Will COVID-19 derail the quest for universal health coverage?

The world is facing both a health and an economic crisis due to COVID-19.  In addition to its direct impact on morbidity and mortality, the crisis resulted in an unprecedent global economic contraction. Countries across the East Asia and Pacific region have seen a dramatic decline in economic activity. Prospects for recovery are mixed: Even if economic growth rebounds in 2021, it could take several years for economies in the region to return to pre-crisis levels.

COVID-19: a risk to universal health coverage

COVID-19 threatens progress towards universal health coverage (UHC). The objectives of UHC – a policy commitment of the United Nations’ Sustainable Development Goals (SDGs) – are to provide everyone with access to affordable, quality essential health services.

Countries in East Asia and Pacific have made dramatic gains toward UHC in recent decades, driven in large part by increases in public spending that have helped the poor reduce out-of-pocket spending on health. During the pandemic, however, public revenues have decreased due to declining economy activity, and countries have ramped up deficit financing, increasing pressures for debt servicing in coming years. If current trends continue, individual out-of-pocket spending will also likely decline due as people forego necessary health care.

Countries may seek additional external financing for health from development partners, but tremendous uncertainty remains, since the economic shock from COVID-19 is also affecting high-income countries. The economic shock raises the prospect that we may see a slowdown or even reversal of growth in public spending on health, risking years of progress made toward UHC. 

Strengthening health systems: key to sustaining progress

A recent World Bank event invited senior health and finance officials from four countries – Indonesia, Lao PDR, Solomon Islands, and Vietnam – to discuss how the COVID-19 crisis has impacted health financing and what can be done to address COVID-19 risks and sustain progress toward UHC in East Asia and the Pacific.

In the immediate term, there has been a significant financing response to COVID-19, creating a misperception that the health sector has been flooded with new resources.  However, much of this increase has been emergency surge financing for COVID-19 and is unlikely to be sustained. Panelists noted the importance of ensuring that these additional resources also help strengthen health systems’ capacity to deliver routine health services.

In Indonesia, the central budget allocated to the heath sector increased from 5.2% to 8.7%, and allocations for the 2021 budget have also increased, albeit to a lesser degree. COVID-19 has triggered and strengthened the momentum for wider health system reforms, including expanding across-the-board testing capacity and integration of information systems to strengthen surveillance.

In Vietnam, the government has not only increased the health budget, but has also increased funding specifically for prevention-related services, accelerating the realization of a preexisting government resolution.

In Lao PDR and Solomon Islands, there has been an increase in development partner funds to support not only COVID-19 preparedness and response efforts, but also activities to strengthen health systems and continue progress toward UHC.

Prioritizing health to protect the economy

Panelists noted that progress toward UHC is dependent on many factors, but ensuring adequate public financing for health is key.  Expanding public spending on health has been critical in helping countries move toward their UHC goals, including for protecting households from impoverishing out-of-pocket health expenditures. However, maintaining that expansion in resources will be challenging, given declining fiscal space. Panelists noted that in order to ensure gains made toward UHC are not lost, public financing for health must be protected, and that adequate additional financing should be secured for the procurement and distribution of the COVID-19 vaccine.

Finally, panelists underscored the need for improved communication and collaboration between ministries of health and finance. To protect public financing for health, ministries of health will need to pay careful attention to planning and budgeting – demonstrating where efficiency can be increased – and to prioritize interventions that are cost-effective and can provide benefits equitably such as primary health care.

At the same time, ministries of finance should improve the predictability of outlays to the sector, taking a multi-year programming perspective, and ensuring adequate financing for health. In doing so, they could consider augmenting resources by increasing the scope and breadth of health taxes and proactively seeking opportunities for debt relief where available.

To the extent COVID-19 presents an opportunity, it is in removing any doubts that health and the economy are inextricably linked , nudging both ministries of health and finance to re-evaluate their priorities, accountabilities, and performance to ensure pandemic preparedness and effective vaccine distribution, improve population health, and support a post-COVID economic recovery.