Strong Health Systems for All: The Imperative of Better Public Spending
As the world grapples with the challenges of building robust public health systems, a pressing question emerges: can we strengthen these systems without a significant increase in public spending? The answer, according to experts, lies not in throwing more money at the problem, but in making the most of the resources we already have.
The Funding Gap: A Persistent Challenge
The World Bank estimates that low- and middle-income countries (LMICs) spend only about half of the minimum benchmarks recommended for universal health coverage. While the health expenditure gap between LMICs and high-income countries has narrowed over the years, the per capita gap has actually expanded more than three-fold since 2000. This raises concerns about the effectiveness of public spending in these countries.
Health Aid Under Pressure
Development assistance for health (DAH) has played a critical role in supplementing national budgets in LMICs. However, the trend of increasing DAH reversed sharply post the COVID-19 pandemic. The United States, a major contributor to DAH, announced a 67% cut to its foreign assistance programme in 2025, followed by similar cuts from the United Kingdom, France, and Germany. According to the Organisation for Economic Co-operation and Development (OECD), health funding could drop by up to 60% from its 2022 peak.
National Budgets Under Strain
Global public debt reached a record figure of $102 trillion in 2024, with developing countries accounting for $31 trillion of this total. Since 2010, the public debt of developing countries has grown twice as fast as that of advanced countries. Developing countries paid a record $921 billion in net interest payments in public debt in 2024, leaving less for other needs, including health.
The Way Forward: Spending Better
With public sources drying up, it is unlikely that more money will flow into health systems anytime soon. The way forward may be to spend available money better. There are three broad ways to make public health spending go further:
Spend What is Allocated
Health budgets in LMICs are executed at around 85%-90%, rates that are lower than that for the general budget and for education. This effectively means that there is a deprioritisation of health at the implementation stage of budgets. In India, a parliamentary panel found that only about two-thirds of the allocation for the flagship health infrastructure mission was spent in 2024-25. Within the National Health Mission (NHM), the picture is worse: just 26% of the money earmarked for communicable and non-communicable disease programmes was actually used that year.
Spend on the Right Things
Budget execution varies across expenditure categories. While wages and salary budgets tend to be implemented in full, there is underspending on goods and services. As a result, workers are not well-equipped to deliver quality health care. More broadly, there is a choice to be made in terms of the tiers of health care that are prioritised in public spending. A lot of the money goes to curative care at the secondary and tertiary levels — at the cost of preventive, primary health care. According to estimates from the London School of Hygiene & Tropical Medicine, India spends less than one-fourth of public health money on preventive care.
Better Governance, Better Health
Good governance is key: if corruption is reduced or the quality of bureaucracy improves, countries see greater positive effects of public health spending on desired health outcomes, such as child mortality. The converse also holds: simply increasing spending where governance is weak is unlikely to improve outcomes. Moreover, with the increasing decentralisation of public service delivery, it is becoming imperative to focus on improving governance at the subnational level.
Within governance, there is a crucial role for public finance management. While a well-formulated budget is a good starting point, impact will only be achieved if the budget is implemented efficiently. There is a need to improve budget credibility and cash disbursement. Involvement of public health providers in budget processes can enhance both their accountability and motivation. Improving procurement processes can help achieve greater value for money in health sector resources.
Conclusion
The case for enhanced spending remains: its returns are greatest precisely where health outcomes are poorest; hence, money that is well-directed can help narrow gaps across countries. By spending what is allocated, spending on the right things, and improving governance, we can make the most of the resources we already have and build stronger health systems for all.