The macroeconomic implications of public healthcare financing: a computable general equilibrium analysis of Uganda

Rapid progress to universal healthcare coverage is dependent on adequate resourcing. In low-income-countries, government health expenditure is below the WHO recommended level for universal health coverage and these countries rely heavily on external resources for healthcare financing which is unsustainable. This paper evaluates three options for creating greater domestic fiscal space to support universal health coverage in a more sustainable manner: prioritising the health sector by increasing the health budget share (given a fixed government budget), an earmarked tax for health and increasing foreign aid for health. We use a recursive dynamic computable general equilibrium model to capture the lagged health and healthcare effects. We find that increasing the health share in the general government budget generates higher growth rates in GDP, investment and private consumption, and accelerates poverty reduction in Uganda, leading to increased health, strengthening the case for policy-makers in low- and middle-income countries to frontload investment in healthcare.