GS-II: Governance | Health | Public Health Financing | Universal Health Coverage (UHC)
Context
- Public health financing debate: Building strong public health systems is often viewed through the lens of increasing financial allocations.
- Editorial’s argument: With declining global health aid and rising fiscal constraints, improving the efficiency of existing public health expenditure is equally important as increasing spending.
Global Public Health Financing
- Persistent financing gap: According to the World Bank, per capita public spending on Universal Health Coverage (UHC) in Low- and Middle-Income Countries (LMICs), including government expenditure and off-budget development assistance, is about half of the minimum benchmarks. Although the health expenditure gap as a share of GDP narrowed from 2.05 percentage points (2000) to 1.68 percentage points (2023), WHO data show that the per capita spending gap has expanded more than three-fold during the same period.
- Declining Development Assistance for Health (DAH): Development Assistance for Health peaked during the COVID-19 pandemic in 2021 but has declined sharply thereafter. In early 2025, the United States (67%), United Kingdom (39%), France (35%), and Germany (12%) reduced foreign health assistance. According to the OECD, global health funding could decline by up to 60% from its 2022 peak.
- Rising public debt: Global public debt reached $102 trillion in 2024, with developing countries accounting for $31 trillion. According to UNCTAD, developing countries paid $921 billion in net interest payments in 2024, reducing resources available for health.
Editorial’s Suggestions to Improve Public Health Spending
- Spend what is allocated: Health budgets in LMICs are executed at around 85–90%, which is lower than the execution rate for the general budget and education. This reflects deprioritisation of health during budget implementation. In India, only about two-thirds of the allocation under the flagship health infrastructure mission was spent during 2024–25, while under the National Health Mission (NHM) only 26% of funds earmarked for communicable and non-communicable disease programmes were utilised.
- Spend on the right things: Budget execution is higher for wages and salaries but lower for goods and services, leaving health workers inadequately equipped. Public expenditure remains concentrated on secondary and tertiary curative care at the expense of preventive and primary healthcare. According to the London School of Hygiene & Tropical Medicine, India spends less than one-fourth of its public health expenditure on preventive care. Public spending is more effective when directed towards infectious disease control, vaccination and sanitation, where market failure exists. As populations age, greater focus is needed on risk-factor reduction, early detection and management of chronic diseases.
- Improve governance and operational efficiency: Better governance enhances the impact of public health expenditure on outcomes such as child mortality. Merely increasing expenditure where governance is weak is unlikely to improve outcomes. With increasing decentralisation of public service delivery, governance at the subnational level requires greater attention. Better public finance management requires improved budget credibility, timely cash disbursement, participation of health providers in budgeting, efficient procurement and flexible budgets to respond to unforeseen emergencies.
Significance
- Efficient utilisation of resources: Better utilisation of available resources can strengthen health systems even when additional funding is limited.
- Improved public health outcomes: Strategic allocation improves infectious disease control through greater access, vaccination and sanitation.
- Better governance: Strong governance increases the effectiveness of public health expenditure and improves service delivery.
Challenges
- Declining international health assistance: Reduction in Development Assistance for Health limits external support for public health systems.
- Fiscal constraints: Rising public debt reduces fiscal space for additional health expenditure.
- Underutilisation of budgets: Approved health allocations remain partially unspent because of implementation bottlenecks.
- Weak governance: Poor governance and operational inefficiencies reduce the effectiveness of public health expenditure.
Way Forward
- Improve budget utilisation: Ensure that allocated health budgets are fully implemented through better planning and monitoring.
- Prioritise preventive healthcare: Increase investment in preventive and primary healthcare alongside curative services.
- Strengthen governance: Improve governance and operational efficiency, particularly at the subnational level.
- Reform public financial management: Improve budget credibility, procurement systems, cash disbursement and maintain flexibility to respond to emergencies.
Conclusion
- Better spending alongside higher spending: While increased public health expenditure remains necessary, efficient allocation, stronger governance and better implementation are essential to improve health outcomes and narrow health gaps.
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UPSC Mains Practice Question
Q. In the context of declining global health assistance and fiscal constraints, discuss how improving the efficiency of public health expenditure can strengthen India’s public health system.
