Prior to the pandemic, many low-and middle-income countries (LMICs)–Bangladesh, Ethiopia, Senegal, Uganda, and Zambia to name a few—were on track to expand their Universal Health Coverage (UHC) arrangements. Under these UHC policies all people in a given jurisdiction would have access to the needed health services, of sufficient quality, and without exposing them to financial hardship (as defined by WHO). After two years of piloting, Kenya announced its plans to scale up its UHC policy to the entire country two months ago, in the middle of the pandemic. However, can LMICs still make real progress towards UHC as their economies enter some of the most severe recessions in centuries?
Should we still be working towards UHC?
As all eyes are on pandemic management and preparedness, there may be discussions about delaying the implementation of a UHC policy. However, the pandemic has not fundamentally challenged the rationale for and goals of UHC. On the contrary, many have advocated the need to speed implementation of UHC and build resilient health systems as a strategy to address the current and potential future pandemic(s).
UHC may be also important to address the added direct and indirect disease burden from the pandemic now and in the years to come. This includes increasing morbidities from disruptions in provision and access to health services. For instance, of 29 countries that suspended measles campaigns, 18 have reported new outbreaks. A recent modelling study showed that in the absence of catch-up campaigns, the disruptions in routine vaccination efforts would lead to an increase in measles and yellow fever disease burdens between 2020-2030, although the magnitude of those impacts will vary across infections and countries.
Financial protection, or ensuring that individuals and families access essential health services without suffering undue financial hardship, is also integral to UHC policies. Protecting against the risk of impoverishment due to ill health or barriers to healthcare utilization will become all the more important as global poverty is expected to rise significantly for the first time in 20 years, with 150 million people pushed into extreme poverty by 2021 according to the World Bank. Policies to protect the poorest households from catastrophic medical expenditure, including from COVID, will be essential both during and after the pandemic.
A very different (grim?) picture of public health finances in LMICs
Implementing UHC requires significant pooled public resources. This was the biggest barrier to achieving UHC in Asia. The Disease Control Priorities 3 estimated that the annual cost of providing an essential package of care (at 80 percent population coverage) to average $79 and $130 in respectively low-income (LICs) and lower middle-income countries (MICs). In Thailand, the budget of the country’s Universal Coverage Scheme in its first year (2002) was $27.92 per capita and grew over threefold in the first decade of implementation (Hanvoravongchai, 2013). Meeting such resource requirements has always been a challenge, even before the pandemic: in 2018, 22 LICs spent less than $10 per capita through government sources on health, and seven countries (Chad, Guinea-Bissau, Eritrea, CAR, Cameroon, DRC, and Afghanistan) spent as little as 0.5 percent of gross domestic product (GDP). Recent estimates suggest that achieving UHC would require per capita health expenditure to quadruple in LICs and double in MICs by 2030.
The pandemic is likely to exacerbate the constraints on public health financing in LMICs through the following channels: (i) decline in GDP translating into a decline in government revenues, (ii) decline in external support, and (ii) additional direct health costs from the COVID response.
First, the pandemic is already morphing into a global economic shock across the world: the IMF estimated that global growth contracted by 3.5 percent in 2020, though recovery is expected to differ by region, with LICs predicted to experience greater losses.
Figure 1. GDP losses relative to pre-COVID by region
(Current projected 2022 level relative to pre-COVID (January 2020 WEO) forecast, percent difference)
Source: IMF (2020)
This drop of economic activity will affect all major sources of tax revenues. For example, a reduction in travel, international and domestic trade will result in declining revenues from consumption taxes (e.g., VAT), a major contributor to LMICs’ coffers. The World Bank estimates that government revenues in the sub-Saharan region will drop by 12-16 percent compared to a non-COVID scenario. To further compound matters, some LMICs have also made significant cuts in health budgets (compared to other budgets) last year: in Nigeria, severe cuts to health represent a 40 percent reduction in government spending on health even while there was need to surge spending in response to COVID-19.
Second, while external funding only represents a marginal share of domestic health spending overall, it is an important source of funds in specific areas of public health. For instance, close to 50 percent of the total resources spent on the fight against HIV/AIDS in LMICs came from external sources. As a result of COVID, this source of income is also predicted to fall as HICs economies shrink. The OECD estimates that the decline in development finance (albeit not specifically in health) will exceed the decline following the 2008 Global Financial crisis by 60 percent. The United Kingdom, previously the world’s second largest source of aid country contributor, also recently announced reductions in the UK aid budget from 0.7 percent of gross national income (GNI) to 0.5 percent, which will, combined with the GDP decline, lead to a reduction of £4.5bn or $6.2bn relative to 2019.
Finally, the direct costs of the COVID response (e.g., to health infrastructure such as testing facilities, hand-washing stations, tracing systems and employment benefits) are also significant in all countries. LICs have allocated an estimated $3.20 per capita towards pandemic response, equivalent to 36.4 percent of their combined health budgets. Those costs were covered by exceptional budget allocations, but sometimes required reallocations within existing budgets. As we see the demand for COVID-19 vaccine coverage go well beyond most-vulnerable groups, we also observe large spend on vaccines that represents multiples of country vaccination budgets and sometimes multiples of health budgets.
Can we build back better?
It has now become evident that LMICs will need to adjust to the new realities created by the pandemic. If UHC is to become more than an aspiration, we put forward several considerations for existing and future efforts.
- Prioritising entitlements: what is essential and affordable under the current environment? According to Glassman et al. (2017), the disconnect between the health plans and available budget is “the single most common failing of existing benefits plans in LMICs.” The use of health technology assessment (including cost-effectiveness analysis and budget impact analysis) can ensure that available funds are spent toward paying for interventions that will offer the best value in the country. Starting with a smaller yet realistic and affordable set of benefits, and revising the package as public finances recover, can be a successful path to UHC: Chile’s AUGE is an example of a “staged approach” to UHC: the health benefits package started with 25 priority health problems and is revised every two years (mandate by law) to reflect increasing public finances. After 15 years of implementation, it now covers 80 priority interventions. Defining essential services and their financing at the country level enables their protection if there is further fiscal adjustment in the health sector, and the multilateral development banks have an important role to play in this effort.
- A difficult topic: delisting low-value medicines or interventions under existing benefits plans or initiatives. Prior to the pandemic, several UHC plans already suffered from challenges with provision and financial sustainability. Greater guidance should be produced for countries to consider delisting interventions that are no longer cost-effective given new budget constraints and increasing disease burdens due to the pandemic. If there is a budget adjustment, delisting ineffective, wasteful, or simply low-value interventions is much preferred as an alternative to across-the-board cuts, or cuts affecting non-wage expenditure (medicines mostly) that will have perverse effects on the coverage and quality of care. This excellent 2013 World Bank book by Hou et al. helps to frame the issues, but beyond this work, there is little literature on this topic. Adaptation of UHC plans to new realities will be key. Beyond interventions, there are also reforms that could help to reduce or reorganize the costs of delivery of certain services—investing in primary healthcare or community health workers, for example, but this might also imply wage bill adjustments elsewhere in the health sector, difficult to imagine at the present time.
- Negotiate to manage aid differently and deliver for UHC and public health. In too many countries, much of health aid remains off-budget or ring-fenced around specific modalities of delivery or products. The crisis is an opportunity to rationalize fragmented aid flows in support of an integrated set of benefits or services that should be protected or indeed enhanced, and to reform traditional ways of channeling aid and provider payments that may have weak incentives for the provision of essential services. Recent efforts by the World Bank’s Global Financing Facility aim to consolidate related donor flows behind government plans in the area of reproductive, maternal, child, and adolescent health and nutrition, but the track record is mixed (more due to donors than to GFF efforts, CGD work forthcoming). As a result, this idea is more of a slogan than a reality yet—one of us (Amanda) has argued for such an approach for 20 percent of US aid under the new administration, but much remains to be worked out. (CGD will hold an event on Making Fragmented Aid Flows Work for Health on February 16.)
- Build the data to deliver better for UHC. The crisis demands that all countries up the game on recording deaths and carrying out real-time and accurate disease and intervention surveillance, not only on COVID but across health. The SCORE initiative, a comprehensive review of health data systems from WHO, found important data gaps in LMICs: for instance, in Africa, only 10 percent of deaths are registered. Many LMIC countries are planning to set up large-scale adult vaccination programs for the first time in history and this will require significant investments in data to manage delivery of vaccines and track progress of the vaccination campaign; in settings where, for a myriad of reasons, this data is typically poor quality. This must be an opportunity to track health status better and to revamp poor-quality data systems and their use for management, payment, and accountability.
- Future of UHC financing: a mixed picture. The pandemic could provide an opportunity to reform tax systems in ways that could benefit UHC, although the recent literature focusses on fiscal stimulus (e.g., increasing government expenditure or reducing taxes) of high income countries. The experience of past crises also gives some hope that health budgets may be more insulated (compared to other budgets): for instance, public spending on health in Sierra Leone, Guinea, and Liberia increased after the Ebola outbreak. Likewise, perhaps the crisis puts pressure on fiscal authorities to do more on health taxes which have a double benefit—saving lives and money in the medium-term and increasing revenues in the short-term. While the outlook may not be entirely negative, being realistic about what is achievable under UHC is essential: many LMICs encountered problems in servicing existing debts during 2020 and many are at risk of running into a debt crisis in the near future.
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.