Taking Stock of Fiscal Health: Trends in Global, Regional, and Country Level Health Financing

This note analyzes levels and trends of health expenditures by country, income group, and region in the context of overall government revenue, expenditure, and GDP trends between 1995 and 2010. The study uses available data from the World Health Organization's (WHO) National Health Accounts, the International Monetary Fund's (IMF) fiscal data bases, and the World Bank's World Development Indicators. The paper provides snapshots of health financing patterns, both public and private, at different points in time, as well as analyzing the stability of these relationships and tracing their evolution during this period. In general, there is little variation in the average income elasticity's of total, government, and out-of pocket (OOP) health spending by income level or region. The elasticity's of government health spending to total government expenditures and revenues exhibit more variation across both income groups and region than the income elasticity. Controlling for demographics moderately reduces the magnitude of these estimates. Many elasticity estimates are close to one, indicating the importance of income as a driving force behind health spending. Some countries exhibit fluctuations in the income elasticity of government health spending but many have increasing elasticity's over the 1995 to 2010 period. These trends highlight the simple macro-fiscal context for health spending, and flag situations that require more in-depth analyses as countries struggle with the fiscal sustainability of their health systems, particularly as they pursue universal insurance coverage and significant supply side expansions.