By: Staff Writer
April 5, 2024
The Inter-American Development Bank (IDB) in a recent report, “Smart Spending for Health How to make each dollar count,” said that “smart spending,” is needed for healthcare development in the Latin American and Caribbean (LAC) region as spending grew by double the amount per person.
“Smart spending” in healthcare refers to policies that get as much health-related value as possible for the population within a given budget.
The report said: “No country, no matter how rich, can afford to provide all the healthcare its population wants or needs. Rather, the amount countries spend on health is ultimately a political choice about taxation and spending priorities. It is affected by values, health system goals, framing of debates, and administrative capacity. It is also affected by the importance countries give to other kinds of public spending along with perspectives on the government’s role in healthcare. Thus, there is no “correct” amount of spending on healthcare. Rather there is an amount of spending required to reach a country’s health goals.”
It continued: “Reaching health goals has always been difficult but it may be even harder these days. Countries in Latin America and the Caribbean have had long-standing macroeconomic and fiscal problems, periods of slow productivity growth, and other factors that limit how much they can spend on healthcare. More recently, the COVID-19 pandemic and climate change are straining public resources while increasing demands on public healthcare budgets.
The pandemic years were particularly hard on the healthcare sectors across the region. Not only were facilities strained with the amount of COVID-19 patients, but economic activity came to a halt, leaving governments with little to no resources to work with.
“No matter how much a country spends on healthcare, it will be better off if it considers the value it gets from its healthcare spending. Another term for efforts to get more value from a country’s healthcare spending is “efficiency.” A more efficient country gets more impact from the inputs it uses. Thus, countries that improve their health system’s efficiency will be able to progress more rapidly toward UHC than those that spend inefficiently.”
The report also said: “To get more value, it is often useful to distinguish “doing the right things” from “doing things right.” “Doing the right things” involves directing funds toward health interventions that have more impact. The technical term for this is “allocative efficiency.” “Doing things right” involves getting more impact from the same amount of resources by, for example, managing personnel better, reducing waste, or improving the quality of care. The technical term for this is “technical efficiency.””
Between 2000 and 2020, total healthcare spending in Latin America and the Caribbean almost doubled from US$366 to US$583 per person (see Figure 1). Over the same period, public healthcare spending grew faster than total healthcare expenditure, from US$168 to US$314 per person. Thus, public healthcare spending is an increasing share of total healthcare spending, displacing private and out-of-pocket spending.
Healthcare spending grew faster than income between 2000 and 2020, accounting for a larger share of GDP. Total healthcare spending increased from 6.5 to 8.4 percent of GDP and government healthcare spending rose from 3.0 to 4.5 percent of GDP. Healthcare spending grew in other regions of the world, too. Healthcare spending in the European OECD countries rose from 5.9 to 8.3 percent of GDP and in low- and middle-income countries together, it rose from 1.0 to 2.7 percent of GDP.