Public financing of health in developing countries: a cross-national systematic analysis

Government spending on health from domestic sources is an important indicator of a government's commitment to the health of its people, and is essential for the sustainability of health programmes. We aimed to systematically analyse all data sources available for government spending on health in developing countries; describe trends in public financing of health; and test the extent to which they were related to changes in gross domestic product (GDP), government size, HIV prevalence, debt relief, and development assistance for health (DAH) to governmental and non-governmental sectors.

We did a systematic analysis of all data sources available for government expenditures on health as agent (GHE-A) in developing countries, including government reports and databases from WHO and the International Monetary Fund (IMF). GHE-A consists of domestically and externally financed public health expenditures. We assessed the quality of these sources and used multiple imputation to generate a complete sequence of GHE-A. With these data and those for DAH to governments, we estimated government spending on health from domestic sources. We used panel-regression methods to estimate the association between government domestic spending on health and GDP, government size, HIV prevalence, debt relief, and DAH disbursed to governmental and non-governmental sectors. We tested the robustness of our conclusions using various models and subsets of countries.

In all developing countries, public financing of health in constant US$ from domestic sources increased by nearly 100% (IMF 120%; WHO 88%) from 1995 to 2006. Overall, this increase was the product of rising GDP, slight decreases in the share of GDP spent by government, and increases in the share of government spending on health. At the country level, while shares of government expenditures to health increased in many regions, they decreased in many sub-Saharan African countries. The statistical analysis showed that DAH to government had a negative and significant effect on domestic government spending on health such that for every US$1 of DAH to government, government health expenditures from domestic resources were reduced by $0.43 (p=0) to $1.14 (p=0). However, DAH to the non-governmental sector had a positive and significant effect on domestic government health spending. Both results were robust to multiple specifications and subset analyses. Other factors, such as debt relief, had no detectable effect on domestic government health spending.

To address the negative effect of DAH on domestic government health spending, we recommend strong standardised monitoring of government health expenditures and government spending in other health-related sectors; establishment of collaborative targets to maintain or increase the share of government expenditures going to health; investment in the capacity of developing countries to effectively receive and use DAH; careful assessment of the risks and benefits of expanded DAH to non-governmental sectors; and investigation of the use of global price subsidies or product transfers as mechanisms for DAH.

Bill & Melinda Gates Foundation.