Health amid a Financial Crisis: A Complex Diagnosis: The Global Financial Crisis Could Have Profound Implications for the Health Spending Plans of National Governments. Unless Countries Have Safety Nets in Place, the Poor and Vulnerable Will Be the First to Suffer

By Parry, Jane; Humphreys, Gary | Bulletin of the World Health Organization, January 2009 | Go to article overview

Health amid a Financial Crisis: A Complex Diagnosis: The Global Financial Crisis Could Have Profound Implications for the Health Spending Plans of National Governments. Unless Countries Have Safety Nets in Place, the Poor and Vulnerable Will Be the First to Suffer


Parry, Jane, Humphreys, Gary, Bulletin of the World Health Organization


Dr Suwit Wibulpolprasert, senior adviser on disease control at Thailand's Ministry of Public Health, remembers the last time the wheels came off the global economy. "There was less travel and purchase of cars and motorcycles. Sales of alcohol--as well as tobacco--were reduced. These factors resulted in fewer deaths and injuries in road accidents," he says.

Wibulpolprasert's rather upbeat remarks underscore the complexity of the situation faced by public health officials, health-care professionals and patients around the world, as falling asset values, volatile exchange rates and shrinking industrial output complicate the business of getting health care to the people who need it.

This complexity is familiar to health economists. "There are so many offsetting factors that do not necessarily lead to one-sided effects on health," says David Evans, director of the department of Health Systems Financing at the World Health Organization (WHO). Examples of this abound. In an economic crisis, governments may use their health budgets more effectively by switching to more generic drugs. Governments--as in the case of Mexico, Thailand and the Republic of Korea among others--may also take new social protection measures.

"In a recession it is important for governments to protect the poor and vulnerable, but most countries have not yet done this," Evans says, adding that WHO has long been helping countries develop universal health protection mechanisms that are a vital safety net in times of economic turmoil.

The current financial crisis that started with the collapse of the subprime mortgage market in North America and parts of Europe in 2007 has since extended to low- and middle-income countries. Hungary has received emergency financial support from the International Monetary Fund (IMF) and other countries are in talks to secure similar IMF packages. But such support could limit governments' ability to spend on health. And while developing countries are not yet in recession--defined as two consecutive quarters of negative economic growth--economists are concerned about the global downturn. Some fear it could be as bad or even worse than the great depression of the 1930s.

The World Bank currently forecasts growth for the global economy of 1% in 2009, including a contraction of about 0.1% for developed countries. The only silver lining in the gathering clouds for net importers of commodities is that oil, food and commodity prices have fallen. As bleak as the situation appears to be, it is hard to gauge the implications of all of this for people's health around the world.

That's why health economists are looking at past recessions and their effect on health care to shine some light on the current crisis. The IMF identities three periods of global recession in the past 20 years: 1990-93; 1997-98; 2001-02. The last two were driven by financial crises and are, in some ways, similar to the current crisis.

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One of the clearest trends economists have identified is that in all three recessions total commitments of official development assistance (ODA) declined. While, ODA for health increased during the 1990-93 recession, it fell more than overall ODA commitments in the two subsequent recessions. Economists, however, qualify this by saying that disbursement data before 2002 are not accurate.

WHO's Director-General Dr Margaret Chan has urged affluent countries not to reduce ODA or to cut spending on health, education and social protection. "Both of these responses have occurred in the past. And both could be as ... devastating for health, development, security and prosperity as they were in the past."

Beyond the decline in ODA, another striking fact economists point out is that total health expenditure has tended to fall in countries affected by recession. But not always, and here, the key factor is government policy. Some countries have protected government health spending and others have not.

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