Five Ideas for the Future of Global Health Financing: The Road Not Yet Taken

Amidst stagnating levels of development assistance for health, questions about the future of vertical programs such as PEPFAR, lackluster performance on the Sustainable Development Goal for health, and growing calls to address excessive fragmentation in global health, the global health community is arguably facing an existential crisis. Global health stands at a crossroads, a fork in the road leading to (at least) two paths: one where status quo prevails, continuing the last twenty years’ emphasis on vertical or stove-piped models with dominant disease-specific approaches and funding agencies; or an alternative path that embraces horizontal approaches, integration, and systems thinking.

The outlook for the health sector, and the Sustainable Development Goals in general, has been further clouded by stagnating revenue growth in many low- and lower-middle-income countries. Since a large share of financing for health must come from domestic sources, sluggish revenue growth will likely delay the envisioned global convergence in key health indicators. The incomplete utilization of already budgeted resources in many countries further compounds these challenges. Together, these facts and the zeitgeist indicate that a new path in global health must be charted. How do we chart a new path forward, one that is freed from fads, déjà vu, and euphemisms? We outline five ideas to advance the global health community forward on health financing.

The fog of status quo

While there is some consensus that a new path is needed—see the Lusaka Agenda and the Future of Global Health Initiatives work, for example—the path remains hazy and lacks clarity. Principles of greater integration and improved coordination among donors are widely accepted not only in health but other sectors as well. These ideas are akin to saying: “Kids, get along in the sandbox. Everyone should work better together.” Such statements are indisputable because they are obviously true.

The confusion lies not in the principles but in the actions. We all agree on the principles, but when it comes to “where the rubber hits the road” or “putting your money where your mouth is,” as a community we are suddenly overtaken by confusion. What is the path forward?

This fog is perhaps the biggest problem of global health today: the status quo. It is a comfortable, albeit imaginary, place where things don’t change much. In the ideal world, donor budgets and allocations to major funding agencies would remain constant—or even increase. In this imagined universe, there is no such thing as a zero-sum game. Increases in donor assistance in one area, such as pandemics, do not lead to decreases in others. The global health community, and all its diverse and fragmented funding avatars, must recognize fiscal realities in donor countries which face severe competition for resources from programs to fund aging populations, pressures to increase defense spending, and the need to reduce all-time high debt burdens.

Pulling one’s head out of the sand

We owe it to ourselves to pull our head out of the sand: we should first agree that the system needs reform and remind ourselves of reasons for this reform.

First, we must acknowledge that the global health architecture needs to be reformed in the face of the multiple crises the world is confronting. These include a climate crisis, a debt crisis, geopolitical tensions and associated fragmentation in trade and investment flows, growing inequalities, polarization, and perhaps most importantly, a sense of betrayal and lack of trust.

Second, we should remind ourselves of some basic facts on health financing. Despite significant increases in external aid for health, government budgets for health have been relatively flat in LMICs in relation to GDP or total budget. In some cases, they have declined because of rising share of interest payments in revenues, both of which can be attributed to at least two reasons:

  1. Over 2012-2020, government revenues stagnated, as the tax-to-GDP ratio did not increase much in LMICs. This stagnation is highlighted by certain low-income countries collecting less than 10 percent of revenues in relation to GDP. Thus, domestic revenue efforts have not matched growth in development assistance for health and expansion in tax base because of growth, indicating that governments have room to bolster tax collection and strengthen state capacities. The IMF has estimated that the potential to raise additional revenues could be as high as 9 percent of GDP in low-income countries (or less).
  2. The execution of health budgets in relation to budgeted amounts has declined over 2010-2020 in LMICs—unlike for education budgets. Yet low-income countries allocate almost twice as much on education when compared to health as a share of GDP. The budget underspent in the health sector implies that an estimated $4 per capita (at 2020 constant dollars) is lost, equivalent to the average expenditure on primary health care in low-income sub-Saharan African countries. These facts indicate that, despite massive inflows of external health aid, governments are less able—or less incentivized—to execute their health budgets.

There is another reason why the system needs reform, such as the international response to the COVID-19 pandemic. Despite the unprecedented speed of COVID-19 vaccine roll-out, the fact remains that rich countries failed to share COVID-19 vaccines with LMICs in a timely and effective manner.

Déjà vu on integration and coordination

If global health is a pendulum, the arm has swung to its peak towards the vertical, with so much of global health being disease specific and “results” oriented. Now, the pendulum can only swing in one other direction: towards horizontal, integrated, and systems-based approaches.

Seizing the zeitgeist, the Lusaka Agenda has called for greater alignment of global health initiatives with health systems and primary health care to: “effectively support integrated delivery of services, aligned behind one national plan, and coherently invest in strengthening resilient health systems…”

But it’s not a new idea; and it has been proposed before—including in the Paris declaration on aid effectiveness, and subsequent development fora in Accra and Busan. Past efforts by UHC2030 and various initiatives such as the International Health Partnerships, Health System Funding Platform, Sector-Wide Approaches (SWAp), all called for greater country-led national plans for health systems supported by donors. The International Health Partnership (IHP), launched in 2007, sought to strengthen coordination, country ownership, and resource alignment with national strategies.

The idea that there should be country compacts where all donors integrate into a country plan, rather than each donor operating independently in each country as they wish. However, one of many recurrent problems in realizing the IHP vision was procurement. Each donor has separate procurement processes, which results in fragmentation, despite best intentions to coordinate. As an example in the case of digital health, the result of fragmented aid can be highly wasteful: in one African country, there were more than 70 distinct fragmented eHealth or mobile health applications, all failing to connect on a single platform. Thus, at present coordination is at best optional and minimal, and at worst duplicative and wasteful. International donor fragmentation exacerbates burdens for national authorities but also allows national authorities to shop around from different donors. Meanwhile, donors can operate independently without knowing what other donors are doing, resulting in duplication.

In acknowledging the need to move away from donor-centric models, calls towards aid localization are encouraging, but on their own they also run the risk of fragmentation. If aid is localized to non-state actors, the diversion of human resources and talent from state authorities to non-governmental but localized organizations could have unintended consequences of maintaining the disease-fragmented landscape of health funding and health care delivery. Parallel health care delivery systems, whether local or not, are the unpleasant underbelly of global health’s verticalized era. Thus, localization on its own does not necessarily reduce aid dependence, even if it masquerades as increasing country ownership.

The Paris Declaration is defunct. Donors such as the Global Fund stopped reporting on their progress and alignment with the Paris/Accra/Busan agendas (see this 2010 report for example). The abandonment of reporting absolves donors from accountability. So too does the Lusaka Agenda run the risk of having “no teeth” without reporting requirements for accountability of donors.

Trash the catch-all euphemism of “health systems strengthening”

There is growing recognition that vertical approaches to the health sector cannot continue as they are and that we need to move towards horizontal approaches. But in response to the zeitgeist, many disease-specific advocates have suddenly become “health systems strengthening” advocates. Even US Congress, which has leaned hard on vertical approaches, has joined the trend, with regular reports on health systems strengthening now being submitted.

But what exactly is the problem that “health systems strengthening” is meant to solve? From the perspective of disease-specific vertical funders, each funder claims that they are already involved in health systems strengthening. They contend that areas they work on, such as HIV/AIDS, strengthen the health system—drugs, health workers, informatics, governance, financing—and thus, their activities should automatically be counted as “health systems strengthening”. This logic, however oversimplified, persists.

Regrettably, the term “health systems strengthening” is such a catch-all phrase that becomes a Rorschach test for whatever one wants it to be. In the end, the phrase means nothing specific at all.

One could argue that the original intention of the phrase “health systems strengthening” was a euphemism for addressing distortions caused by vertical funders on the primary health care system, such as drawing core cadres of health workers to disease-specific areas due to donor incentives. For this, a better phrase would be “anti-distortionary investments.”

Sometimes, “health systems strengthening” means “sustainable health financing,” itself another euphemism for “domestic or government health financing.”

A third alternative to “health systems strengthening” is “universal health coverage” (UHC)—and this latter term is far more concrete and practical than the former. There are pathways to UHC but not to health systems strengthening. Moreover, there is only one kind of funder that truly finances UHC: the multilateral development banks. UHC is the mother ship on which disease-specific initiatives hang. For example, projects financed by the World Bank for UHC are, by definition, country owned. The bells and whistles of disease areas funded by donors can be additional elements hung on this Christmas tree of UHC.

However, what global health has right now is not a Christmas tree, but rather lots of bells and whistles, with a non-existent or very small tree to hang on. In short, if we are serious about moving towards integration and even of UHC, we should forever discard this catch-all euphemism of “health systems strengthening” from our vocabulary.

Five ideas for charting a new path in global health financing

To move away from the déjà vu, euphemisms, and disease stove-piping, here are five ideas to advance the global health community further: (1) establish a donor reporting and accountability mechanism on the Lusaka Agenda; (2) keep a bull’s eye on domestic government financing for health; (3) de-duplicate functions within and across organizations; (4) continue to fund an international coordinating body; and (5) go diagonal on interventions through incremental health benefit packages.

1. Develop and implement a donor reporting mechanism on the Paris and Lusaka agendas

To ensure that the Paris Declaration or the Lusaka Agenda are even considered, at a minimum we need to return to the donor reporting mechanism as a means of accountability. Such reporting and reviews need to be conducted independently by a third party, i.e. those who are not financed by the bilateral donors or the global health initiatives themselves. Thus, donor constituencies that serve on multiple global health funding initiatives can use their collective bargaining clout to conduct independent impact assessments or rigorous evaluations, based on which serve as the conditions for incremental increases in next-round replenishments.

This accountability mechanism should independently ask questions such as: Is aid being recorded in national budgets? Are grants aligned to country cycles? Is aid using national public procurement and financial management systems? Are there harmonized and joint donor engagements? Are donors supporting a national plan on UHC with their disease-specific focus? Perhaps most importantly, is domestic financing for health increasing along with overall tax revenues and budget execution?

Instead, what global health initiatives have reported on in their campaign for replenishments are “investment cases.” These models on “lives saved” proclaim a large number of lives saved. Global health initiatives, not surprisingly, have a self-interest to report as large a number as possible on how many lives it has saved. In general, these models are not conducted by an independent third-party that rigorously evaluates the contributions of each global health initiative collectively. Until then, notions of lives saved as reported in investment cases should be treated as a well-designed promotional campaign.

Because of the lack of independent evaluations, donor constituencies on the boards of global health initiatives have been rubber-stamping these metrics. But proclaiming implausibly large health impacts attributable to global health initiatives ultimately reduces long-term trust in these initiatives. It is a bit like the emperor who has no clothes; everyone (the donor constituencies) might pretend the emperor is clothed (the global health initiative), but in the end, we will all be embarrassed by the false claims. Unbiased and rigorous evaluations of lives saved as an attributable result of global health initiatives will lend far more credibility for supporting future replenishments.

Importantly, we’re not saying that these initiatives are not value for money. We agree that supporting these initiatives is needed. But making the investment case of precious taxpayer money should be based on facts and rigor, not on feel-good advertisements.

2. Bull’s eye in global health: increase domestic health financing and decrease external aid resources

The Lusaka Agenda also has another deficiency: its primary emphasis on global health initiatives. However, recipient countries are the main protagonist in the story of country ownership. Talk of decolonization and shifting power in global health may remain only lip service, especially as external aid resources in grant form, or off-budget parallel systems, continue to be highly attractive and desired.

The long-run objective of increases in domestic health financing and eventual decreases in donor spending needs to be the bull’s eye of global health success—an argument that was made for newer initiatives such as the Pandemic Fund. While so much of global health architecture and agencies have emphasized the metric of lives saved, the domestic government health financing metric is the true and essential indicator of sustainability. We should not lose sight of or forget this indicator.

3. De-duplicate functions such as in procurement

The reality is that organizational form drives function, not the other way around. Unless there is political willingness to reorganize the global health initiatives, funding flows will continue to be fragmented—not just on the donor side (i.e. multiple donor agencies) but also on the country recipient side (i.e. some recipients of certain donors are non-governmental entities, such as civil society and NGO actors funded directly by the Global Fund). Thus, in the absence of reforms to consolidate multiple agencies together, the conversation can begin with the de-duplication of functions.

Certain global health initiatives perform similar activities, such as procurement of health products, specialized in different areas (e.g., vaccines vs. HIV, TB, malaria). However, from the country perspective, there is generally a single authority for procurement. To address duplication in global health functions, such as procurement, there needs to be a willingness from donors to accept that these donor agencies in fact share functions.

One possible idea would be for donors to coordinate procurement, country by country. For example, the Global Fund and Gavi both emphasize the purchase of health products and they could coordinate procurement at the national level. Since these agencies are already in the same building in Geneva, this coordination could initially be voluntary and work to reduce friction with and burden on the national authority, including ensuring reported and actual amounts of country domestic financing needed for international matching funds.

4. Establish a permanent coordinating body for health and finance

The G20 Joint Finance and Health Taskforce, which initially emerged during the pandemic, is another strong example of coordination. During the pandemic, global health funding agencies were forced to share their activities with each other to coordinate better and reduce duplication, while also coordinating with finance ministries. These kinds of coordinating bodies are essential, have little additional marginal cost, and improve information sharing; information that can reduce wasteful duplication.

With the significant imbalance between grants and concessional financing in global health—arguably skewed towards the former—many LMICs have little incentive to borrow for health sector, prioritize health in budgets, or otherwise increase revenues for, and budget execution in, health. Discussion by some global health initiatives indicates a desire for the ability to offer concessional loans—implicitly recognizing that grants alone will not increase domestic government financing for health.

Thus, one key focus for a body such as the Joint Finance and Health Taskforce should be the coordination of cofinancing policies and implementation. Fragmentation in purchasing for a single disease area (e.g. malaria RTSS vaccines in Gavi and anti-malarial medicines and bed nets in the Global Fund) also drives fragmented donor policies for ensuring domestic government financing—often termed “cofinancing” or “counterpart financing.” Domestic government financing is singular, but because of the fragmented purchasing system, what is reported and implemented for domestic financing to one donor may differ significantly from what is reported to another donor.

If boards of global health initiatives fail to ask tough questions of these global health initiatives, then coordinating bodies such as the Joint Finance and Health Taskforce could step in to address issues such as duplicative functions in procurement and cofinancing policies—among others.

5. Go diagonal with health benefits packages

If global health has been rife with disease-specific approaches, there are two paths forward away from the vertical. The first is to fully adopt integrated approaches, such as primary health care or UHC—concepts that are hard to argue against. However, the weakness of these concepts is the lack of emphasis on results and a lack of clarity about what exactly constitutes such integrated delivery.

The second path involves going diagonal. By this, we mean that national authorities should define a “package” of cost-effective interventions (e.g. comprising primary health care or UHC). The term “diagonal” comes from the landmark Mexican health care reform, which prioritized and expanded coverage through a selection of highly cost-effective services, which constituted a “diagonal” approach that integrated both horizontal and vertical perspectives.

Countries need not reinvent the health benefit package from scratch. As they design their own package, they can draw from an extensive body of research and knowledge, such as a recent special issue launched in Health Systems & Reform on building institutions for priority setting or the Disease Control Priorities (DCP) project which prioritized a list of proven cost-effective interventions. For example, the third edition of the DCP emphasized the role of five types of platforms (classified as population, community, health center, first-level hospital, and specialty hospital) in delivering a package of 218 highly cost-effective interventions, as well as the highest priority package of 108 interventions. Countries should prioritize this package of interventions and design platforms for delivery, beginning from primary health care and subsequent referrals that form the continuum and system of care, pulling resources from different donors as it fits into their national plans.

Ministries of Finance should deliberately collaborate with their Ministry of Health to update health benefit packages in light of budget constraints. Organizations such as the WHO and the World Bank have a crucial role to play in supporting national priority-setting agencies, mechanisms, and processes. To repeat the Christmas tree metaphor, the health benefit package can form the Christmas tree of UHC—and the disease-specific programs can form the different donor-beloved ornaments. Disease-specific donors can adorn the tree with their ornaments, but they do not get their own Christmas tree.

With thanks to Masood Ahmed, Kalipso Chalkidou, David Bryden, Ruchir Agarwal, and Sara Casadevall Belles for past discussion and comments.


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.