Health financing in times of multiple crises: analysis and recommendation

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Strupat, Christoph / Pooja Balasubramanian / Srinivasa Srigiri / Anna-Katharina Hornidge
Policy Brief 11/2023

Bonn: German Institute of Development and Sustainability (IDOS)

DOI: https://doi.org/10.23661/ipb11.2023

Dt. Ausg. u.d.T.:
Gesundheitsfinanzierung in Zeiten von Mehrfachkrisen: Analyse und Empfehlungen
(Policy Brief 13/2023)

The COVID-19 pandemic has exposed the fragility of health systems and highlights the need for renewed efforts to finance pandemic preparedness, prevention and response (PPR) mechanisms, and universal health coverage (UHC). Two lessons emerge from this global health challenge. First, it has shown that global problems need global solutions, as well as the agency of local and national actors to make them work, so it is recommended that public health be considered a global public good. This requires solidarity between rich and poor countries to attain a globally “highest attainable standard” for managing pandemics and other public health emergencies.
The provision of such a global public good requires substantial public resources. Furthermore, the focus should not only be on preventing the spread of diseases but also on detecting and fighting infectious diseases at their source. The second lesson is that prevention is a good investment, as it costs less than remedial interventions at later stages. Health systems can be considered as the means by which health priorities, such as pandemic PPR and UHC, can be operationalised. Studies show that health systems that could effectively leverage both robust health security core capacities (e.g. laboratories) and fundamental UHC interventions (e.g. accessible health facilities) were often in a better position to protect their citizens against the negative impacts of the COVID-19 pandemic.
Focusing on the landscape of health financing in low- and middle-income countries (LMICs), it becomes clear that during the COVID-19 pandemic there was a substantial increase in international health financing. However, continued high out-of-pocket expenditure (OOPE) in LMICs points to a structural imbalance in health financing, which is one of the major barriers for achieving SDG3. Further contribution from international
development assistance and an increase in domestic government expenditure by LMICs through improved mobilisation of domestic resources is therefore impera-tive. Funding gaps to achieve PPR and UHC in LMICs are small in relation to the projected costs of a pandemic such as COVID-19. However, as global debt levels soar, fiscal spaces to close these funding gaps become smaller. The following policy options for governments and international development partners should be considered to protect and improve spending on health in times of shrinking fiscal spaces: reallocation within budgets towards health, better priority-setting of health financing, and greater use of debt-to-health swaps, health taxes and national health insurance schemes.
Importantly, investment in health is critical not just for the health benefits, but also because of the positive socio-economic impacts that result, in excess of the level of investment. Improved well-being and health outcomes translate into higher productivity and income, with a benefit–cost ratio of nine for low-income countries and 20 for lower-middle income countries. Given the high rates of unemployment in many LMICs, investments that create jobs in the healthcare sector are also beneficial for other sectors. Evidence shows that for every healthcare professional job that is created, 3.4 jobs are created on average in other sectors. As a large proportion of healthcare workers is female, these new jobs can be an opportunity for young women, in particular, and can help to promote female empowerment and gender equality. Altogether, these long-term benefits affirm that investment in health can enable large spillover effects on the social and economic dimensions of sustainable development and the implementation of the 2030 Agenda for Sustainable Development.