Patterns of global health financing and potential future spending on health
Authors: Jose Eduardo Gomez-Gonzalez, Nidia Ruth Reyes
Journal: The Lancet (2017)

Two new Articles in The Lancet1Global Burden of Disease Health Financing Collaborator NetworkEvolution and patterns of global health financing 1995–2014: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries.Lancet. 2017; (published online April 19.)http://dx.doi.org/10.1016/S0140-6736(17)30874-7Google Scholar, 2Global Burden of Disease Health Financing Collaborator NetworkFuture and potential spending on health 2015–40: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries.Lancet. 2017; (published online April 19.)http://dx.doi.org/10.1016/S0140-6736(17)30873-5Google Scholar address a very relevant and timely topic in global health economics. In the first Article, Joseph Dieleman and colleagues in the Global Burden of Disease Health Financing Collaborator Network1Global Burden of Disease Health Financing Collaborator NetworkEvolution and patterns of global health financing 1995–2014: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries.Lancet. 2017; (published online April 19.)http://dx.doi.org/10.1016/S0140-6736(17)30874-7Google Scholar use a wealth of data to explore global health financing trends across a 20-year period for a vast number of countries. With adjustment of the data for inflation and purchasing power parity and using non-linear regression methods, the study shows that total health spending is positively correlated with economic development. However, there is substantial heterogeneity among countries. Particularly relevant for policy matters, in absolute terms, low-income and lower-middle-income countries are increasing their health spending at much slower rates than more economically developed countries, which increases the health expenditure gap and calls attention to the need for policy interventions. Although international assistance might seem to be a natural way of bridging the gap, incentives for higher public and private expenditure in low-income and lower-middle-income countries must also be developed. For instance, international assistance programmes should condition donations on a higher commitment of governments in effective health programmes capable of improving the overall health status of their populations. Through more effective involvement in broader multisector areas (such as social policy, housing, and education), national governments can have greater influence on how resources are distributed beyond the traditional health-care sector. This recommendation is even more relevant for countries with lower than modelled health spending per capita and lower than modelled share of government financing, among which there are several African, Asian, Latin American, and Middle Eastern countries. For example, in Venezuela and Nigeria, the government's share of health spending is less than 50% of the share predicted by the model, while Venezuela's total health spending per capita is around 80% of the modelled amount. In the second Article, Dieleman and colleagues in the Global Burden of Disease Health Financing Collaborator Network2Global Burden of Disease Health Financing Collaborator NetworkFuture and potential spending on health 2015–40: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries.Lancet. 2017; (published online April 19.)http://dx.doi.org/10.1016/S0140-6736(17)30873-5Google Scholar use frontier analyses to estimate future and potential health spending for 184 countries between 2015 and 2040. Using an ensemble approach that combines several models to improve prediction accuracy, the authors estimate that spending on health will increase from US$9·2 trillion in 2014 to US$24·2 trillion in 2040. Per-capita health spending is expected to increase more in upper-middle-income countries, as gross domestic product (GDP) and government health spending are expected to grow faster in these countries. Meanwhile, the authors expect health spending in low-income countries to remain low, justifying the need for continuous external aid for boosting health expenditure. The health expenditure gap is expected to widen, as health spending is predicted to increase fastest in upper-middle-income countries (at 5·3% per year, compared with 4·2% per year in lower-middle-income countries). Hence, the authors show that health spending in the next two decades will remain to be mainly associated with economic development. They predict that external support will remain of vital importance for the poorest countries in the world, as their low level of GDP growth will not allow them to achieve adequate levels of health expenditure even if policy reforms are executed. Additionally, government spending in low-income countries will need to grow substantially, because private per capita health spending in these countries will not grow as fast as required. The two Articles usefully take a prospective approach, and draw on a range of countries including low-income and middle-income countries. They certainly expand what it is known about the health financing transition and make valuable forecasts of the near future of this transition. Of special relevance, the authors show how the composition of health expenditure varies with economic development, and how the role of international financial aid might remain relevant in the next few years to attend to the needs of poor countries in which government spending is insufficient for attending to the basic health needs of most of the population. Hence, the new analyses emphasise the important role that development assistance for health has had and will continue to have over the next two decades. The forecasts show that the group of high-income countries currently spending on health on average $5221 per capita will increase their spending by more than $3994 between 2014 and 2040. Meanwhile, low-income countries will increase their current per capita health expenditure ($120) by only $75 over the same period of time. The widening of the health expenditure gap between developed and developing countries will clearly continue to impact the life expectancy and life-quality gaps, calling for the need to increase government spending in low-income and lower-middle-income countries, as well as maintain the promotion of development assistance for health policies. These very timely and policy-relevant Articles raise new questions that should be addressed by future research. First, due to the important policy implications that derive from this research, more papers using alternative prediction techniques are required for validation of the results. For instance, studies including a richer set of institutional and country-specific variables are welcomed. Although GDP is certainly an important predictor of health expenditure, as shown in these two Articles, other variables could help to explain the observed heterogeneity in private and government health spending in different countries. For example, differences in birth and mortality rates, age composition, the probability of incidence of natural disasters, the appearance of new diseases, and the degree of employment informality, among others, are variables that should be accounted for when forecasting health expenditure, especially in developing and emerging market economies. Second, some studies have shown that is not only the amount of expenditure that matters, but also the effectiveness of health expenditure.3Grigoli F Kapsoli J Waste not, want not: the efficiency of health expenditure in emerging and developing economies. IMF Working Papers 13/187. International Monetary Fund, Washington, DC2013Google Scholar In that sense, it would be interesting to check whether the current expenditure in prevention and health-care education programmes has a major effect on the projected patterns of future health spending. The inclusion of this variable might impose several challenges, due to the limitation of availability of data, but will certainly enrich the public policy analysis on the topic. Similarly, the effect of corruption and government instability on the effectiveness of public health expenditure would also be worthwhile to test. We declare no competing interests. Evolution and patterns of global health financing 1995–2014: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countriesHealth spending remains disparate, with low-income and lower-middle-income countries increasing spending in absolute terms the least, and relying heavily on OOP spending and development assistance. Moreover, tremendous variation shows that neither time nor economic development guarantee adequate prepaid health resources, which are vital for the pursuit of universal health coverage. Full-Text PDF Open AccessFuture and potential spending on health 2015–40: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countriesHealth spending is associated with economic development but past trends and relationships suggest that spending will remain variable, and low in some low-resource settings. Policy change could lead to increased health spending, although for the poorest countries external support might remain essential. Full-Text PDF Open Access