Publications

	Table of Contents
p. 8 of 27 BACK | NEXT Executive summary Introduction Regional health context Health status Major trends in the health sector Financing of health services Global commitments to the health sector The Bank’s involvementin the health sector Issues and options The Bank’s health policy

Policy for the Health Sector : Regional health context

---

Financing of health services

Financing health services in the DMCs

The largest source of health care financing in the Bank’s DMCs comes from private expenditures, most of which are out-of-pocket. Data from national health accounts provide the most reliable indication of the shares of private and public expenditures. These data indicate that government budgetary allocations account for much less than half of total expenditures. In the Philippines, they account for 44 percent of total expenditures and, in India, 22 percent. Typically, 70 percent or more of the public subsidies support public hospitals, leaving less than 15 percent of total health expenditures to cover primary health care.

Experience in high-income countries

As the Bank’s DMCs undertake reforms in health sector financing, the experience of developed countries may provide some useful information to guide policy for-mulation. Over the last 20 to 50 years, every high-income country in the Organisation for Economic Co-operation and Development (OECD), with the exception of the United States, mandated universal coverage of prepaid health care, i.e., some form of social health insurance in the broadest sense. Although the specific approaches have differed the results have been similar. Universal coverage has been achieved; life expectancy is generally higher than would be predicted from the gross domestic product (GDP) and education levels; and most systems are actually single-payer systems, with the attendant capacity for controlling cost inflation. In these countries, which are the world’s most market-oriented economies, public sector financing (including publicly mandated finance) ranges from 80 to 97 percent of health expenditures. This experience suggests that mandating universal coverage is a practical long-term policy objective.

Developed countries currently spend an average of 8 percent of their GDP on health services.¹⁵ In all the high-income countries, there is a consensus on the need to contain spiraling health care costs but less agreement on how this is best accomplished. Over the last two decades, experience in these countries suggests the following tentative conclusions: