A target for UHC: How much should governments spend on health?
Universal Health Coverage (UHC) exists when all people have access to needed health services of adequate quality to be effective, and are protected against financial hardship from using these services. Universal health coverage has significant health and economic benefits and promotes equity and human rights. Widespread recognition of its benefits has led to UHC being included as one of the United Nations health-related Social Development Goals.
Global discussions on UHC often focus on how to raise more money for health, and recent research confirms the importance of increasing domestic government health spending, in particular tax funding, in improving countries’ health status. Pertinent to these discussions is the question of how much governments in pursuit of UHC should aim to spend on health.
A new publication by Professor Di McIntyre and colleagues from Chatham House working group on Sustainable Health Financing, addresses this question and suggests a target of government spending on health of at least 5% of GDP for progressing towards UHC. In this blog, we delve deeper into the potential benefits of this target.
A target for government spending on healthcare
To date, targets for UHC have several drawbacks, limiting their uptake. Absolute targets, which specify an amount of spending per person, focus on what is required to provide a limited number of health services rather than what is required to move towards UHC. Relative targets, which call for a proportion of total government spending to the health sector, can undermine governments’ autonomy to make budget allocation decisions and potentially detract spending from other sectors.
An alternative target is to specify government spending on health relative to the total economy – namely GDP. The authors argue that this is the most appropriate target in the context of UHC goals and the right to health for several reasons:
- The target takes account of affordability within a specific country context as it is expressed relative to the country’s level of wealth.
- It does not argue for more government spending on health at the expense of other social services; rather it provides a basis to advocate for increasing both government resource mobilisation and spending on the full range of human rights and social determinants of health.
- It maintains a focus on government expenditure as the key route to achieving UHC rather than less equitable sources of funding such as out-of-pocket payments or private health insurance.
What percentage of GDP should governments spend?
The target of government spending on health of at least 5% of GDP is derived from a wide range of evidence and comparisons across countries. Several factors support the 5%+ figure:
- According to data from the 2010 World Health Report, public spending of about 6% of GDP on health will limit out-of-pocket payments to an amount that makes the incidence of financial catastrophe negligible.
- Government spending on health of more than 5% of GDP is required to achieve a conservative target of 90% coverage of maternal and child health services.
- A range of studies projecting the financial resource requirements to achieve universal health systems, using detailed health service cost data and modelling techniques, indicate that public health expenditure should be 6-7% of GDP.
An absolute target for low income countries
Given the variation in wealth across countries, the relative target of 5% of GDP translates into very different amounts in absolute monetary terms. Most low-income counties will continue to require external assistance – an absolute (per capita) target would be a useful complement to the relative target of 5% of GDP. Such a target can be developed by costing a set of core PHC services, for example the High Level Task Force estimate of $86 (based on 2012 AER).
Although absolute targets have deficiencies, when used alongside relative targets, they can play an important role in advocating for domestic government and international assistance funds that are truly additional to move towards universal primary healthcare services.
This blog is based on two journal publications published April 2017 in Health Economics, Policy and Law:
- What level of domestic government health expenditure should we aspire to for universal health coverage?
- Fiscal space for domestic funding of health and other social services