Health Financing and Spending in Low- and Middle-Income Countries

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Background

The World Bank has introduced the Atlas method to determine in an econometrically valid way borderline thresholds for classifications of all national economies into low, middle, and high-income categories in an objective and predictable manner. Although this approach may be challenged to some extent, it has long served well in observation and predictions of long-term trends in GDP growth and national health expenditures.

Contribution of low- and middle-income countries (LMICs) share in total health expenditures as observed through the World Health Organization’s (WHO) Global Health Expenditure criteria has almost doubled in terms of purchase power parity (PPP) basis from only 20% of global share in 1995 up to almost 40% in 2013. These fiscal flows have been well documented via WHO’s National Health Accounts database. This lengthy and rocky road forward for the LMICs contains many difficulties. A few core challenges include: socioeconomic inequalities in medical care access and affordability, large out-of-pocket expenses, and vulnerabilities against catastrophic household expenditures. These challenges remain matters of grave concern in many LMICs.

Broad trends give far greater grounds for optimism, however, since networks of rural and suburban health care facilities are growing and strengthening. Preventive lifestyle interventions, provision of essential medicines, and spreading of cost-effective basic medical technologies, designated in WHO policy as “best buys” interventions, all contributed to exceptionally improved early childhood survival and extended life expectancy. Current circumstances in most LMICs are characterized by aging populations, rapid urbanization, and increased citizen expectations in terms of health insurance coverage. Prescription drugs consumption is still dominated by generic medicines, with brand name originals gradually taking root. Hospital sectors are state or publicly owned in most former and modern day centrally-planned socialist economies. By contrast, in some regions like Middle East and North African (MENA) Arabic nations, Latin America, and free-market Far East Asian economies, hospital property structure is predominantly privately owned.

Rapidly developing world regions exhibit substantial heterogeneity in terms of historical legacy in health care establishments, provision, and financing, however, they all face a few core common challenges. Among them epidemiological transition in morbidity and mortality structure is probably the most notable. Burden of infectious diseases, nutritional disorders, and traumatism is gradually being replaced by chronic non-communicable diseases (NCDs). Infections tend to be of acute clinical course, affect juvenile and elderly population outside the labor market, and are mostly curable with contemporary medicine. NCDs are chronic, costly, lifetime illnesses demanding complex and expensive medical care. Another core issue is related to decreasing working ability, absenteeism, and premature mortality imposed by NCDs to the working population of society. This means that the national health systems face a double burden in terms of work load and fiscal flows face from these dual long-term epidemiology trends. LMICs national health systems have historically evolved to combat primarily communicable disorders and now they are facing much harsher challenges.

This Research Topic was created in order to address the core challenges of medical care financing and spending primarily across LMICs. Contributions of original research, reviews, as well as perspective / opinion style papers are welcome. Submitted manuscripts should preferably focus on issues relevant to health care economics among the developing world nations. In addition to a variety of health-economic evaluations and health policy analysis, methodological and resource use studies, are within the Topic scope. Health policy considerations relevant to financing mechanisms and health expenditures are welcome, while surrounding issues such as health insurance, reimbursement, and cost-containment strategies will also be considered. Submissions from academia, industry, and regulatory authorities are strongly encouraged.

Keywords: health expenditure, GDP, developing countries, health care cost, medical care, health insurance, low-Income, middle-Income, LMICs, BRICS, EM7, G7

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