The Post-COVID Shift in Global Health Expenditure and Financing: Evidence from a 193-Country Panel, 2010–2023
Using a 193-country panel from 2010–2023, this study demonstrates that the post-COVID period triggered a persistent, statistically significant shift in global health financing characterized by a sharp rise in government health spending per capita and a relative decline in out-of-pocket shares—particularly in high-income nations—rather than a mere transient spike or pre-existing trend.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
Every nation keeps a ledger of how much it spends to keep its people healthy, tracking the total bill as a slice of the country's overall economic output. This slice, known as health expenditure as a percentage of gross domestic product, is a vital sign of a society's priorities and its ability to pay for care. For decades, economists and public health officials have watched this number drift slowly upward, driven by aging populations and the rising cost of new medical technologies. But in early 2020, the world faced a sudden, shared shock: a global pandemic that demanded an immediate, massive injection of funds for testing, vaccines, and hospital care. The question that has lingered since the acute phase of the crisis passed is whether that surge was merely a temporary spike—a fiscal emergency that faded once the danger receded—or if it permanently altered the baseline of how much the world spends on health and, perhaps more importantly, who foots the bill.
A researcher at the Indian Institute of Technology Kharagpur, Kunal Dhanda, set out to answer this by looking at the financial records of 193 countries over a fourteen-year period, from 2010 to 2023. Because the pandemic hit every nation at roughly the same time, there was no "control group" of unaffected countries to compare against, making the analysis difficult. Instead of trying to find a perfect comparison, the researcher treated the pandemic as a global event and looked for a distinct break in the data, asking if the spending habits of the world changed in a way that could not be explained by the slow, steady upward trends that were already happening before the virus arrived. The study also sought to untangle a specific confusion: when the share of health costs paid by governments goes up, does that mean households are paying less, or does it simply mean the total pot of money has grown so fast that the government's slice looks bigger even if the household's slice is also growing?
The analysis reveals that the pandemic did indeed leave a lasting mark on global health spending. When the researcher compared the years after 2019 to the years before, the data showed a clear, persistent jump in spending. In the immediate aftermath of the crisis, health spending surged, and while it did retreat somewhat as the emergency eased, it did not return to its pre-pandemic level. By 2022 and 2023, countries were still spending significantly more on health relative to their economies than they had been a decade prior. To ensure this wasn't just a continuation of the slow upward drift that existed before the virus, the researcher built a strict counterfactual model. This model took each country's spending trend from 2010 to 2019, drew a straight line through those years, and projected where that line would have gone if the pandemic had never happened. When the actual spending of 2020 through 2023 was compared to this projected line, a gap remained. The actual spending was roughly 0.37 percentage points of GDP higher than what the pre-pandemic trend would have predicted. This gap is statistically significant, meaning it is highly unlikely to be a random fluctuation.
To test the strength of this finding, the researcher performed a rigorous check often used in high-stakes research: a permutation test. Imagine taking the ten years of data before the pandemic and randomly picking four of them to pretend were the "post-pandemic" years. If the researcher did this hundreds of times, looking for a fake "break" in the data, the results would cluster around zero, showing no real jump. However, when the researcher looked at the actual four years of the pandemic, the jump in spending was so large that it fell completely outside the range of any possible random combination of pre-pandemic years. In fact, the real jump was more than twice as large as the biggest fake jump the researcher could manufacture from the earlier data. This confirms that the 2020 surge was a genuine discontinuity, not just an artifact of the data drifting upward over time.
The story of who pays for this increased spending is more nuanced than the headline numbers suggest. The data shows a clear shift in the financing mix: the share of health costs covered by governments rose by about 2.4 percentage points, while the share paid directly by households out of their own pockets fell by a similar amount. At first glance, this might suggest that governments absorbed the burden and protected families from the cost. However, when the researcher converted these shares into actual dollar amounts per person, a different picture emerged. Both government spending and household spending increased in absolute terms. Government spending per person rose by nearly 195 US dollars, while household spending per person also rose, though more modestly, by about 27 US dollars. The reason the household share went down is that the total amount of money spent on health grew so rapidly that the government's contribution grew roughly seven times faster than the household contribution. Households did not pay less; they simply paid a smaller portion of a much larger total bill.
This shift in financing, however, was not felt equally across the globe. The data indicates that the move toward government-funded health care was concentrated in middle- and high-income countries, where governments had the fiscal space to expand their budgets quickly. In these wealthier nations, the share of health costs paid by households dropped significantly. In contrast, low-income countries saw no statistically detectable change in their financing mix. In these poorer nations, households continued to shoulder about 43 percent of health costs, a burden that remained stubbornly high and unchanged by the pandemic. For roughly three in ten countries in the study, household spending per person did not rise at all, but for the majority, it did rise, just at a slower pace than government spending.
The trajectory of the spending tells a story of a spike followed by a partial fade. The most dramatic increase happened exactly in 2020, with a sharp jump in spending relative to the previous year. In the years immediately following, the rate of growth slowed, and spending began to drift back down, but it did not return to the baseline. By 2023, the level of spending remained elevated, settling at a new, higher plateau. This pattern suggests that while some of the spending was a temporary emergency response that has since receded, a portion of the increase represents a durable expansion of health system capacity or entitlements that has persisted. The research concludes that the pandemic coincided with a real, persistent rise in global health spending and a shift toward public funding, but this shift was a privilege of wealthier nations. For the world's poorest countries, the pandemic did not durably protect households from health costs, nor did it fundamentally alter the heavy reliance on out-of-pocket payments that defines their health systems.
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