Where’s the money? Realignments in global health funding

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In a recent opinion piece for Devex, Grameen Bank founder and Nobel Peace Prize winner Muhammad Yunus highlighted some of the shortcomings of conventional aid in today’s uncertain economic climate and stressed that the world must think creatively to support global health and development goals. Yunus pointed to the slow progress on the Millennium Development Goals and the World Health Organization projection that an additional $250 billion will be needed to achieve the MDGs by 2015. Yunus concludes that innovative partnerships are critical to closing the global health funding gap.

Reaffirming Yunus’ remarks, chair of the Organization for Economic Cooperation and Development’’s Development Assistance Committee and former U.S. Agency for International Development Administrator Brian Atwood recently revealed that official development assistance will continue to serve as a source of innovation and creative combinations of ODA and private sector resources will help meet future development financing challenges. This thesis can be readily applied to the wide-ranging and multifaceted sector regarded as global health.

These assessments and other interesting analysis leading up to the OECD-DAC High Level Forum on Aid Effectiveness prompted Devex to look closer at some of the realignments in global health funding, including the new actors, the winners, and the losers.

From 2000 to 2010, overall global health aid increased dramatically both in absolute terms and as a share of total aid expenditure. During this period, based on numbers from the Institute for Health Metrics and Evaluation, spending on global health increased from $10.52 billion to $28.87 billion. 

The largest portion of that growth can be traced back to bilateral donors who quadrupled their health spending from $3.30 billion to $12.16 billion. In 2010, bilateral donors contributed 45 percent of total global health assistance – a number which we will probably find remained close to steady in 2011.

A central reason for this growth: global health programs are easy for voters in wealthier countries to understand and support, regardless of where they are on the political spectrum. For example, in 2007 the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) – the world’s largest and most diverse HIV/AIDS global prevention, care, and treatment initiative – was reauthorized with increased funding amid bipartisan and NGO praise. In the U.K., despite some public opposition to aid spending overall, the government increased pledges to the Global Fund to Fight AIDS, Tuberculosis and Malaria and the Global Alliance for Vaccines and Immunization (GAVI) – major investments which were largely applauded by the public. According to a July 2011 survey by the international NGO ChildFund titled, “Australian Perceptions of Global Child Poverty and Aid Effectiveness,” Australians strongly support government spending on health aid.

The appeal of health programs resulted in bilateral donors stepping up their funding for global health initiatives during 2000-2010. However, budgetary constraints caused by the current global economic recession have forced conventional donors either to cut back or funnel their funds from traditional to new global health actors. There is clear evidence that the playing field is changing as we usher in 2012.

According to Yunus, “after more than a decade of steady increases in funding for global health and development programs, foreign aid is flat lining, in many cases dwindling.” Case in point is the U.S. which represents the largest single share of public investment in health programs, but is engaged in contentious budget infighting that may very well result in hard felt decreases in global health spending. Already in Washington, significant health aid cuts are being proposed for 2012, including a 25 percent cut to family planning and reproductive health programs. These austerity realities will likely spread across the Atlantic to affect the global health programming of the European Commission, as well as European DAC donors even if health programs continue to garner the strongest domestic support.

The global emphasis on aid effectiveness is also realigning health spending by urging various donors to commit money to organizations that can prove a direct and immediate impact. This includes those organizations focusing on vaccines and immunizations which can demonstrate the lowest cost per life saved, as opposed to traditional multilateral organizations that tend to have higher overhead costs and a longer-term view. For instance, the World Bank was forced to slash its developmental health budget from $2.05 billion in 2005 to $1.41 billion in 2010. In May, the World Health Organization (WHO) announced it was cutting $1 billion from its $4.8 billion budget for 2012-2013 and cutting 300 jobs at its Geneva headquarters. Similarly, the U.N. health budget for 2012-2013 is 3 percent lower than the agency’s current budget of $5.4 billion. The permanence and effect of these cutbacks remain to be seen. Some global health experts contend that this may hurt critical and more strategic elements of the global health infrastructure, such as R&D and health systems, which are historically executed and driven by multilateral organizations.

At the same time new actors have entered the game, most of which seek to address the “Big 3” communicable diseases, AIDS, tuberculosis, and malaria, and are winning larger slices of the funding pie. Specifically, global health partnerships, particularly the Global Fund and GAVI, were working with only $2.75 million in 2000 (so virtually nothing), but had US$4.05 billion at their disposal in 2010, representing about 15 percent of total global health spending. Moreover, coming out of an initial pledging conference a few months back, donors committed $4.3 billion to GAVI, bringing the alliance’s available resources to $7.6 billion for the period 2011 to 2015. The Global Fund, while missing its replenishment target of $13 billion annually for the next 3 years, was promised a still formidable $11.7 billion by donors to implement its rapidly expanding programs.

Of course no discussion of global health funding is complete without mentioning the Bill & Melinda Gates Foundation – an organization that has altered the global health landscape more than any other and sparked hope and promise over the power of private philanthropy. Although the exact scale of Gates Foundation giving is difficult to pin down, according to the Institute for Health Metrics and Evaluation, its private health spending doubled from about $2.03 billion in 2000 to $4.48 billion in 2010. Other sources estimate that the Gates Foundation will account for approximately 66-68 percent of private giving to global health in the 2010-2011 timeframe.

These still evolving shifts will have a major impact on what we know as the global health enterprise and the diverse set of professionals dedicated to it. Add in the participation of other key private sector players, including pharmaceutical, medical device, and biotechnology firms as well as impact investors and social entrepreneurs and the shakeup becomes all the more imaginable, but not necessarily better understood. Despite new paradigms and worries about inadequate funding for global health, however, it appears that there is still sufficient money on the table to effectively carry out critical programs and reach the world’s poorest. Perhaps these funding realignments will even encourage the pursuit and fostering of the new partnerships and innovation that Yunus, Atwood, and other prominent development practitioners view as the way forward.

Christine Dugay contributed to this report. 

Read more:

  • Global Health: What You Need to Know

  • The Source of Innovation

  • More Health for the Money 

About the author

  • Troilo pete%2520head

    Pete Troilo

    Former director of global advisory and analysis, Pete managed all Devex research and analysis operations worldwide and monitors key trends in the global development business. Prior to joining Devex, Pete was a political and security risk consultant with a focus on Southeast Asia. He has also advised the U.S. government on foreign policy and led projects for the Asian Development Bank and International Finance Corp. He still consults for Devex on a project basis.