Health Still More Expensive Than Any Other Global Economies

Spending on health is growing faster than the rest of the global economy, accounting for 10 percent of global gross domestic product (GDP).

A new report on Global Health Expenditure dubbed ‘Public Spending on Health: A Closer Look at Global Trends’ by the World Health Organization (WHO) reveals a swift upward trajectory of global health spending, which is particularly noticeable in low- and middle-income countries where health spending is growing on average 6 percent annually compared with 4 percent in high-income countries.

In 2016, the world spent US$ 7.5 trillion on health, representing close to 10 percent of global GDP. Health’s share of GDP is greatest in high-income countries, at around 8.2 percent on average. For both low- and middle-income countries, health expenditure is approximately 6.3 percent of GDP.

The distribution of health spending globally remains highly unequal. Despite GDP and health spending growing fastest in low- and middle-income countries, a large gap persists between rich and poor countries.

In 2016, median per capita health spending was over US$ 2,000 in high-income countries but just a fifth of that (US$ 400) in upper-middle income and one-twentieth of that (US$ 100) in low and lower-middle income countries. This inequity in health spending is also illustrated by the imbalance between health spending and population. Only 20 percent of the world’s population live-in high-income countries, and yet these countries account for close to 80 percent of global health spending.

Whereas the top 10 countries spent US$ 5,000 or more per person in 2016, the bottom 10 countries spent less than US$ 30 per person. This inequity has not shown any signs of significant change since 2000.

In middle-income countries, government health expenditure per capita has doubled since the year 2000. On average, governments spend US$60 per person on health in lower-middle income countries and close to US$270 per person in upper-middle income countries.

Governments provide an average of 51 percent of a country’s health spending, while more than 35 percent of health spending per country comes from out-of-pocket expenses. One consequence of this is 100 million people pushed into extreme poverty each year.

According to the report, there is a trend of increasing domestic public funding for health in low- and middle-income countries and declining external funding in middle-income countries and thus, reliance on out-of-pocket expenses is declining around the world, albeit slowly.

When government spending on health increases, people are less likely to fall into poverty seeking health services. But government spending only reduces inequities in access when allocations are carefully planned to ensure that the entire population can obtain primary health care.

In low- and middle-income countries, new data suggest that more than half of health spending is devoted to primary health care. Yet less than 40 percent of all spending on primary health care comes from governments.

The report further discloses that as domestic spending increases, the proportion of funding provided by external aid has dropped to less than 1 percent of global health expenditure. Almost half of these external funds are devoted to three diseases – HIV/AIDS, Tuberculosis (TB) and malaria.

The report clearly illustrates the transition of middle-income countries to domestic funding of health systems where external aid remains essential to many countries, particularly low-income countries.

Health is a human right and all countries need to prioritize efficient, cost-effective primary health care as the path to achieving universal health coverage and the Sustainable Development Goals.