Recent trends in government health spending across low-income countries (LICs) and lower middle-income countries (LMICs) reveal worrying shifts as nations approach the deadline for the Sustainable Development Goals. A World Bank paper examines government health spending in 63 LICs and LMICs by analysing data from 2019 to 2023, with comparisons to pre-pandemic trends from 2015 to 2019.
The study highlights an initial spike in health spending during the pandemic followed by a steady decline. While early spending cuts appeared temporary, the analysis indicates these reductions are more permanent, challenging the necessary momentum for health-related SDG targets. In particular, LICs and LMICs are seeing declines in health spending per capita.
Between 2019 and 2023, government health spending per capita grew only modestly, constrained by a decreasing share of health within overall government budgets as general government expenditure rose faster than health spending. This shift reversed the pre-pandemic trend where health had steadily gained priority in national budgets. The impact was starkest in LICs, where health funding remained minimal and heavily reliant on external aid.
The paper underscores risks for 35 nations, including India, where government health spending per capita and health spending’s budget share have dropped. In 23 of these countries, projections by the International Monetary Fund indicate a likely contraction in government budgets from 2023 to 2029, potentially forcing policymakers to make difficult trade-offs to keep health spending on track.
Chart 1 shows the average real government health spending per capita by income group (constant US$ 2023). Includes data for 63 countries.
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In 2023, average real government health spending per capita continued its decline from the peaks observed during the pandemic response. In LICs, spending surged in 2020 but since fell back to nearly pre-pandemic levels, reaching approximately $10 per capita in 2023. Similarly, in LMICs, spending dropped from its 2021 peak.
The recent, prolonged decline in government health spending has resulted in only modest growth rates during the pandemic and recovery period. From 2019 to 2023, the average real annual growth rate of government health spending per capita was a mere 0.4% in LICs and slightly higher at 0.9% in LMICs.
Chart 2 shows the annual growth rate of real GHS per capita by income group (in %)
These modest growth rates stand in sharp contrast to the pre-pandemic period. Between 2015 and 2019, the average real annual growth of government health spending per capita was significantly higher, at 4.2% in LICs and 2.4% in LMICs.
Chart 3 shows the average government health spending to government health expenditure ratio by income group (in %)
In 2023, the share of general government spending allocated to health continued to decline from its pandemic peak. In LICs, this decrease began notably in 2021, with the health spending share dropping to 5.6%. In LMICs, the decline started a year later and was less pronounced, with the government health spending to general government expenditure ratio falling to 6.5% in 2023. These reductions were driven by negative growth in government health spending per capita, while general government expenditure per capita remained largely stagnant or saw modest growth in most years since 2021.
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India is one of the LMIC countries where health spending has significantly decreased since its peak during the pandemic.
Chart 4 shows the trend in health spending as a percentage of the total budget over the years.
Health’s share in the budget surpassed the 2% mark in FY18 and remained elevated during the pandemic years, only to drop to 1.75–1.85% in the years that followed.
Published - November 13, 2024 08:00 am IST
