The COVID-19 pandemic was huge, unprecedented, and costly. Economists estimated the socio-economic damages and related costs of the pandemic in the tens of trillions of dollars[1]—a necessary expenditure to save lives and shield the economy from an unexpected external shock. However, emergency support is enormously costly and only marginally contributes to the resilience and sustainability of a health system. The COVID-19 pandemic has not only exposed the existing infrastructure gaps and health challenges in many countries' healthcare systems but has also emphasized and brought attention to these limitations.
A health system is considered sustainable when it can continually improve the health of a population in pursuit of universal health coverage. Such was the goal of the global health community, but progress was vastly interrupted by the onset of the unexpected health crisis. The experience of COVID-19 suggests that in addition to being sustainable, health systems need to be resilient, or able to cope with, manage, and learn from systemic shocks and other less abrupt challenges when they happen. However, sustainability does not necessarily equate to resilience. The global health system, particularly weakened by inadequate global health governance, has been shown to be far less resilient when facing crises that do not recognize national boundaries. Conversely, a well-resourced health system is more resilient to withstand shocks and better equipped to sustain itself even amidst numerous challenges.
Thus, there is a strong economic argument in favor of upfront investments to enhance the preparedness of health systems against future health crises. Building strong health systems calls for sustained and commensurate funding of the health sector.
Public health has historically suffered from chronic underfunding and erratic budget allocation globally, which contributed to the widespread unpreparedness observed during the COVID-19 pandemic. Just before the pandemic, the World Health Organization recommended in 2019 at least an additional 1% of gross domestic product (GDP) investment in primary health care.[2] In contrast, funding and investing in personal healthcare could enhance the sustainability and resilience of curative health services, preventing issues like bed shortages[3] in intensive care units and ensuring the uninterrupted provision of regular services amidst health security threats. This becomes even more relevant in an urbanized and ageing society where there is an increasing prevalence of non-communicable diseases due to sedentary lifestyles, changes in dietary patterns, and higher stress levels.
Government budgets for the health sector differentiate between public health and personal healthcare funding. Public health measures are population-based and considered public (merit) goods with strong externalities (e.g., herd immunity from vaccination, and early warning from zoonosis surveillance). It is socially optimal for governments to finance most of these types of services. The benefits of personal (curative) healthcare provided in hospitals and primary healthcare clinics, on the other hand, accrue to individuals. Governments fund public health services either directly through taxes or social protection and individuals fund healthcare through out-of-pocket payments and health insurance premiums.
During the height of the pandemic, there was an expectation that governments and the global community would adopt a more far-sighted approach to allocating adequate resources and building robust social protection systems—including health insurance—investing now to be better prepared for the next epidemic, whether it occurs in 5,10, or 20 years. In fact, some governments have already made strong commitments to enhance the resilience and preparedness of their health systems. For instance, Indonesia, as a result of its COVID-19 experience, is implementing a USD4 billion health system strengthening project to increase the availability of functional equipment in public health facilities and improve the utilization of public health services across Indonesia. Similarly, the Philippines is implementing its Universal Health Care Act, aiming to provide access to high-quality and affordable healthcare to people across all economic levels and regions, while strengthening the public health system and increasing preparedness for future health emergencies.
Yet for most governments, their capacity to invest in health systems is impacted by their available budget, high interest rates for investments, and diminished appetite to risk capital for new ventures. Moreover, investing in health may not be the highest priority, as the benefits may only materialize after five to ten years. Thus, there is a considerable risk that the lessons from COVID-19 will go unheeded, leading to a delay in establishing sufficient and stable funding for the health sector, particularly public health.
Addressing the underfunding of health systems requires collaboration from multiple actors, with private capital mobilization complementing governments’ efforts. Governments should prioritize dedicated health budgets that can be insulated from cyclical budget fluctuations. Additionally, the funding capacity of health insurance programs should be expanded to ensure a greater flow of financial resources into the health sector. Conducive environments for private sector investment need to be in place. For instance, ensuring payment guarantees from the government for public-private partnership projects in the health sector is vital to attract private investors. Moreover, civil society and individuals need to hold governments accountable for their actions in the health sector. Increased funding for the health sector also requires better allocation of funds, such as by directing more resources toward strengthening primary health care. Currently, a significant portion of public health funding in most countries is allocated to hospitals, even for services that could be provided at the primary level at a lower cost. Furthermore, private-public partnerships can support government efforts in vaccine and medicine production, and in expanding the range of medical technology and digital health services in medical facilities.
For the international community, including multilateral development banks (MDBs) like the Asian Infrastructure Investment Bank (AIIB), now is the right time to engage in post-emergency support to make health systems more sustainable and resilient to health security threats. MDBs can facilitate appropriate investments and increase government awareness about the sustainability and resilience of health systems. Additionally, this period provides an excellent opportunity to implement the many lessons learned from the COVID-19 pandemic. This includes enhancing preparedness at the national, regional, and global levels; and creating a roadmap and an action plan for faster and more coordinated implementation of programs and projects. The international COVID-19 response showed the importance of international coordination to better respond to health security threats. MDBs were crucial in mobilizing resources, facilitating information exchange and coordination, exchanging best practices, and adopting new technologies. For instance, the rapid adoption and expansion of medical technology, such as telehealth, have played a significant role in mitigating overcrowding in clinics and hospitals during the COVID-19 pandemic.
Thus, MDBs should continue to build on the critical role they played during the pandemic, when they mobilized tens of billions of dollars at a critical time and implemented emergency operations for weak-capacity countries. MDBs should continue to work together to ensure timely and coordinated actions in the future. This includes developing innovative operational modalities for financing and execution to ensure the full and effective disbursement and utilization of financing assistance.
When the pandemic broke out, AIIB swiftly responded to the urgent needs of its Members by providing a total financial envelope of USD20 billion under the COVID-19 Crisis Response Facility (CRF) for vaccines, healthcare needs, and economic and financial support to struggling economies. It also cofinanced many health projects with other MDBs, such as the Asian Development Bank, the European Bank for Reconstruction and Development, and the World Bank Group.
In early 2021, AIIB established a new department, the Social Infrastructure Department (SID). Although AIIB did not have prior operations in the health sector before the pandemic—as a young organization, AIIB’s focus was on hard infrastructure such as energy, transport, and urban development—many health projects were approved under the CRF, leading to the establishment of new relationships with stakeholders and the enhancement of AIIB’s capacity in the health sector. Building on this experience, AIIB is currently formulating its Health Strategy, which is expected to be presented to the Board of Directors by end of 2024.
Considering the challenges and opportunities presented by the post-pandemic landscape, what are the potential interventions that AIIB could implement? As AIIB formulates a comprehensive long-term strategy for health operations, the focus will increasingly be on strengthening healthcare infrastructure to support the expansion of healthcare services, delivery of medical products, medical education, as well as digital and telehealth services. The strategy will also encompass promoting awareness and accessibility of healthy food options, adopting innovative technologies in medical and life sciences, and providing financing for the private healthcare sector in countries with well-established regulatory frameworks. Additionally, AIIB will prioritize One Health initiatives, along with the provision of care for the elderly and long-term care services, as integral components to its health operations.
[1] Statistica. Sept. 19, 2023. Impact of the coronavirus pandemic on the global economy - Statistics & Facts
[2] WHO 2019 Report, 2019-uhc-report.pdf (who.int).
[3] According to OECD, the hospital beds per 1,000 population across upper-middle and lower-middle and low-income Asia-Pacific countries is far below the OECD average of 4.6. Hospital care | Health at a Glance: Asia/Pacific 2020: Measuring Progress Towards Universal Health Coverage | OECD iLibrary (oecd-ilibrary.org).
