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$74 billion to deliver universal healthcare as part of ‘social compact’ with world’s poor - new report

Press Release

​Press release - global
Embargoed until Monday 13 April 2015 00:01

$74 billion to deliver universal healthcare as part of ‘social compact’ with world’s poor - new report

Free basic universal healthcare would cost $74 billion a year to deliver in poor countries – equivalent to 1.7% of what the world’s richest countries spend on healthcare a year, according to a new report from the Overseas Development Institute (ODI).

In ‘Financing the Future’, researchers at ODI calculate that a ‘new social compact’ comprising universal health, free primary and secondary education, and income support to protect the poorest, will cost around $148 billion in low income countries. They argue the costs for this must be shared by rich and poor countries. 

The report says that while there have been enormous strides in poverty reduction over the past two decades, progress will not be so easy in the coming years, as the poor are increasingly concentrated in conflict-prone states, mainly in sub-Saharan Africa.

A global financing summit planned in July provides an opportunity to tackle the huge gaps in the delivery of basic services, like health and education. Even with the recent increases in economic growth and more taxes raised in low income countries, ODI researchers estimate there will be a shortfall of $73 billion.

The authors argue that aid should support a global ‘minimum standard of living for all’ and it is affordable. Existing finance should be focused on the delivery of this basic global compact. If existing pledges on international aid are fulfilled there would be more than enough to pay for the $73 billion shortfall.

Report author Romilly Greenhill said, “Aid is uniquely well placed to support poor countries in their efforts to reach the poorest, including by providing free healthcare and education, and cash for those living below the poverty line. But to do this effectively, the aid industry will need to change”.

The report says that poor people are increasingly living in fragile states, but aid flows to these countries haven’t been keeping step. On current projections, if radical change does not occur, over half a billion people will still be in extreme poverty and four million children will die annually from lack of basic healthcare by 2030.

“Aid isn’t the answer to eradicating poverty – but it is an incredibly important part of the solution,” said Paddy Carter, co-lead author of the report, “without more aid delivered in the right way, in the right places, the goal of eradicating poverty will be out of reach.” 

Among the report’s other key recommendations are:

·       New global funds should be created or the mandates of existing organisations expanded to support the introduction of universal health coverage, income support and the provision of education in humanitarian emergencies.

·       50% of aid should be provided to least developed countries, over the long term, to ensure no one is left behind by progress.

·       Development must be locally-led; therefore foreign aid must work to increase local capacities so that fragile states and other poor countries can use aid effectively.

This report is launched in advance of the UN’s 2015 Financing for Development conference in Addis Ababa, Ethiopia, where governments will pledge funds to support the next set of global development targets.

- ends-

Notes to editors:

The $148 billion is made up of $74 billion for universal health care, $32 billion for universal primary and secondary education and $42 billion for social protection. The methodology used to calculate this is based on the latest costings from international experts, such as the 2015 UNESCO Education for All report, the High Level Task Force on Innovative International Financing for Health, recently updated by Chatham House, and the authors own calculations for an indicative social protection budged, based on a stylised cash-transfer scheme tailored to national poverty gaps, and accounting for leakage and administration costs, full details are in the report.

The 0.15% comparison was calculated by using the cost of healthcare in the 34 richest countries (based on official OECD figures) and comparing it to our calculation of what healthcare would cost in 34 low income countries.

The $73 billion gap was calculated using estimates of the each country’s tax capacity and existing aid flows, assuming that 50% of resources are spent on the social sectors. Full details are in the report.

The World Bank has classified 36 of the world’s poorest countries as low-income countries, with the majority of these countries in sub-Saharan Africa.

The 2015 States of Fragility report published by the OECD categorises 50 countries as fragile states. Almost all of these are also low-income countries.

For a copy of the report or to interview the lead authors Romilly Greenhill or Paddy Carter, please contact ODI’s Clare Price on +44 7808 791 265 or email
[email protected]