Health systems: the real drivers of economic growth and social well-being

As countries lean towards austerity, health budgets are falling victim to reductions – this isn’t just short-sighted, it’s dangerous. Health care systems keep people healthy and productive, and also support equity, and are therefore essential for thriving economies

The Covid-19 pandemic laid bare vulnerabilities and inequalities the world over. It also taught us many valuable lessons, by showing us that when health systems are robust and resilient, they can better support societies and drive economic growth.

During the pandemic, policymakers allocated unprecedented public resources to health. In the average country in the World Health Organization European Region, domestic government expenditure on health care as a share of government budgets increased from 12.9% to 13.9% between 2019 and 2021. As a share of gross domestic product, health spending increased nearly a full percentage point, to 5.9%.

These investments paid off, improving and saving lives.

As countries transition into the post–Covid-19 era, they face new political and economic challenges, from the spillover effects of war in Ukraine and the Middle East, to the cost-of-living crisis, to the economic concerns linked to rapidly ageing populations.

Yet health budget fatigue is now starting to set in, and many policymakers, burdened by the pandemic-era financial toll, are leaning towards austerity.

As we have seen time and again, restrictions on health spending are both short-sighted and dangerous. Health systems are not mere cost centres: they are the backbone of our societies.

It is time to reframe the narrative.

How health systems drive growth

An industry in its own right, health systems are essentially economic engines. They are major employers, providing stable jobs that are resilient to market fluctuations. In many countries, healthcare workers represent a substantial segment of the labour force, simultaneously ensuring economic stability and health care for the population.

Health systems are also drivers of human capital, keeping people healthy and productive, and allowing ageing populations to remain in the workforce longer. Poor health remains a leading cause of premature retirement, placing an additional strain on public finances through lost productivity and increased dependency on social security.

Moreover, investing in health systems generates cross-sector benefits.

Recent research has shown that investments in health are also instrumental for gender equality and climate change mitigation.

When people are healthy, they are better equipped to engage in educational and economic activities, fostering gender equality and empowering communities.

And sustainable health systems can drive progress on climate change by promoting green practices and technologies in healthcare delivery.

Perhaps most crucially, health systems underpinned by universal health coverage help reduce poverty and financial hardship.

Curbing out-of-pocket spending on health is a crucial step towards social equity, as enshrined in key international agreements and frameworks, including the Sustainable Development Goals and the WHO European Region’s Tallinn Charter.

The WHO Regional Office for Europe has developed state-of-the-art indicators to monitor progress towards universal health coverage based on the risk of financial hardship due to out-of-pocket spending.

A regional report produced by the WHO Barcelona Office on Health Systems Financing this past year found that among 40 of the 53 member states in the European region, catastrophic health spending worsened in the years leading up to the pandemic compared with when measurement began.

Reshaping our approach

The evidence is clear: policymakers must commit to health systems that spend more effectively and sustainably.

There are two key ways to do this.

First, we need to eliminate low-value care and reduce unnecessarily high prices for health services. Many health systems are still spending far too much on high-cost interventions with very little benefit, diverting resources from more impactful areas. We must make the shift towards high-value care for maximum health benefit.

Second, we urgently need fair wages for all health workers. Competitive salaries and supportive working conditions are vital for maintaining a motivated, capable workforce, essential for delivering high-quality care. As our societies age and labour markets shrink, more working-age people will need to enter the healthcare workforce: we must make it lucrative enough for them to do so.

Covid-19 showed us that without health, societies crumble.

Now, the post–Covid-19 era presents a unique opportunity to reshape our approach to health systems.
We must recognise them as vital investments in our economic and social well-being.
It is time to turbocharge health budgets and ensure resources are effectively used.
It is time to turn our attention to supporting not only healthier populations but also more resilient and equitable societies.

Ultimately, sound health investments leading to healthier populations also contribute to political stability – all the more vital at this time of permacrisis, in the WHO European Region and beyond.
The defining fact remains: investing in health systems is a strategic economic – and political – choice that promises substantial returns for everyone, everywhere.