Reprioritizing government spending on health: pushing an elephant up the stairs?

Abstract

Countries vary widely with respect to the share of government spending on health, a metric that can serve as a proxy for the extent to which health is prioritized by governments. World Health Organization (WHO) data estimate that, in 2011, health's share of aggregate government expenditure averaged 12% in the 170 countries for which data were available. However, country differences were striking: ranging from a low of 1% in Myanmar to a high of 28% in Costa Rica. Some of the observed differences in health's share of government spending across countries are unsurprisingly related to differences in national income. However, significant variations exist in health's share of government spending even after controlling for national income. This paper provides a global overview of health's share of government spending and summarizes some of the key theoretical and empirical perspectives on allocation of public resources to health vis-à-vis other sectors from the perspective of reprioritization, one of the modalities for realizing fiscal space for health. The paper argues that theory and cross-country empirical analyses do not provide clear-cut explanations for the observed variations in government prioritization of health. Standard economic theory arguments that are often used to justify public financing for health are equally applicable to many other sectors including defence, education and infrastructure. To date, empirical work on prioritization has been sparse: available cross-country econometric analyses suggest that factors such as democratization, lower levels of corruption, ethnolinguistic homogeneity and more women in public office are correlated with higher shares of public spending on health; however, these findings are not robust and are sensitive to model specification. Evidence from case studies suggests that country-specific political economy considerations are key, and that results-focused reform efforts - in particular efforts to explicitly expand the breadth and depth of health coverage as opposed to efforts focused only on government budgetary benchmarking targets - are more likely to result in sustained and politically feasible prioritization of health from a fiscal space perspective.

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