Intro
This chapter assesses health financing policy in low- and middle-income countries (LMICs). It discusses the basic functions of health financing systems and the various mechanisms for effective revenue collection, pooling of resources, and purchase of interventions (WHO 2000). It analyzes the basic financing challenges facing LMICs as a result of revenue generation and collection constraints, increasing flows of development assistance for health (DAH) coupled with donors' concerns about aid effectiveness, and the difficult economic situation facing many LMICs as a result of globalization and poor economic management.
In 2001, about US$3.059 trillion—approximately 9 percent of global gross domestic product (GDP)—was spent on health care worldwide (WHO 2004b; World Bank 2004e); however, only 12 percent of this amount was spent in LMICs, which account for 84 percent of the global population and 92 percent of the global disease burden (Mathers and others 2002). Ongoing epidemiological, demographic, and nutrition transitions will pose significant challenges for health financing systems in LMICs in the near future as the communicable disease burden lessens and the noncommunicable disease and injury burdens expand. At the same time, the current communicable disease burden in low-income countries (LICs) and in many middle-income countries (MICs), especially that caused by malaria, tuberculosis, and HIV/AIDS, poses a serious threat to public health, health systems, and economic growth.
As a result of the international focus on poverty reduction, the HIV/AIDS pandemic, and the Millennium Development Goals (MDGs), international health financing policy has evolved over the past decade from defining a basic package of cost-effective health services to figuring out how to finance and deliver those services equitably and efficiently, to recognizing the need to scale up health systems to meet basic service needs and achieve the MDGs, which will require large amounts of DAH for poor countries (see, for example, WHO 2000 WHO 2001 ;World Bank 1993 World Bank 2004b ).
This chapter updates and reviews the global evidence on health spending, health needs, revenue-raising capacity, organization of health financing, and trends in DAH. It discusses the key challenges that country policy makers face in ensuring access to services and financial protection while dealing with a new health policy world defined by new instruments such as sectorwide approaches (SWAps) and Poverty Reduction Strategy Papers (PRSPs). The chapter also discusses the scope and potential effects of new and relatively large global funding sources, such as the Bill & Melinda Gates Foundation; the Global Fund to Fight AIDS, Tuberculosis, and Malaria; and the Global Alliance for Vaccines and Immunization (GAVI) Vaccine Fund.
