Using the COVID-19 Response to Advance Universal Health Coverage

COVID-19 has brought about an unprecedented global economic contraction that is threatening the progress countries in the East Asia and Pacific (EAP) region have been making toward Universal Health Coverage (UHC).  

But every cloud has a silver lining. If countries seize the opportunity, they can ensure their pandemic response efforts keep them firmly on the UHC track – while aiding their economic recovery in the process.

Gains on UHC in the region have been achieved largely by countries increasing public spending 
to provide affordable essential health services to their populations. But the current global economic crisis may not only slow down, but possibly reverse growth in public spending on health and set the advance toward UHC back many years.

How can we prevent this prospect? In a word, or three — countercyclical public spending. This fiscal policy approach goes against the prevailing economic trend by increasing public spending during an economic downturn.

Spending on health is key
It may seem counterintuitive to spend more money on health at a time of contracting economies and falling government revenues. In truth, circumstances are already forcing countries to do it.  They must finance pandemic response and increase the capacity of their health systems to manage the outbreak as well as secure COVID-19 vaccines. They also have to increase spending on social protection programs and other schemes to stimulate the economy and mitigate the adverse economic effects of lockdowns.

During the 2007–2009 Global Financial Crisis, countercyclical fiscal policies, especially public spending on health and other forms of social protection, built the resilience that European countries needed to weather that storm. 

Likewise, in this pandemic, health financing is important not only for safeguarding UHC but also for sustaining population health, improving welfare, and invigorating the economy.  The crisis also presents EAP countries with an opportunity to reset their health financing systems, especially for financing primary health care (PHC) and improving future pandemic preparedness.

Reprioritizing health 
With government expenditures expected to rise to meet the challenges of COVID-19, their debt servicing needs will cause fiscal tightening across all sectors for many years to come. Giving health greater priority in government budgets will therefore be necessary to maintain growth in per capita spending on health. In the absence of such a reprioritization, growth in public spending on health is likely to decline across most low- and middle-income countries in the region, putting at risk the substantial gains made on UHC in recent decades.

Health ministries will have to make a strong case for continued investment and demonstrate the health benefits of providing these resources. Within their budget outlays, they must prioritize interventions that are most cost-effective and equitable. These include strengthening weak health service delivery systems (especially PHC), surveillance systems for early outbreak detection and response, supply chain management, and improved data for decision making. Finance ministries must ensure adequate and regular funding for the health sector through multi-year programming that includes additional resources for procuring vaccines.

World Bank’s work in these areas
Besides its Emergency Response to COVID-19 Projects in EAP, the World Bank has also been leveraging its work in the areas mentioned above through the Advance UHC Multi-Donor Trust Fund (MDTF), supported by Australia’s Department of Foreign Affairs and Trade (DFAT) and other partners.

Advance UHC MDTF activities are designed to have medium- and long-term health systems strengthening impacts. For example, the Indonesia Supporting Primary Health Care Reform (I-SPHERE) Program focuses on improving the performance and service delivery capacity of Indonesia’s primary health care and referral systems. The US$ 150 million program is being implemented during 2018-2023.

In Kiribati, the Program of Advisory Services and Analytics (PASA) provided insight into the Bank’s COVID-19 Emergency Response Project launched in mid-2020. The US$ 2.5 million project has expanded medical supply storage, invested in communication technology to improve the timely flow of information, and laid foundations for telehealth services. This contributes to more equitable expansion of UHC in Kiribati.

Health taxes 
The pandemic is also a propitious time to ramp up health taxes on products with harmful health effects such as tobacco, alcohol, sugar-sweetened drinks and carbon emissions.  With shrinking economic output and revenues, these so-called “health taxes” can plug some of the financial shortfalls and are far less likely to face political opposition under the circumstances. Revenues raised from them can also be earmarked for pro-poor health programs to offset any criticisms.

Global evidence and World Bank regional work have shown that health taxes can boost revenues and promote better health. This is not only limited to the traditional “sin tax” on products like tobacco and alcohol, but also sugar-sweetened beverage (SSB) and unhealthy foods¹.  

Tonga is one of the countries at the forefront of the implementation of “health tax” policy and has been applying these taxes not only on tobacco, alcohol, and sugar-sweetened beverage, but also a wide range of unhealthy foods that are high in fat, salt, and sugar to tackle the high noncommunicable diseases (NCDs) burden. A World Bank report, Using Taxation to Address Noncommunicable Diseases: Lessons from Tonga, supported by the DFAT, Government of New Zealand, and Japan Trust Fund for Scaling Up Nutrition, found that these taxes decreased consumption of cigarettes, alcohol, SSB, and a range of unhealthy foods. Their use elsewhere will certainly prove beneficial as NCDs place significant strain on existing health services to provide treatment under universal coverage.

COVID-19 has removed any doubts that health and the economy are inextricably linked.  It has also provided the opportunity for countries to implement necessary reforms to reprioritize health and keep advancing toward UHC, which will ultimately sustain not only improvements in the health of their populations – but also their economic performance.

[1] Lane et al. (2021). Using Health Taxes to Support Revenue: An Action Agenda for the IMF and World Bank. Center for Global Development: Washington, DC; WHO guidance on healthy sugar intake and the cost-effectiveness of taxes on sugar-sweetened beverages and list of selected economic and medical studies therein; World Bank. (2020). Taxes on Sugar-Sweetened Beverages: Summary of International Evidence and Experiences. World Bank, Washington, DC. Shekar, M. & Popkin, B. (2020). Obesity: Health and Economic Consequences of an Impending Global Challenge. Human Development Perspectives series. Washington, DC: World Bank.