Money and healthcare: a wrap-up of the current world situation

Recently, the World Health Organization (WHO) released a report titled “Public Spending on Health: A Closer Look at Global Trends”. The topic is sensitive, because it concerns how much money countries spend to guarantee people’s health. The results are encouraging, although something better could be done. Hereunder, I wrap up the key points of the report.

How much does healthcare cost?

Let’s start with some numbers. In 2016, the world spent 7.5 trillion dollars for healthcare, which correspond to 10% of the global gross domestic product (GDP). Globally, health spending increases faster than economy (which globally grows at 2.8% rate per year): low and middle-income countries had an increase of 6.3% per year, while high-income countries of 4%. Despite the difference in growth, health spending difference between high and low/middle-income countries remains massive. people, money healthApproximately 1000$ are spent per person for health each year, but this average is little informative, considering that half of the world spends less than 350$ per capita and high-income countries more than 2000$. As shown in the picture, only 20% of the world population lives in high-income countries, and they benefit from the 80% of the global health spending. The gap between rich and poor countries has not changed since the year 2000, and becomes even more evident when we learn that in 2016 the 10 richest countries spent nearly 5000$ per capita, while the 10 poorest less than 30$.

From where does money for healthcare come from?

The following sources compose health spending: government expenditure (public money), self-payments (people paying for their own care), and sources such as voluntary health insurances, employer-provided health programmes, and activities by non-governmental organizations. The low and middle-income countries benefit also from external aid, which represents the 1% of the global health spending. In particular, between the years 2000 and 2016, external aid diminished in middle-income, while doubled for low-income countries (increasing from 4 to 10$ per capita).

The general trend, especially for middle and high-income countries, indicates that bigger investments come from government expenditures (which correspond approximately to 70% of the health spending). Self-payments decreased since the year 2000, and in 2016 represent less than 25% in high-income, and up to 45-50% in middle-income countries. In low-income countries, health spending gets money from government for the 25%, from self-payments for the 40% and from external aid for the 30%.

How did public health spending evolve since 2000?

Of the 7.5 trillion dollars spent for health in 2016, 5.6 came from public money, with an increase of 2% compared to the previous year. The amount of government expenditures increased constantly since 2000 for high and middle-income class, following the trend of the GDP. Instead, low-income countries lagged far behind because government expenditures did not increase, despite economic growth. The biggest results were achieved by middle-income countries, which doubled government investments in this time window, requiring less self-payments.

Where does health spending money go?

70% of health spending is destined to inpatient and outpatient curative care, and medicines and medical supplies. This leaves little funding to long-term and rehabilitative cares. It is interesting that government expenses prioritize inpatient care, which they fund for 35%, despite medicines, which receive public money to cover only the 4% of expenses. The striking difference becomes more evident when looking at the weight of the two services: inpatient care represents the 25% of health costs, medicines the 19%: basically they weight the same on health spending. In turn, government expenses cover 19% of the administrative costs, which are only the 8% of total health spending. Despite large variations among countries, more than half of health spending in middle and low-income countries goes to primary healthcare (general and dental outpatient curative care, prevention and 80% of medicine and administrative costs). Anyway, in these countries, governments cover less than 40% of primary health care spending, usually prioritizing administrative costs, and leaving medicine costs to non-government agents.

How is money coming from external aids employed?

In 2016, 46% of external funds for health were used to fight HIV/AIDS (28%), malaria (14%) and tuberculosis (4%). Reproductive health and to non-communicable diseases received 9% each, and nutritional deficiencies the 5%.

More money, better service?

The purpose of government expenditures for health have the purpose to subsidize services to the poorest segments of society. A healthcare system that relies on high levels of government funding and public structures generally provides better and more equitable access to services and better financial protection. Government expenditures are essential for healthcare (as for any other social service) to reduce the risk that people fall into poverty when needing health services. Access to essential healthcare varies widely across countries, and is proportional to government contribution to the health system. Anyway, it is important to notice that increasing public spending for health does not directly increase the possibility to access healthcare services, because the latter is determined by how money is spent in function of access to services, equity in access to services and financial protection.

Reference

Xu K, Soucat A & Kutzin J et al. Public Spending on Health: A Closer Look at Global Trends. Geneva: World Health Organization; 2018  (WHO/HIS/HGF/HFWorkingPaper/18.3). Licence: CC BY-NC-SA 3.0 IGO.

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