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Cross-cutting View on Health Spending

Motivational examples for countries classified as “poor”
Michel ODIKA

With regard to the impact of health spending on health outcomes, countless people are
liable to error, while most of them are, in many points, by passion or interest, under
temptation to it. Nevertheless, what we commonly call “truth” emerges more readily
from error than from confusion. What is the matter?

Disparities and inequalities in terms of health care spending are large across the world.
For instance, the world’s richest countries spend more than 16 times the amount spent by
the world’s poorest countries - after adjusting the per capita spending rates to
international dollars1. On the whole, the relation between health and wealth is strong
certainly. But this well-documented relation also needs to be qualified, mainly because
the link between health spending and health outcomes calls for two preliminary

Firstly, an income per capita of I$ 1,000 in 1975 was associated with a life expectancy of
nearly 49 years. Three decades later, life expectancy was almost four years higher at
comparable levels of spending. Clearly this suggests that improved access to prevention,
education and expanded health-service networks – among others -, allows for better
health outcomes for the same level of wealth.

Secondly, there are still considerable disparities in government expenditure on health

across countries with the same life expectancy at birth. For example, the total amount
spent on health is 7 times higher in Norway than in Singapore, although citizens in
Norway live as long as those in Singapore (79 years). Most importantly, Namibia spends
on health 16 times more than Congo-Brazzaville, whereas inhabitants of both countries
experience a life expectancy of 54 years. Similarly, Lesotho spends on health far more
than Jamaica, yet its people live 34 years shorter.

Money is like manures, of very little use except it be spread

(Francis BACON, philosopher)
Despite the wide gaps, higher spending on health care does not necessarily prolong lives.
In 2006, the United States government spent more on health care than many other
countries in the world: an average of more than $2,500 per person. However, average

1 . International dollars are derived by dividing local currency units by an estimate of their
purchasing power parity compared to the US dollar.

US life expectancy is 78 years. It should also be noted that many countries achieve
higher life expectancy rates with significantly lower spending.
With the same life expectancy as the United States, 78 years, the Cuban government
spending per person on health care is one of the lowest in the world, at $220 in 2006.
There are other cases where high life expectancies are achieved with low spending on
health care. Overall, countries with higher spending generally have longer life
expectancy rates, but there are also many countries that perform nearly as well with
much lower spending.

The first wealth is health (Ralph Waldo EMERSON,

One reason for the discrepancy between spending and longevity is that these numbers
are average life expectancies and per-capita spending rates, which mask inequalities.
For example, the US Health and Human Services department found that people with
lower incomes and less education tended to die younger. Life expectancy also varied by
ethnicity. In 1998 life expectancy among white Americans was 76.8 years, while African
Americans lived an average of 70.2 years. Another reason some countries achieve
higher life expectancy with lower health spending is that clean drinking water and
preventive health care can be provided with little spending. If there is near universal safe
water and preventive care, life expectancy rates can be the highest possible. In the US,
however, approximately 40 million Americans lack basic health insurance, and are
therefore less likely to receive preventive care. In contrast, Cuba has universal health
care and one of the highest doctor-to-patient ratios in the world. Although Cuba has
limited resources and experience many economic problems, it has made health care a
priority. It is not alone. Sri Lanka, China and the Indian State of Kerala are labelled as
"low-income, high well-being" countries, which have adopted policies that not only
reduce inequality but also increase overall health and well-being. The results of this
specific approach are predominantly translated on the ground into increased life
expectancy at birth.

The real tragedy of the poor is the poverty of their

aspirations (Adam SMITH, economist)
When dealing with health issues, much money does not necessarily extend human lives.
The biggest challenges, then, lies not so much in mobilizing large amounts of cash as in
focusing the flows of financial resources on what is known to be cost-effective. In other
words, the question is not how much, but how, for what and for whom money is spent.
Particularly in countries where the envelope for health is small, every dollar allocated

sub-optimally tends to make a significant difference2. This salutary warning is ultimately

the price to pay for tackling efficiently all dangerous mismatch between where money is
most spent (care infrastructures) and where money is most needed (preventive services).

1) Deaton A. Global patterns of income and health: facts, interpretations, and policies. Princeton
NJ, Princeton University Press, 2006.
2) Marmot M. Achieving health equity: from root causes to fair outcomes. Lancet, 2007,
3) Starfield B, Shi L. Policy relevant determinants of health: an international perspective. Health
Policy, 2002, 201-218.
4) The World Health report 2008. Primary health care: now more than ever. Geneva. World
Health Organization, 2008.
5) World development indicators 2007. Washington DC, The World Bank, 2007.

Doctor Michel ODIKA

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2 . In fact, every I$ 100 per capita properly spent on health seems to correspond to a 1-year
gain in life expectancy at birth.