Health Financing

Health financing is how money is collected, managed, and spent to pay for health services. Effective and strategic health financing helps people access the care they need without facing financial hardship, improves health for everyone, and builds strong, resilient health systems. Effective health financing ensures hospitals and clinics can run well, helps more people afford treatment, and supports countries in reaching universal health coverage (UHC).

Efforts to redesign benefits packages, align and execute health budgets, or change the way healthcare providers are paid, among other elements of health financing policies, can create jobs and improve lives. Health is a fundamental component of human capital —the knowledge, skills, and health that enable individuals to realize their potential in society. Good health contributes to economic growth and shared prosperity.

The COVID-19 pandemic and global crises exposed and deepened vulnerabilities in health systems and public finances. Today, over half the world’s population is not fully covered by essential health services, and one in four people face financial hardship due to out-of-pocket payments in seeking health care. Fiscal space for health, in part due to debt distress, will likely remain constrained for years to come in many low-and middle-income countries. At the same time, demands on health systems, from climate-related shocks to population aging, are growing.

Health spending remains far below the minimum benchmark needed to achieve Universal Health Coverage (UHC) and has stagnated since 2018. Low- and lower-middle-income countries are at a crossroads with growing economic uncertainty and a changing aid landscape.

Most low-income countries and many lower-middle-income countries are projected to face a decline in combined government and donor health spending by 2030. Countries have policy options to alter their trajectories by spending better and spending more on health under fiscal constraints. Doubling down on efficiency—by prioritizing primary healthcare, aligning remaining development assistance with domestic priorities, and improving budget execution —can help resources go further. Aid-dependent countries have a reform window to restructure their health systems as aid dwindles. Progress also requires spending more and it is feasible to raise the share of government spending for health in a third of LICs and LMICs; they have the fiscal space and underprioritize health compared to peers. Countries can also raise taxes on unhealthy products and undertake broader macro-fiscal reforms to create fiscal space.

Advancing policies in health financing is more urgent than ever to reignite progress toward UHC, amidst volatility in external assistance and constraints due to competing demands on public finances. The World Bank helps countries develop strategic health financing policies by coordinating health and public finances, and optimizing both domestic and external resources. As a leading multilateral development bank, it provides leveraged on-budget financing to support sustainable national health goals, guided by country-led strategies and informed by local engagement and global expertise.

The World Bank plays a leading role in producing relevant global knowledge, through initiatives such as the Government Resources and Projections for Health (GRPH) report series (previously known as From Double Shock to Double Recovery) and Disease Control Priorities (DCP). Furthermore, the Bank delivers capacity-building, supports country operations with just-in-time analytics and technical assistance, and partners across sectors to help countries strengthen health financing.

To deliver on its goal of supporting countries to provide quality, affordable health services to 1.5 billion people by 2030, the Bank is leveraging its comparative advantages: deep country engagement, customized and appropriate financing instruments, and global convening power. Leveraging its unique position, the Bank brings cross-sectoral expertise in health financing and engages comprehensively with health and finance ministries on key issues such as fiscal policy, public financial management, decentralization, and social protection. The Bank also brings its multisectoral lens in addressing social determinants of health including policies outside the health sector.

Supporting governments, the World Bank analyzes health financing through a set of core questions:

• Resource Mobilization: How much do countries spend on health, and what sources of funding are mobilized?
• Financial protection and pooling of public resouces: What are the pooling schemes in place, how conducive are these arrangements to leveraging the public purse’s purchasing power, and how well do they protect people from financial hardship?
• Purchasing health services: How are resources allocated and used to purchase services and invest in the health system?
• Public Financial Management: How do public financial management systems affect the flow and use of funds?
• Cross-Cutting: What tools, capacities, and cross-sectoral linkages are needed to implement reforms effectively?

Resource mobilization and fiscal policies for health

Resource mobilization for health focuses on health spending levels and funding sources. Reliable public financing is essential for sustainable health systems, though many countries rely on development assistance. Fiscal policies such as taxes and subsidies can impact health by influencing the consumption of harmful goods such as tobacco or fossil fuels. The World Bank also works with other development partners by cofinancing health projects, and engages in analytical and operational work on health taxes, including with the World Bank’s Global Tax Program.

Financial protection and pooling

Financial protection refers to the ability to protect households against the hardship of out-of-pocket health payments which can empoverish prople. The World Bank in partnership with the World Health Organization publishes the biennial Global Monitoring Report which tracks financial hardship. Advancing financial protection requires efficient pooling of public resources. The World Bank documents best practices and responds to country demand for practical, implementation-focused support to improve the reach and effectiveness of health insurance schemes.

Allocation and purchasing of health services

Allocation and purchasing refers to how financial resources are distributed and spent. Once decisions have been made about which health services to cover, allocations must be aligned to enable their delivery where needed. Strategic purchasing ensures value for money in paying providers. The World Bank offers expert guidance and tailored support such as Designing and Implementing Health Care Provider Payment Systems and the Disease Control Priorities 4^th edition. It also engages the private sector to expand service delivery, strengthen local medical manufacturing and supply chains, including with the IFC.

Public Financial Management

Public Financial Management (PFM) supports effective public spending on health by improving the transparency of budgetary processes, reducing the fragmentation of public funding flows, and by enhacing the autonomy of public providers and the capacity of all public institutions to manage health programs and deliver services. Recent global knowledge products published by the Bank include the Budget Execution in Health: From Bottlenecks to Solutions, in collaboration with WHO, as well as the FinHealth tool, a diagnostic framework designed to identify PFM bottlenecks for health service delivery.

Cross-cutting tools and capacity building

Health financing must be holistic integrated in conversations about how systems deal with aging, noncommunicable diseases, fund and deploy human resources for health or digital health strategies. The Bank’s cross-cutting work on health financing also includes:

• The Health Public Expenditure Report, a diagnostic tool to assess how public funds are allocated and spent in the health sector
• Training on Financing UHC through the UHC Knowledge Hub in Tokyo
• The Health Systems Flagship program, an initiative designed to enhance countries' capacities to strengthen their respective health systems.

Partners

The World Bank Group partners with leading global organizations to strengthen health financing and support countries toward universal health coverage. Key partners include the World Health Organization, UNICEF, Gavi, the Global Fund to Fight Aids, Tuberculosis, and Malaria, the Bill & Melinda Gates Foundation, the International Monetary Fund. and the OECD.

The World Bank Group has supported countries in advancing wide-ranging health financing reforms. These engagements combine financing, technical assistance, and policy dialogue to raise domestic resources for health. Based on the context, they help reduce out-of-pocket spending, expand social and financial protection, increase efficiency and value for money and institutions - complementing broader health policies to achieve universal health coverage.

Colombia 

Colombia, with World Bank support, has successfully expanded its use of health taxes to both reduce consumption of harmful products and mobilize domestic resources. Health taxes include excise taxes for tobacco, alcohol, and sugar-sweetened beverages (SSBs). For this work, Colombia leveraged a series of Development Policy Operations (DPOs) between 2017 and 2025 and received technical help to design and implement these excise taxes. Between 2019 and 2022, the share of children aged 2–17 drinking at least one sugary drink dropped from 24% to 18%. Tax revenues are expected to reach 0.2% of GDP by 2025. 

Morocco

In Morocco, a major health financing reform supported by policy dialogue, technical assistance and Development Policy Financing from the World Bank has expanded compulsory health insurance nationwide. By March 2025, coverage reached 75% of the population. The reform replaced a fragmented system and gives the poorest people equal access to benefits, including private services. Additional changes centralized insurance management under the National Social Security Fund and created new regulatory agencies to improve quality, equity, and transparency. 

Cambodia

The World Bank is supporting Cambodia’s Health Equity Fund (HEF) to reduce catastrophic out-of-pocket health spending and strengthen financial protection. This includes $113 million in financing for the Health Equity and Quality Improvement Project, which expands HEF coverage, improves service quality through performance-based financing, and increases access for poor and vulnerable groups. The World Bank also provides technical and analytical support to enhance HEF implementation, assess private pharmacy practices, study beneficiary health-seeking behavior, and develop an action plan to reduce out-of-pocket costs. These efforts support the country’s UHC Roadmap goal of reducing out-of-pocket spending from 60% to 35% by 2035

Egypt

In Egypt, after the 2011 revolution, the World Bank supported a dialogue around inequalities and social justice in health which eventually culminated in the launch of the Universal Health Insurance Law (UHIL) in 2018. The transformative Law mandates health insurance for all Egyptians and re-organizes the health sector to deliver its benefits nationwide. The World Bank is supporting this ambitious UHIS reform of the Government of Egypt with a project and advisory services to increase the coverage of health insurance and strengthen UHIS-related processes and institutions,  The IFC also supports this effort by helping to set up contracts with private providers and by investing in hospitals and services. 

Côte d'Ivoire

In Côte d’Ivoire, the national health insurance scheme quickly grew to cover 68% of the population in less than two years (2023-2024), thanks to government leadership and World Bank support. Daily enrollment rose from 200 to over 30,000 using decentralized, biometric, and mobile systems. Mandatory enrollment and the introduction of a social security number are now widely used. World Bank projects support the roll-out of performance-based financing across all districts and facilities expanding rural coverage and lower fees in urban areas. The surge in enrollments in the health insurance scheme has already resulted in a fourfold increase in the utilization of health services, particularly in rural areas. Digital tools were added to many health centers, new jobs created for young people, and subsidies introduced to encourage informal workers to join the insurance scheme. The World Bank Group is also helping create a public-private partnership for diagnostic services.

Uganda

In Uganda, World Bank financing has helped more than quadruple the government’s financing for local health services – from $70 million per year in 2017 to over $300 million in 2024 – despite a period of severe fiscal stress. A $190 million program of the International Development Association (IDA) helped leverage the budget needed, with every $1 from the Bank bringing $6 more from the government. The number of local governments meeting health workforce standards rose from 37% to 65% and 312 health facilities were improved. Around 3.3 million people now get quality health services annually. The program also improved the management of resources and their allocation in line with needs, illustrating overall how Public Finance Management matters for service delivery.