WHO projects up to 40% cut in health aid in 2025

Official development assistance, or ODA, for health may hit a decade low. Health aid is projected to decline by up to 40% in 2025 compared to 2023 levels, from over $25 billion to around $15 billion, according to estimates from the World Health Organization, presented earlier this month during the Asian Development Bank-hosted INSPIRE forum. This is even below the health ODA funding in 2015, which was over $18 billion. The decline is due to significant donor funding cuts from some of the world’s biggest donor countries, including the United States — the world’s largest sovereign donor to health — and several countries in Europe. Why is this important? This will hit many low-income countries heavily reliant on external aid for their health, impact their ability to respond to disease outbreaks, and also risk further increasing the likelihood of people spending their own money for their health needs. Out-of-pocket spending can push individuals or families into poverty, especially when health care costs are substantial. The WHO data showed that increases in health spending in low-income countries between 2000 and 2022 were driven by external aid and out-of-pocket spending, with the latter making up over 40% of total health spending in low- and lower-middle-income countries. In the African region, out-of-pocket spending accounted for more than 50% of the total health spending in 11 countries, including in Equatorial Guinea, which is classified as an upper-middle-income country by the World Bank. “This means … countries need to spend more on health. Full stop. They need to prioritize domestic public spending on health,” said Kalipso Chalkidou, who holds an expanded role at WHO as director of governance, financing, economics, primary health care, and universal health coverage. What are the potential solutions? In the wake of aid cuts, several health leaders have increased calls for blended financing and health taxes to boost domestic health spending. But there are other potential sources of funding. When it comes to tax, for example, countries can improve tax collection, including addressing illicit financial flows. Countries could also increase their health spending if they’re free from massive debt interest payments through debt relief or restructuring. Another is the use of Special Drawing Rights, which are international reserves held by the International Monetary Fund that countries can use to respond to a crisis or that countries can commit to multilateral development banks to increase the amount these banks can lend to countries. Countries can also scale the use of debt-for-development swaps, where countries get reduced debt and redirect the savings to development projects such as health initiatives. These mechanisms are already working to support countries in addressing the impacts of climate change or to boost their education sector. But they can be set up to benefit health too, said Chalkidou. But the challenge is scaling their use. “The problem I think we have is one of scale,” Chalkidou told Devex. “The scale of the solutions, it’s just like orders of magnitude lower than the scale of the gap that we’re perceiving.”