COVID-19 (coronavirus) and the future of health financing: from resilience to sustainability

COVID-19 (coronavirus)  has hit countries with a double shock: both health and economic. Especially in low- and middle-income settings, policy makers face unprecedented challenges in financing health.  Many health systems were overstressed and underfunded to begin with, and the pandemic’s economic fallout further constrains national fiscal capacity.

It is crucial for countries confronting the coronavirus pandemic to adopt policies that increase resilience  in health financing — the ability to absorb and respond to unpredictable shocks in health spending and revenue generation. By doing so, countries can also improve the sustainability of their health financing — the capacity to fund long-term strategies on the road to universal health coverage (UHC).

For health financing after the pandemic, it should not be the goal to return to the pre-crisis status. Countries have the opportunity to emerge from the COVID-19 crisis with health financing that is fit for the future. 

To demonstrate how this can work, it is helpful to distinguish three overlapping phases of COVID-19 response and their implications for health financing: Emergency response, containment, and recovery.

1. Emergency response

First, countries have deployed emergency measures to slow the spread of the virus and treat the critically ill. The immediate health-financing challenge is to mobilize funding for the response. But countries also need procedures and regulations to ensure that resources are used well.

Key adjustments in public financial management can help streamline procurement while mitigating the risks of no availability, price inflation, and contract default. They can also accommodate supplemental pay, task shifting, redeployment, and rapid recruitment in health payrolls without crowding out other critical expenditures. Effective public financial management enables swift cash flows while ensuring adequate controls.

During this phase, some governments have moved toward a whole-of-society response by harnessing the capacity of private health providers. Options include supplying private providers with protective gear and purchasing their services, which may require temporarily relaxing regulations on licensing and liability insurance. Governments may also mandate private insurers to cover COVID-19 services and waive copayments for them, including user fees in both public and private health facilities.  

2. Containment

Many countries have already entered a second phase of pandemic response. As mitigation and suppression policies exert collateral macro-fiscal effects and public revenues shrink, governments can use fiscal and monetary policy to shore up economies, protect the income of households and firms, and fund public services.

In health, it is imperative to prevent health system collapse until reinforced control measures, and ultimately a vaccine or treatment, are in place to reduce transmission and hospitalizations. In this phase, the health-financing challenges get even tougher. Major investments in disease surveillance, including large-scale testing and contact tracing, are needed before strict social controls can safely be relaxed. As they expand resource envelopes for treating severely ill COVID-19 patients, countries must restore the provision of other essential medical interventions that can only be deferred briefly: for example, antenatal care, vaccinations, acute cancer treatment, and chronic disease management (including for HIV). While government revenues decline across the board, job losses are sharply reducing income for employment-based health insurance schemes.  This is increasing reliance on funding from general government revenues and development assistance for health.

3. Recovery

Post-crisis recovery will mark a third phase of country action. Success factors will include ensuring that fiscal and monetary packages designed to stimulate economic growth do not crowd out basic public services. Health systems will face backlogged demand for postponed non-essential services – from preventive visits to elective surgeries – raising financing and equity questions.

Three challenges and opportunities will be key for bolstering health-financing resilience and sustainability: 

• Roll back: Some policies adopted during the pandemic could undermine long-term health-financing resilience and sustainability. Examples include resource shifts from primary to secondary and tertiary care, loosening of public financial management rules to speed COVID-19 funding, and recruitment of additional health workers who cannot be incorporated into the permanent payroll.

• Roll out: Some policies implemented as emergency measures during the COVID-19 response can improve future health financing for UHC . Examples include reinforced disease surveillance, new modes of public-private collaboration, accelerated deployment of telemedicine, and increased task-shifting. Countries need to continue and deepen these reforms.

• Drive forward: The global trauma inflicted by COVID-19 gives health financing policymakers a mandate to break with the pre-crisis status quo and pursue deep change.  By demonstrating the importance of an adequately funded health sector in all countries, the pandemic has created political visibility and public support for step-change improvements in health financing. This can be harnessed to drive ambitious and long-needed reforms that enhance health financing resilience and sustainability.

There are well-tested principles and policies that countries can use to strengthen their health financing. However, policymakers will need to assess the extent to which established principles still hold in the wake of COVID-19. This will involve, for example, weighing trade-offs between increasing efficiency and maintaining buffers in health system capacity, including whether to privilege local production of key inputs, despite higher costs. To solve such issues, countries need to develop their foresight capacity in health financing, including a process and resources to anticipate future opportunities and challenges.

Working together for resilience and sustainability

As countries plan and implement post-COVID-19 health financing reforms, peer-to-peer collaboration and knowledge sharing will be more important than ever before . So will support from international partners.

This is why the World Bank, the Revisiting Health Financing Technical Initiative of the Joint Learning Network, and the Global Financing Facility are joining forces to deepen their work with countries on health financing’s role in beating COVID-19 and delivering UHC. Other partners may join this collaboration.

At the heart of the support for health financing resilience is a community of practice dedicated to mutual learning, comprising technical experts and policymakers from ministries of finance and health.

The joint work will also document countries’ health financing policies, implementation, and impact throughout the phases of COVID-19 response and recovery. It will share the results widely and curate knowledge gained for rapid use by policymakers. This will help countries shape a new normal in health financing post-crisis, with resilience and sustainability at its core.