Spending targets for health: no magic number
Health financing working paper No. 1
Quiz: Test your knowledge on how countries perform on UHC given what they spend
Infographic: Health spending targets
In the context of discussions on health spending targets, this paper analyses not only how much countries spend on health, but how they perform in terms of universal health coverage (UHC) relative to that spending. The paper highlights the limited use of spending targets to inform country policy dialogue and decision making.
In each of the 83 low and middle income countries for which verified data were available, we looked at UHC performance for selected agreed tracer indicators. For service coverage we use five indicators:
- Diphtheria, tetanus and pertussis immunization coverage among 1-year-olds.
- Family planning coverage with modern methods.
- Tuberculosis treatment coverage.
- Antiretroviral therapy coverage.
- Live births attended by skilled health personnel - doctors, nurses or midwives.
In terms of how countries perform on financial protection, a key element of UHC, we look at the level of public spending on health as a percentage of total health spending; this is a proxy measure given the lack of widespread country estimates of catastrophic and impoverishing expenditures on health.
This analysis brings two key perspectives; first, we look simultaneously at how countries perform in terms of both service coverage and financial protection and, secondly, we look at “UHC performance” relative to levels of public spending on health per capita. A number of observations and finding come out of the analysis:
- there are high levels of variation in UHC performance across countries with similar but very low levels of public spending on health i.e. less than PPP$ 40 per capita; some countries achieve a performance less than half of others despite a similar level of spending. This variation between countries reduces as levels of public spending on health increase, a trend driven primarily by improvements in service coverage rather than financial protection;
- significant improvement in financial protection is observed across countries only once their public spending is greater than PPP$ 200 per capita; even at higher levels of public spending there remains significant variation in how well countries ensure financial protection for their citizens;
- whilst the analysis is descriptive, and draws no conclusions in terms of causality, the suggestion is that all countries can make progress towards UHC, including those with very low levels of public spending on health (less than 40 PPP$ per capita). Despite this, absolute levels of public spending are clearly central to UHC progress, with service coverage improving rapidly with relatively small increases in public spending. Financial protection does not appear to systematically improve across countries until far higher levels of public spending; and
- clearly a range of non-health systems factors, including for example female literacy and population density, will explain some of the variation observed. How well health systems are organized, and how limited funds are spent, are also important however, and this analysis provides a focus for further research to understand and explain why low-spending countries with similar levels of public spending have such wide variations in performance.