Challenges in Health System Financing
Building robust public health systems often begins with addressing financing issues. Current trends and statistics highlight significant challenges in maintaining and expanding funding for health systems, particularly in low- and middle-income countries (LMICs).
Per Capita Public Spending
- According to the World Bank, the per capita public spending on universal health coverage in LMICs is approximately half of the minimum benchmarks required.
- As a share of GDP, the health expenditure gap between LMICs and high-income countries narrowed from 2.05 percentage points in 2000 to 1.68 percentage points in 2023.
- Despite a seeming convergence, per capita terms have shown the gap expanding more than three-fold during this period.
Role of Development Assistance for Health (DAH)
- DAH has been crucial in supplementing national budgets in LMICs, peaking during the COVID-19 pandemic in 2021.
- Post-pandemic, there has been a sharp reversal in the trend of increasing DAH.
- In early 2025, the United States, a significant contributor to global DAH, announced a 67% cut to its foreign assistance program.
- Other countries like the United Kingdom, France, and Germany also announced cuts of 39%, 35%, and 12%, respectively.
- OECD projects that health funding could drop by up to 60% from its 2022 peak.
With public sources of funding drying up, a pressing issue for health systems is to optimize the utilization of available resources to deliver better outcomes.
