Healthcare can be paid for through a variety of financing arrangements. In some countries, healthcare might be predominantly financed through government schemes by which individuals are automatically entitled to healthcare based on their residency. In other cases, compulsory health insurance schemes (through either public or private entities) linked to the payment of social contributions or health insurance premiums finance the bulk of health spending. In addition to these, a varying proportion of healthcare spending consists of households’ out-of-pocket payments – either as standalone payments or as part of co-payment arrangements – as well as various forms of voluntary payment schemes such as voluntary health insurance.
Generally, the higher the income level of a country, the higher the share of healthcare spending financed through government and compulsory health insurance schemes. This global pattern of healthcare financing can be seen across Asia-Pacific countries: 77.1% in high-income countries versus 47% in low- and lower-middle‑income countries (Figure 6.3). In New Zealand, Japan and Brunei Darussalam more than 75% of all health expenditure was paid for through government schemes and compulsory health insurance in 2021. A similar proportion was observed in only two low-income countries, Solomon Islands and Papua New Guinea. By contrast, in Myanmar and Bangladesh less than 25% of health spending was covered by such schemes. Between 2015 and 2021, the share of health expenditure financed by government and compulsory health insurance schemes increased by more than 10 percentage points in Nepal, Indonesia, Singapore and Cambodia, whereas it decreased by 5 percentage points in Fiji and by more than 2 percentage points in Viet Nam and Myanmar. Government efforts to tackle the COVID‑19 pandemic are likely to have contributed to a large extent to increases in public health spending.
Figure 6.4 highlights the change in government and compulsory health insurance schemes spending as a share of GDP between 2015 and 2021. On average, there was an increase in the share in upper-middle- and high-income countries in Asia-Pacific from 2.2% to 2.9% and 5.3% to 6.1% of GDP respectively; the share for low- and lower-middle‑income countries also increased from 1.6% to 2.1% of GDP over the same period. No countries reported a decrease during this period, with many countries such as Singapore, Mongolia and Korea experiencing increases of over 1.5 percentage points.
Governments provide a multitude of goods and services out of their overall budgets. Hence, setting priorities for health in budget allocations is a choice by governments and society as healthcare is competing with many other sectors such as education, defence and poverty alleviation programmes. A number of factors including, among others, general government revenues, nondiscretionary obligations such as debt servicing, and the capacity of health ministers to influence the overall budgetary allocation to the health sector determines the size of public funds allocated to health. Public budgets in health were also significantly conditioned by the COVID‑19 crisis. In 2021, health spending by government schemes and compulsory insurance stood at around 7.9% of total government expenditure across low- and lower-middle‑income countries, whereas it represented 10.8% of total government expenditure in upper-middle‑income countries in Asia-Pacific (Figure 6.5). In Japan, Australia, New Zealand, Korea and Singapore more than 15% of public spending was dedicated to healthcare. On the other hand, less than 5% of government expenditure was allocated to healthcare in India, Papua New Guinea, Myanmar and Bangladesh. The level of public spending on healthcare is also linked to the capacity of spending by government as measured by the share of government spending in GDP. Government spending accounted for 24.4% of GDP in low- and lower-middle‑income countries, whereas it represented 27.6% of GDP in middle‑income and 35.1% of GDP in high-income Asia-Pacific countries in 2021.
