How much additional money are countries allocating to health from their domestic resources?

Cross-Country Analysis

How much additional money are countries allocating to health from their domestic resources?

To combat the COVID-19 pandemic, countries are mobilizing additional domestic resources for their health systems, not to mention for other forms of social protection and economic stimuli. But how much extra money are we really talking about when it comes to health?

This post makes use of country information available in the COVID-19 Health System Response Monitor (HSRM) platform as of May 6th and some discussions with country experts to try and quantify how much additional money countries are actually allocating towards health so far during the pandemic. 

Please note that this is a work in progress. These data were NOT provided by Member States and therefore should not be considered as official statistics. If you think any of these data do not accurately reflect the reality in a particular country and would like to suggest revisions, please email [email protected].

Comparing health spending across countries at this stage is tricky and these estimates should be interpreted with caution

It is important to note that comparing domestic resource mobilization for the COVID-19 response across countries is complicated at this early stage of the crisis for a number of reasons, including differences in:

  • reporting detail in the HSRM
  • clarity on whether money has been budgeted or actually spent, 
  • what additional funds are intended to be spent on within the health system (ie some include capital investments while others do not, others cover previous year debts etc.), 
  • whether (and to what extent) existing health budgets have been repurposed for the COVID-19 response,
  • currencies and purchasing power, and 
  • the level that countries ‘normally’ spend on health care.

Some of these differences can be accounted for while others are more complicated to address due to a lack of readily available information at this time. We have only included countries here for which we had a reasonable degree of certainty about the completeness, accuracy and very broad comparability of the data.

In an effort to facilitate easier comparison with National Health Accounts data, which are the gold standard of health expenditure measurement, all reported expenditures were adjusted to 2017 levels by accounting for price inflation using GDP deflators from the IMF (which contains data through 2019) and then adjusted for purchasing power parity (PPP). Per person expenditures are calculated using 2020 United Nations population data. 

To reiterate, all numbers presented should be interpreted with caution and are only meant to give a rough sense of how much additional money from domestic resources are being allocated for health as part of a country COVID-19 response.

Additional domestic spending for COVID-19 varies per person from $17 to $386 in 2017 PPP

The Figure below contains per person health expenditure injections in 2017 PPPs. The median country with data available spent or allocated around $58 PPP per person so far, but this value masks a lot of variability. The largest injection at this time was in Lithuania. This budget allocation comes from a mix of sources including reserve funds: government and state reserves, National Health Insurance Fund reserves and social insurance reserves. The additional expenditure in Lithuania is intended to be used for a wide range of purposes including equipment, salaries, supplementary social security coverage for COVID-19 health workers (which may not technically be considered health expenditure) and improvements in procurement, which may also explain why it is significantly higher than other countries. 

For some countries it was difficult to distinguish health spending from non-health spending – in cases where it was really unclear what percentage of a budget allocation would go to health, we did not include that particular spending in the reported totals. For example, in Sweden the Spring budget included an additional SEK 20 billion (~1.8 billion euros) for municipalities and regions but it was not clear how much of that will go towards health and social care vs. education or public transport. Therefore the actual health expenditure injection for Sweden is likely to be substantially higher than what is reported here.

Alternatively, Latvia and Bosnia and Herzegovina each have allocated less than $20 PPP per person extra so far from domestic resources to their health the system response during the crisis. This should not be interpreted as underspending. Many countries with low levels of additional spending from their central government are instead relying on external donor funds or even private donor funds. In Greece, for example, the additional spending allocated to health (~160.5 million euros) has been supplemented by private donations in cash or in-kind. Serbia (not shown in the Figures due to complete expenditure information not being available) allocated at least 2.2 billion RSD (roughly $6 PPP per person) to its Health Insurance Fund from domestic resources but also receives substantial external funding from the European Commission and the World Bank. 

How does additional domestic spending compare to typical health spending levels?

To better grasp the magnitude of these expenditure injections for particular countries, we compare the per person additional COVID-19 expenditures to 2017 government and compulsory scheme health spending from the WHO Global Health Expenditure Database (see Figure below). The extra domestic health spending to respond to COVID-19 amounts to around 3% of regular health expenditure levels in the median country. Only 5 of 24 countries with data available spent an additional amount on their COVID-19 response that constitutes more than 5% of their regular health spending. Cyprus’s additional spend is 12% of its total government expenditure on health in 2017, a considerable sum for a country that has historically had low levels of government spending for health care compared to other countries in Europe. 

Some countries have allocated relatively large budgets to health but have managed to only spend a small percentage thus far. For example, while Ukraine has budgeted around 18.8 billion UAH (around $39 PPP per person, or 15% of government health spending in 2017) for health, as of April 29th only 1.35 billion UAH had been spent ($3 PPP per person) according to the Accounting Chamber of Ukraine.

How much should countries be spending on their COVID-19 response?

It is interesting to see how much variation there is across countries. Even looking across the Baltics it is striking to note Latvia spending an additional amount that is less than 2% of its regular health spending, while Estonia is spending nearly 15% and Lithuania almost double that share. 

There are however methodological issues to take note of when making these comparisons and when considering how much countries should be spending. For example, while PPPs are useful for comparing expenditures across countries that normally face different prices, many of the costs associated with the COVID-19 response may in fact not differ substantially across countries. Ventilators, personal protective equipment (PPE) and tests are being purchased by many countries on the international market; as a result, countries that have very different purchasing power are often facing similar international prices to supply their COVID-19 response. This means that while PPPs may adequately reflect the opportunity cost of spending on COVID-19 within a country, they may not accurately reflect differences in how much equipment and other supplies countries are actually able to purchase to combat the crisis. For example, while in PPPs Estonia is spending 1.8 times more per person than Finland, in Euros, Estonia only is spending 1.1 times more. It is likely that for many COVID-19 response supplies, both countries are facing the same prices.

There is no right amount of health spending to combat COVID-19. As has been said above, low spending levels in some countries could be supplemented by donors or from repurposed health budgets. In a number of countries what is termed ‘additional spending’ may actually reflect long-standing expenditure commitments that had never materialized. In others, declines in non-COVID-19 service utilization may free up budgetary space so that there is comparatively less need for additional funding– in this case, existing resources must be redistributed appropriately to account for changing use patterns. 

There will undoubtedly be new expenditure injections over the course of the year in many countries. However, it is useful to have some perspective regarding how much additional funding countries seem to be allocating to their COVID-19 response at this stage. Only time will tell whether these additional spending injections lead to markedly higher health expenditure levels for the entire year and whether they have an effect on future spending patterns.

Jon Cylus