Out-Of-Pocket Spending Makes up Majority of Healthcare Spending in All but the Richest Countries

Relative health expenditures in low, lower-middle, and upper-middle-income countries are almost entirely composed of government schemes, which do not require financial contributions from beneficiaries, and out-of-pocket spending. The 2024 Global Spending on Health report by the World Health Organization (WHO) from December 9 shows that 43 percent of all health spending was out of pocket in low-income countries in 2022, compared to 19 percent in high-income countries. The potential result is worse-quality healthcare and a lack of access to necessary medical procedures in times of macroeconomic crises.

Social health insurance and nonprofit schemes are also responsible for significant spending shares in upper-middle and high income as well as low and lower-middle income countries, respectively. Social health insurance is a contributory healthcare scheme implemented in many European countries like Germany or France. In the former country, for example, one half of the cost of mandatory health insurance is deducted from an employee's salary and the other is covered by the employer.

Voluntary private health insurance, on the other hand, makes up only a minority of the overall health spending, reaching an eight percent share in upper-middle income countries. Countries are grouped according to World Bank group definitions updated in 2023, with the upper-middle income group composed of nations like Montenegro, Belarus, Namibia, Turkey or Peru that have a gross national income per capita between $4,516 and $14,005.

Overall, estimated health expenditures worldwide stood at $9.8 trillion in 2022, more than doubling compared to figures from 2000. Domestic public spending, which according to the WHO report is "health expenditure funded by domestic sources, including general taxation, nontax revenue and social health insurance contribution", made up $6.1 trillion or 62 percent of the total. The United States alone was responsible for 43 percent of global health spending, with all other high-income countries like Japan, France, Germany or the United Kingdom contributing an additional 36 percent. Overall spending of low and lower-middle income countries only makes up around three percent of the global health expenditure.