Growth of Global Health Spending Share in Low and Middle Income Countries

Over the past century medical technology has provided bold gains extending human longevity for almost several decades in most welfare economies worldwide. These public health victories came at the cost of huge increase in health spending. The USA, the largest health care market where total health expenditure (THE) grew from 4% of GDP to 15%, may serve as an example of such changes. The secular trend consisting of rising wages and incomes constitutes major factor in the rising resources dedicated to the medical care. Business cycle booms and recessions affected health care spending slowly and with a significant lag. In this sense health expenditures should not be compared to short term, quarterly or yearly fluctuations in Gross Domestic Product (GDP) but correlates well to " smoothed " income over the previous 3–6 years (Getzen, 1990). Growth of health expenditure is driven by several underlying issues: population birth rates, per-capita income, inflation and so called " excess growth " that is mostly explained by medical technology advances or increased patient demand for services. This " excess growth " is responsible for raising the share of health care in national GDP, and thus challenging fiscal sustainability. Evidence of excess growth is seen in health insurance premiums that persistently rise faster than tax revenues or wages. Isolated excess cost growth was the key underlying reason for the surmountable surge in health care costs visible in the United States since the late 1950s. Unlike the contemporary post WWII era, previous historical records testify of stable medical costs of about 4% of GDP from 1929 to the late 1950s. U.S. Census records of employment in clinical medicine and published consumer expenditure evidence from 1850–1950 show that these costs were mostly keeping pace with wages. If they were slightly exceeding wages it was only about 0.5% annually thus it took more than a century for them to double, much slower than the quadrupling from 1960 to 2000 (Getzen, 2000). Major causes of such a sudden rise in health expenditures were huge economic development, distinctively extended longevity, control of contagious diseases, rising availability of income used to fund research in medicine, effective financing instruments, and ultimately significant discoveries in medical technologies that supported public willingness for further investment into potential novel biological drugs, implants, robotic surgery, radiation therapy, organ transplants, and other wonder technologies (Getzen, 2014). With several decades delay, due to dissemination of knowledge and improved …