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publication September 21, 2021

From Double Shock to Double Recovery: Health Financing in the Time of COVID-19

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The COVID-19 pandemic resulted in a double shock—health and economic. It has cost millions of lives and triggered a global economic recession surpassing any economic downturn since World War II.

KEY MESSAGES

In the months ahead—while the world will likely witness the fastest economic growth in the aftermath of any recession in the last 80 years—countries will have to make bold choices to avoid falls in government health spending.

  • In a group of 126 countries, per capita government spending is projected to grow to 2026, despite drops in some years, especially 2021 and 2022.  
  • In 52 countries, however, per capita government spending is expected to drop and remain below pre COVID-19 levels in 2026. Without bold choices to increase the priority given to health, per capita government health spending will remain below 2019 levels and will further fall in many of these 52 countries.
  • To keep their health spending growing at pre-pandemic rates, governments of low-income countries among the 52 will have on average to double the share of their spending on health, from 10% pre-COVID to 20% in 2026; and governments of lower middle-income countries from 8.1% pre-COVID to 13.5% in 2026.

These and other disparities in the macro-fiscal outlook could intensify pre-existing rifts between countries in government health spending in the years ahead, with significant destructive impacts threatening the COVID-19 recovery.  

Most lower income countries will be unable to finance their share of a COVID-19 vaccine roll-out to halt the current pandemic, let alone invest in better preparedness and response capabilities. 

The widening rifts will force cash-strapped countries to make tough choices in health investment. 

While it won’t be easy to boost development assistance for health at a time when some wealthy donor countries are also struggling, high-income countries have a vital interest in supporting a global recovery. Progress toward Universal Health Coverage is critical for human capital development and a full return to inclusive growth everywhere.

Together, countries can bridge the health financing rifts to build a healthier, more secure, more prosperous future for all.