Discussions on strengthening public health systems often begin with funding issues. According to the World Bank, per capita public spending on universal health coverage in low- and middle-income countries, including government outlays and development aid, stands at roughly half the minimum required levels. As a percentage of gross domestic product, the health spending difference between these nations and high-income countries shrank from 2.05 percentage points in 2000 to 1.68 points in 2023. Yet World Health Organization figures indicate that the per capita gap actually widened more than threefold over the same span.
Development assistance for health has long helped supplement budgets in lower-income nations, reaching a high point in 2021 amid the COVID-19 pandemic. That upward trend reversed after the crisis. In early 2025, the United States, which had supplied over one-third of global annual aid in this area, reduced its foreign assistance by 67 percent. The United Kingdom, France, and Germany implemented cuts of 39 percent, 35 percent, and 12 percent respectively. The Organisation for Economic Co-operation and Development projects that health funding could fall by as much as 60 percent from its 2022 peak.
National budgets face added strain from rising public debt and interest costs. Global public debt hit a record $102 trillion in 2024, with developing countries responsible for $31 trillion. Since 2010, debt in developing nations has grown twice as fast as in advanced economies. In 2024, UN Trade and Development reported that developing countries paid a record $921 billion in net interest on public debt, reducing resources available for health and other priorities.
With public funds limited, the focus must shift to using existing resources more effectively. Three main approaches can help stretch public health spending.
First, ensure allocated funds are fully used. The World Bank notes that health budgets in low- and middle-income countries are executed at 85 to 90 percent, below rates for overall budgets and education. This signals lower priority for health during implementation. In India, a parliamentary review showed only about two-thirds of funds for the main health infrastructure program were spent in 2024-25. Within the National Health Mission, just 26 percent of allocations for communicable and non-communicable disease programs were utilized.
Second, direct spending toward the most effective areas. Execution rates differ by category, with wages often fully spent while goods and services see shortfalls, leaving staff without proper tools. Public funds frequently favor curative care at secondary and tertiary levels over preventive and primary services. Estimates from the London School of Hygiene & Tropical Medicine indicate India directs less than one-fourth of public health spending to prevention.
From a health outcomes perspective, resources yield the greatest returns on public goods like infectious disease control and sanitation, where market gaps exist, rather than expanding curative services already offered competitively by private providers. Evidence shows public health spending improves infectious disease results through better access, vaccination, and sanitation, but has smaller effects on maternal and child health or non-communicable diseases. With aging populations, greater attention to chronic conditions through risk reduction, early detection, and management will be needed.
Third, strengthen governance and operational efficiency. Better governance amplifies the impact of public health spending on outcomes such as child mortality. Where governance is weak, added spending alone rarely improves results. Decentralization of services makes subnational governance improvements essential.
Within governance, public finance management plays a key role.
