Strong Health Systems for All with Better Public Spending

UPSC Syllabus: Gs Paper 2- Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

Introduction

Strong public health systems depend on effective health financing, not just higher spending. Many low- and middle-income countries (LMICs) face declining health aid, rising public debt, and growing health needs. At the same time, gaps in spending, weak implementation, and poor governance reduce the impact of available resources. Building resilient health systems requires better financing, efficient spending, stronger institutions, and sustained investment so that quality healthcare reaches everyone without causing financial hardship.

Why Public Health Financing Matters

1. Health financing supports quality healthcare: Health financing is the process of collecting, managing, and spending money on health services. It helps people access quality healthcare without facing financial hardship and strengthens health systems.
2. Foundation for Universal Health Coverage (UHC): Effective financing keeps hospitals and health centres functional, improves access to treatment, and supports countries in achieving Universal Health Coverage (UHC).
3. Investment in human capital and economic growth: Better health improves people’s productivity and well-being. It strengthens human capital, creates jobs, and supports economic growth and shared prosperity.
4. Improves efficiency of health systems: Better budget execution, redesigned benefit packages, and improved payment systems help available resources deliver better health services and greater value.
5. Supports long-term system resilience: Strong financing enables health systems to respond to future challenges such as pandemics, ageing populations, and climate-related health risks while maintaining essential services.
6. Health systems are economic infrastructure: Strong health systems improve workforce productivity, strengthen supply chains, build public trust, and create stable conditions for long-term economic development.

Emerging Challenges in Health Financing

1. Large spending gap remains: According to the World Bank, public spending on UHC in LMICs is only about half of the minimum benchmark. Although the gap in health spending as a share of GDP has narrowed since 2000, the per capita spending gap has increased more than three times, showing that poorer countries are still far behind.
2. Declining international health assistance: Development Assistance for Health (DAH), which supported many LMICs, has fallen sharply after the COVID-19 pandemic. In 2025, the United States cut foreign assistance by 67%, followed by the United Kingdom (39%), France (35%), and Germany (12%). The OECD estimates that global health funding could decline by up to 60% from its 2022 peak.
3. Limited fiscal space due to rising public debt: Governments have less money available for health because public debt has increased rapidly. Global public debt reached $102 trillion in 2024, with developing countries accounting for $31 trillion, while they paid a record $921 billion in net interest payments.
4. Growing health needs increase financial pressure: Health systems now face rising demand due to population ageing, climate-related shocks, pandemics, and non-communicable diseases, increasing the need for sustained investment.
5. High financial burden on households: More than half of the world’s population still lacks full coverage of essential health services, and one in four people face financial hardship because of out-of-pocket health expenditure.
6. Health spending has stagnated: Public health spending has remained below the level needed to achieve UHC and has largely stagnated since 2018, leaving many countries with insufficient resources to meet growing health demands.
7. Global shortage of health workers: The world is projected to face a shortage of around 11 million health workers by 2030. Without enough trained workers, new medicines, technologies, and health innovations cannot effectively reach patients.
8. Innovation without strong systems has limited impact: Scientific advances alone cannot improve health outcomes. Weak health systems reduce public trust, limit access to care, and prevent innovations from reaching the people who need them most.

Key Gaps in Public Health Spending

1. Low budget utilisation reduces impact: Many countries do not fully use the money allocated for health. Health budgets in LMICs are executed at only about 85%–90%, which is lower than the execution rate for overall government and education budgets.
2. Poor utilisation in India: A parliamentary panel found that only about two-thirds of the allocation for India’s flagship health infrastructure mission was spent in 2024–25. Under the National Health Mission (NHM), only 26% of the funds meant for communicable and non-communicable disease programmes were utilised.
3. Imbalance in spending priorities: Salary and wage budgets are usually spent fully, but spending on medicines, equipment, and other goods and services remains low. This limits the ability of health workers to provide quality care.
4. Limited focus on preventive healthcare: Public spending is concentrated on secondary and tertiary curative care, while preventive and primary healthcare receive much less attention. India spends less than one-fourth of its public health expenditure on preventive care.
5. Weak strategic allocation of resources: Public funds should focus on infectious disease control, vaccination, sanitation, and other public health goods where market failures exist, instead of replacing affordable services already supplied by the private sector.
6. Weak governance lowers outcomes: Higher spending alone does not improve health outcomes when governance is weak. Corruption, poor bureaucracy, and weak accountability reduce the effectiveness of public health expenditure.

Strategies to Strengthen Public Health Systems

1. Improve budget execution: Governments should ensure that allocated health funds are fully utilised through better budget credibility, timely cash release, and efficient implementation.
2. Prioritise preventive and primary healthcare: Greater investment should be directed towards preventive care, primary healthcare, early disease detection, and risk reduction instead of relying mainly on curative services.
3. Invest in essential public health functions: Public spending should focus on infectious disease control, immunisation, sanitation, and other public health goods that generate wider social benefits.
4. Strengthen governance and financial management: Better public financial management, transparent procurement, stronger accountability, and greater involvement of healthcare providers in budgeting can improve value for money.
5. Create flexible and resilient health systems: Health budgets should remain flexible to respond quickly during emergencies, as shown during the COVID-19 pandemic, while maintaining essential health services.
6. Expand fiscal space for health: Countries should spend more on health wherever fiscal space exists, raise taxes on unhealthy products, undertake broader macro-fiscal reforms, and align remaining external assistance with national priorities.
7. Invest in frontline health workers: Long-term investment in training, mentoring, and supporting frontline workers strengthens service delivery, improves public trust, and expands access to healthcare.
8. Promote partnerships and digital innovation: Governments, civil society, and the private sector should jointly strengthen health systems. Digital tools can improve health worker training, last-mile service delivery, and access to quality healthcare.

Conclusion

Strong health systems require both higher investment and better use of available resources. Better budget execution, strategic spending, strong governance, investment in frontline workers, and greater cooperation among governments, donors, civil society, and the private sector can improve health outcomes. Well-directed public spending remains essential for building resilient health systems and achieving Universal Health Coverage (UHC).

Question for practice:

Discuss the importance of better public spending in building strong and resilient health systems for achieving Universal Health Coverage (UHC).

Source: The Hindu