A New Compact for Health Financing: From Principle to Practice

Global health financing is undergoing significant strain following the 2025 aid shocks, including the USAID shutdown and major reductions across European donors. The resulting decline in development assistance for health has disrupted services and amplified long-standing concerns around fragmentation, aid dependency, and weak alignment with national systems. This moment has renewed calls for reform in how health services are financed and coordinated.

Centred on evidence-informed priority setting, domestic-first financing of core services, and consolidated supplementary aid, the New Compact offers a framework to guide health financing reform. This paper examines how the New Compact for health financing can be taken from principle to practice, both as a strategic guide for global reform and as a technical framework at the country-level. We analyse implications under three scenarios for global health architecture reform: maintaining the status quo; donor policy shifts but no architectural reform; and a consolidated multilateral financing mechanism. We draw on lessons from past global and country-level coordination efforts and assess opportunities for donor policy shifts to operationalise reforms aligned with a New Compact approach. A framework for country-level drivers for success is developed to guide transition plans. Taken together with ideas for action for donors and recipient countries, this paper positions the New Compact as an approach for strengthening country ownership, improving allocation efficiency, and building more resilient health financing systems amid fiscal uncertainty.