovation. Financial transaction taxes, even a Global Social Protection Fund, have been proposed. Either way, both domestic and external sources of funding will be required to supply a basic package of care for the poorest.

The rationale for an equitable health financing system is based in both human rights and economic arguments. Each year, direct payments for health services exclude 1.3 billion people from gaining access to health services and push 100 million people into poverty. Only when the percentage of out-of-pocket payments falls to 15–20% does the risk of poverty become negligible.

However, other determinants have a complementary role in enabling equitable access to services, financial risk protection and defining outcomes. In building a global health social contract fit for this century, we must consider the risks that may undermine access to food, water, education and jobs. No roads or no staff mean no services, no matter how much money is thrown at health care.

A key uncertainty is the global economy. But coherent reform is possible and it is best to invest now while costs are low. Community-based care offers improved coverage, sustainability and cost-effectiveness. Countries such as Brazil, China, Colombia, Ghana, Kyrgyzstan, Rwanda, Sri Lanka and Thailand have made great strides in coverage. We must be realistic, but there is clearly room for manoeuvre.

The Challenge of Financing