Reprioritizing Government Spending on Health : Pushing an Elephant Up the Stairs?

Abstract

Countries vary widely with respect to
 the share of government spending on health, a metric that
 can serve as a proxy for the extent to which health is
 prioritized by governments. World Health Organization (WHO)
 data estimate that, in 2011, health's share of
 aggregate government expenditure in the 170 countries for
 which data were available averaged 12 percent. However,
 country differences were striking: ranging from a low of 1
 percent in Myanmar to a high of 28 percent in Costa Rica.
 Some of the observed differences in health's share of
 government spending across countries are unsurprisingly
 related to differences in national income. However,
 significant variations exist in health's share of
 government spending even after controlling for national
 income. This paper provides a global overview of
 health's share of government spending and summarizes
 key theoretical and empirical perspectives on allocation of
 public resources to health vis-a-vis other sectors from the
 perspective of reprioritization, one of the modalities for
 realizing fiscal space for health. Theory and cross-country
 empirical analyses do not provide clear, cut explanations
 for the observed variations in government prioritization of
 health. Standard economic theory arguments that are often
 used to justify public financing for health are equally
 applicable to many other sectors including defense,
 education, and infrastructure. To date, empirical work on
 prioritization has been sparse: available cross-country
 econometric analyses suggests that factors such as
 democratization, lower levels of corruption, ethnolinguistic
 homogeneity, and more women in public office are correlated
 with higher shares of public spending on health; however,
 these findings are not robust and are sensitive to model
 specification. Evidence from case studies suggests that
 country-specific political economy considerations are key,
 and that results-focused reform efforts, in particular
 efforts to explicitly expand the breadth and depth of health
 coverage as opposed to efforts focused only on government
 budgetary targets, are more likely to result in sustained
 and politically-feasible prioritization of health from a
 fiscal space perspective.