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Rise in health expenditure: need for more financial plans

International research revealed that enhancing financial situation and operating margins is probable to remain a top issue. Many public and private health systems have been experiencing revenue pressure, growing costs, and stagnating or falling margins for years. The trend is predicted to persist, as growing demand, funding limitations, infrastructure upgrades, and therapeutic and technology advancements strain already limited financial resources. The experts also mentioned in the research that combined health care spending in the global major regions is predicted to stand US$8.7 trillion by 2020, up from US$7 trillion in 2015.

As has been the case for the past many years, spending is predicted to be driven by aging and growing populations, developing market expansion, clinical and technology advances, and growing labor costs (exacerbated by many markets’ competition for health care workers). Health care spending by country varies widely. Unluckily, research also revealed that higher spending levels don’t always produce better health outcomes and value. It is also revealed that United States, at 16.9 percent of GDP in 2016, continues to spend considerably more on health care than comparable countries but it is in the lower half of the Organization for Economic Cooperation and Development (OECD) countries’ life expectancy rankings. US health spending now exceeds US$3 trillion per year, with growth rates predicted to accelerate through 2024. Major spending categories are led by hospital care (US$1 trillion), physicians (US$634.9 billion), and prescription drugs (US$328.6 billion).


In Pakistan, the Finance Ministry reported that cumulative health expenditures of federal and the provinces were estimated at Rs 384.57 billion for FY2018 which was 31.75 percent higher than the actual expenditures of Rs 291.90 billion realized during FY2017. A brief look into previous year’s performance explained that total health expenditures rose both in terms of growth and as percentage of GDP. It increased by 29.54 percent to stand at Rs 291.90 billion during FY2017 as compared to Rs 225.87 billion in 2015-16. In the country, the government experts also mentioned that the achievements of the health sector during FY2017 included establishment of 3,100 hospital beds, 5,000 new doctors, 500 dentists, 3,200 Nurses, 4,500 paramedics, 450 Traditional Birth Attendants and 9,000 Leady Health Workers (LHWs).


Under the National Expanded Program for Immunization, about 7 million children were immunized and 18 million packets of ORS were distributed during FY2017. The target for FY2018 is 4,000 hospital beds, 5,000 new doctors, 700 dentists, 4,000 Nurses, 5,000 paramedics and 1,000 Traditional Birth Attendants and 8,000 LHWs.

The government officials also reviewed that health expenditures surpassed the budget allocation of Rs 273.34 billion set for 2016-17. While in terms of GDP, health expenditure increased to 0.91 percent during FY2017 from 0.77 registered during 2016. During the months of Jul-February, 2017-18 health expenditures consumed 43.5 percent of budget allocation to stand Rs 167.16 billion as compared to the expenditure of Rs 121.57 billion in the same period of FY2017. In terms of growth it rose by 37.51 percent. Viewed from GDP, it increased to 0.49 percent during July-February, 2017-18 from 0.38 percent recorded in the corresponding period of FY2017. It is worth mentioning that the last fiscal year has recorded a considerable rise in budget allocation for health expenditures explaining 40.7 percent growth by allocating Rs 384.57 billion during FY2018 as against to Rs 273.34 billion during FY2017. It is also said that reforms in the country’s pharmaceutical and health sector are probable to be implemented over a longer time frame, supporting the sector on its growth trajectory. Pakistan’s pharmaceutical market was valued at Rs 301 billion (US$2.86 billion) in 2017, and the experts forecast an increase in expenditure to Rs 973 billion (US$ 5.36 billion) by 2027.



Since health expenditure is considered as a public good as it adds to the capacity of the economy, many developed states no doubt allocate huge budget for universal medical coverage and others look for measures to enhance coverage. However, despite a positive link between economic development and a healthy society, the health sector still gets low priority in the public strategies and allocation decisions of the investment funds in our country. In particular, public sector health expenditures as a percentage of GDP have not only remained immensely low but have also been declining consistently since 1990s. Not only the ratio has been falling, Pakistan declined far lower than health related spending in many developing states. Ever growing population and limited budgetary resources are considered principal factors behind these unimpressive statistics. In spite of all above, the Government of Pakistan is dedicated to increase the health coverage to meet the growing demand of increasing population.

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