15 June 2020

This is a joint blog written on behalf of the UHC 2030 Core Team, as well as the partners engaged in the Sustainable Health Financing Accelerator (SHFA) *

How COVID-19 is reshaping priorities for both domestic resources and development assistance in the health sector

The COVID-19 pandemic has swept across the world, reshaping the global health landscape and sparking an economic crisis deeper than anything seen since the great depression. The pandemic has plainly shown the interdependence of health security and economic security.

While health security - reducing the vulnerability of societies to pandemics like COVID-19 - is a distinct goal, it is interlinked with efforts to move towards universal health coverage  (UHC).  Neither UHC nor health security can be achieved without the foundation of common goods for health, produced through strong and resilient health systems.  The crisis has laid bare this interdependence.

The immediate and comprehensive response to COVID-19 must strengthen universal systems that contribute to both health security and UHC. This will have implications for how both domestic resources and development assistance, currently channelled to the health sector, should be used to protect against future emergencies and sustain essential service coverage.

COVID-19 will have an impact on public domestic financing and priorities for development assistance to health.

The COVID-19 pandemic has caused an enormous economic shock that touches every country. The International Monetary Fund predicts that more than 170 countries will experience negative income growth in 2020, which is a stark reversal from only months ago when growth was projected in 160 countries. Estimates suggest that the economic contraction following COVID-19 could push 71 million people into extreme poverty in 2020 with sub-Saharan Africa and South Asia being hardest hit. While the full depth and length of the crisis is uncertain, governments are rushing to mobilize and allocate financing for the COVID-19 emergency response to maintain macro-economic stability, while mitigating shocks to vulnerable households, firms and essential services.  In recent months, more than 90 nations have sought support from the IMF and more than 100 countries have received support for COVID-19 response from the World Bank.

The impact of the economic shock on health spending may be substantial. In the short term, health expenditures may rise as countries surge to respond. In the medium-term we can expect to see decreasing tax revenues and increasing government debt obligations that will put pressure on any available fiscal space for public expenditure. Countries with financing arrangements that rely on payroll tax contributions for social health insurance will be impacted due to increasing unemployment and reduced wages. Initial analysis using the IMF/WBG economic impact projections on select countries in Asia, indicate that without adaptive measures and/or reprioritization, public expenditures on health will decline. From previous crises, we also know that poor women and children are disproportionately impacted by economic vulnerability and are most at risk of experiencing the negative health-related consequences. 

Financial pressure for the health sector in the medium- to long-term will come from a combination of revenue constraints and expenditure demands arising from the need for scaled up investments into core public health functions, as well as from delayed or foregone essential care that has occurred for conditions other than COVID-19.  As policy makers move to respond to these pressures, they must steer clear of approaches that offer at best only limited additional resources which come at the cost of making the system more vulnerable to shocks, e.g. policies that link financing and coverage to employment status.

While the financial stress for countries is clear, the impact of COVID-19 on development assistance is yet to be seen. High-income countries have been hard hit and domestic fiscal pressures may lead to some reductions in development assistance, just at a time when low- and middle-income countries need support the most. Given these competing pressures, there is a need for broad-based support for the international financial institutions and technical partners that can provide requisite assistance. For the health sector, COVID-19 reinforces the need for countries to align their service delivery models, improve their governance and health financing arrangements, and prioritize across and within population-based and individual services to make best use of available resources. Health agencies must therefore focus on supporting countries for both the immediate response and medium-term health system strengthening actions to reinforce the foundations for both health security and UHC.

In recent years, donor transitions have featured prominently in health financing discussions in many low and middle-income countries. Many of these transitions are triggered by country Gross National Income (GNI) per capita thresholds [1]. Given the expected impact of COVID-19 on economic growth and fiscal capacity, domestic resources which are expected to compensate for decreases in donor funding will come under severe pressure.

The response to COVID-19 however, also provides an important opportunity to better manage the transition and interface between domestic and external financing. Partners must come together to support more efficient and coherent systems strengthening that is oriented towards better health security and increased effective coverage of essential services. Past approaches have contributed to impact towards specific outcomes but also to inefficiencies that are important to address, in order to strengthen sustainability and to prepare for transitions. Future approaches must address inadequate attention to common goods for health, including public health operations, along with overly fragmentated funding flows for essential services and systems, and multiple lines of accountability. 

Pandemic preparedness and response capacity must become the “step zero” in the UHC agenda

The pandemic is a stark reminder to the world that epidemic preparedness and response constitute a common good for health. Poorly prepared and weak health systems are a threat to global economic security. As the world emerges from the immediate crisis response, countries and development partners need to reconsider their priorities for funding. They must place core public health operations, such as surveillance systems, water and sanitation, and health promotion at the front of health system development strategies. Despite repeated warnings and their relative affordability, such common goods for health functions such as these suffer from severe under-investment. The world is now seeing the consequences of these under-investments in real time. Countries are using COVID-19 response funds to fill the gaps in surveillance, risk communication systems and surge capacity; but these investments must be made smartly if they are to be sustained over the long term ensuring they are aligned with other health system strengthening efforts. 

Domestic and external resources should be used more efficiently to sustain and increase the coverage of essential services.

The global economic contraction triggered by the pandemic will require greater efficiency in resource use from domestic and donor sources alike. Apart from the direct impact of COVID-19, the pandemic will have large indirect impact on the coverage of essential services (see examples : a b, c, d, e, f,). Health systems must not only become resilient to future epidemics, hard won gains in essential health service coverage must also be protected and scaled up.

For countries and their partners, this must include working with civil society to strengthen the voice for adequate and collective financing for health, prioritizing common goods for health. As countries rush to fill revenue gaps, the moment may be opportune to introduce or revisit the case for pro-health taxes and reduction of fossil fuel subsidies. Such policy actions can deliver both fiscal space and health benefits. For sustainability, attention must also be paid to strengthening public financial management systems and improving strategic purchasing to enable expanded coverage and better use of resources. 

At the sector level, health ministries and related agencies (e.g. social health insurance funds) must focus on making the most effective use of the public resources available to protect and scale up essential services and transparently report on the results achieved. This also must include improved governance, and ensuring attention to equity and those marginalized and left behind. Presently, undue fragmentation in financing arrangements works against building adaptable and well-prepared health systems that deliver cost-effective population-based services and patient-centred quality individual services. 

In conclusion

Times of crisis provide a unique window of opportunity to address persistent obstacles that have long remained out of reach. From a historical perspective, the collective investments that are enjoyed today often came about as a response to troubled times, but it would be a mistake to assume logic and technological solutions on their own are sufficient. Political will, advocacy by civil society groups and private enterprise, as well as support from international partners play a key role. The pandemic is a tipping point towards different approaches in the health sector, both in terms of what to fund as well as instruments and approaches building on the above reflections and priorities.

The recently launched Access to COVID-19 Tools (ACT) accelerator and the successful replenishments of GAVI, Global Fund, Global Financing Facility and the World Bank’s US$160B COVID-19 emergency response funding provide an opportunity to support countries to put their health systems on stronger foundation for both common goods for health, and improved access to essential health services without financial hardship (or UHC). Advocacy by UHC2030 constituencies, joint commitments and collaboration under the Global Action Plan for Healthy Lives and Wellbeing to All and its Sustainable Financing Accelerator should help advance this agenda. 

[1] GAVI thus bases its eligibility criteria on three-year GNI averages with some adjustments, while the Global Fund bases eligibility both on income thresholds and disease burden. For the World Bank, transition from International Development Association  to International Bank for Reconstruction and Development is based on income levels.

* Specific contributors to this blog are:  Maria Skarphedinsdottir UHC2030 Core Team, Santiago Cornejo GAVI the Vaccine Alliance, Michael Borowitz The Global Fund to Fight AIDS, Tuberculosis and Malaria, Joe Kutzin World Health Organization Health System Governance and Financing, Toomas Palu World Bank Group, Health, Nutrition and Population, Ellen Van de Poel The Global Financing Facility, Susan Sparkes World Health Organization Health System Governance and Financing.

 Photo: WHO/Fid Thompson

Blog in Spanish 
¿Cómo está redefiniendo la COVID-19 las prioridades en materia de recursos nacionales y asistencia para el desarrollo en el sector de la salud?

Blog in French 
Comment la COVID-19 redessine les priorités à la fois pour les ressources nationales et pour l’aide au développement dans le secteur de la santé.

Categories: Invest more, invest better

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