A World Bank Brief of 15 January 2026 looked at how money is collected, managed, and spent to pay for health services. Effective health financing helps people access the healthcare they need without causing financial hardship. The financing improves healthcare for the population and builds strong, health systems. If there is effective health financing, hospitals and clinics can operate effectively; more people can access affordable treatment; and countries can make progress in achieving universal health coverage.
Wider access to quality healthcare can increase human potential and productivity, boosting economic development. Unlocking human capital leads to economic dividends for countries and results in further economic growth. Efficient health financing is essential to reach the World Bank Group goal of helping countries to deliver affordable healthcare to 1.5 billion people by 2030, with the ultimate objective of eliminating extreme poverty and increasing prosperity.
Healthcare policies can include redesigning benefits packages, changing the way healthcare workers are paid or aligning and implementing health budgets. There is still considerable underspending of healthcare budgets across low and lower-middle income countries. Countries underspend their health budgets by 13% on average. This represents a significant missed opportunity. This also undermines efforts to increase health budgets, as Health Ministries are not in a position to request more funding if they are not spending all of their current budget.
Health financing policies can lead to improvements in lifestyle and can create further employment. The improvements in the human capital of a country, which include the knowledge, skills, and health enabling individuals to reach their potential, contribute to economic growth and shared prosperity.
Less than half the world’s population is fully covered by essential health services, and one in four people are falling into financial hardship as a result of the payments made to receive healthcare. Owing to high indebtedness in developing countries, the fiscal space for health is likely to remain limited in many low-and middle-income countries. There are growing demands on healthcare systems and populations age and climate related problems increase. There is growing economic certainty globally, and funding from international aid is decreasing.
Global health spending is still below the minimum benchmark required to implement universal health coverage and has been stagnating in recent years. Most low-income countries and many lower-middle-income countries are forecast to experience a decline in government and donor health spending by 2030.
There are policy options that can be taken by countries to spend better and spend more on health even when they are under fiscal pressure. They can increase efficiency by giving priority to primary healthcare, aligning development assistance with domestic priorities and improving budget implementation . Countries that have been dependent on international aid can restructure their health systems to cope with the falls in aid. LIC and LMICS have room to spend more on health, as they have often under-prioritised health spending.
Countries can also increase the taxation of unhealthy products and increase their fiscal space with broader reforms. Imposition of excise taxes on unhealthy items such as tobacco, alcohol and sugar-sweetened beverages (SSBs) can help to reduce the consumption of these products while increasing tax revenue.
