Shrinking pie, larger slice – and other health financing ingredients for a timely and strong COVID-19 recovery

This blog originally appeared on the World Bank website. Below is an excerpt. 

From a shrinking government spending pie, a larger slice for health makes a balanced diet for most economies ailing from COVID-19.

After rapid increases in government expenditure to control the pandemic and to protect people, jobs, and businesses, the International Monetary Fund (IMF) projects that government per capita spending in low- and middle-income countries will fall in 2021 and, again, in 2022.  This drop will happen despite a return to economic growth, as governments have exhausted their capacity to accumulate and service public debt.

In previous economic crises, a shrinking pie of government spending often also meant a drop in health spending, not only in absolute terms, but also in relative terms – governments reduced the slice of their spending going to health.

Getting over the economic crisis

In our new paper, “From Double Shock to Double Recovery,” we argue that a smaller slice of government spending on health would starve economies of what they need most to enjoy a timely and strong recovery from COVID-19.  This is because basic public services and key sectors cannot properly restart until the pandemic is controlled.  To put an end to the pandemic, we need enhanced disease surveillance, stronger delivery platforms, and the roll out of COVID-19 vaccines. All of these depend on continued investment in the health-sector crisis response.

But there is more to the story.  The pandemic has caused severe disruptions in the supply of and demand for the full spectrum of essential non-COVID-19 health services, from routine immunization to maternal and child services, cancer diagnosis and treatment, and emergency services.  Reclaiming these losses and restarting progress toward universal health coverage is vital for rebuilding human capital, increasing workers’ productivity, reducing poverty, and returning to inclusive and sustainable economic growth.

Read the full World Bank Blog here.