The global outbreak of COVID-19 is making dramatic changes to policies in health care of governments around the world. The rapid spread of the new pandemic created huge pressure on the health care system of all countries struggling with the new viral disease highlighting the importance of medicine. Rapid reactions to the situation from most parts of the global community and governments add to the importance of proper management of resources in the health care system. The real size and duration of the current pandemic is still unknown. However, it becomes obvious that the COVID-19 pandemic will reshape previous plans and projections of governments around the world on the development of health care systems and there will be unprecedented growth of the amount of resources to be spent on the global health care industry.
Figure 1. Average annual domestic general government health expenditure as % of GDP
|Heavily indebted poor countries||1.49||1.47|
|Source: World Bank data, 2020|
At least during the last two decades we have seen a global trend of gradual increase of the share of public resources that goes to global health care. The share of healthcare in the aggregate government expenditure is commonly accepted as a good proxy showing to what extent health is prioritized by governments. The share of resources a country spends on health care and education is believed to be one of the indicators of development success. In this regard, it should be admitted that Kazakhstan has been extremely underinvesting in health care compared to the rest of the world. The average annual percentage of GDP spent on healthcare in Kazakhstan during 2000-2009 was only at 2.19% ($1.4 billion). This is much lower than the vast majority of other middle-income countries, which on average spend an equivalent of 2.70% of their GDP on health care. Besides, over time the amount of resources directly spent by governments around the world on health measured as a percentage of GDP has increased from 5.41% in 2000-2009 to 5.80% during 2010-2017 (World Bank, 2020). In general, health expenditures have been more significant in wealthy and more developed countries than in developing countries. Currently, the most developed countries devote as much as 10% and even more of their public spending on health.
Given the fact that since 2000, the global population has grown nearly by 24% and the world real GDP growth since then has reached 60%, the global population, in general, has seen very significant growth of health expenditures by states in per capita terms (World Bank, 2020). At the same time, it is interesting to note that Kazakhstan has been following the opposite trend decreasing its spending on healthcare. During the first decade of the 21st century, healthcare accounted for nearly 2.2% of its annual government expenditures and by 2017, this figure dropped as low as 1.94%. This decline rate is even worse than in heavily indebted poor, countries where health expenditures’ share decreased slightly from 1.49% to 1.47% during the last two decades (World Bank, 2020). It becomes even more confusing if we take into account that since 2000 Kazakhstan has had a rather good economic period with more than 6% of average annual GDP growth in real terms (Statistics Committee, 2020).
Fiscal expenditure of the state is an even more precise indicator showing the place for health in the government’s priority list, especially during economic growth that Kazakhstan has seen during most of the period since 2000. In 2019, there was 1291.8 billion tenge ($3.4 billion) allocated to healthcare in the expenditure side of the state budget, which is 9.5% of its total expenditures. Unfortunately, over the last decade, we can see this number decreasing gradually from 12% to 9.5% (Ministry of Finance, 2020).
Salaries are another very important factor that affects any industry and its attractiveness in the labor market. Assuming that most of the healthcare industry in the country is in the public sector of the economy, the salary rates are predominantly determined by the state. Unfortunately, since 2001, the average salary in the healthcare sector of Kazakhstan has been 35% lower than the average salary in the economy (Statistics Committee, 2020), which is a highly negative factor for the development of this essentially important sector. Moreover, as a result of tenge depreciation since 2013, there was a significant decrease in salaries measured in foreign currencies not only in healthcare but also in the entire economy of the country (Statistics Committee, 2020).
The amount of resources along with other factors largely determines the development of any industry in mid-term and long-term perspectives. Healthcare is a very sophisticated industry that requires specific expertise and techniques for proper assessment. However, many international rankings show a clear decline in healthcare in Kazakhstan over the last two decades. For instance, there is the Healthcare Index, which is a commonly used measure of healthcare development. The index estimates the overall quality of the healthcare system including healthcare professionals, equipment, doctors, costs, etc. (Tandon et al. 2000). In 2014, Kazakhstan ranked 48th with an overall score of 60.19. By 2020, Kazakhstan went down to 86th place in the ranking list scoring 50.70 (Numbeo.com, 2020). Thus, we can clearly see that twenty years of underinvestment in healthcare were characterized by a notable decline of the industry.
The Ministry of Healthcare of Kazakhstan already declared salary increases for the medical workers as well as substantial social benefits during the COVID-19 spread in the country [kursiv.kz, 2020]. However, these are temporary measures that will not have a significant effect on the industry in longer-term perspectives. The current situation of global emergency will require drastic changes in the healthcare system in Kazakhstan and a significant increase in economic resources to support healthcare.
Health and education are considered to be the top priority spheres for financing in successful countries and it is essentially important to have a good healthcare system for sustainable development. The statistics show that Kazakhstan has been devoting much fewer resources to its healthcare in comparison to most other countries despite having good economic growth during the last two decades. In order to reach the level of other middle income countries, Kazakhstan needs to increase its healthcare financing by at least 40-50%. Moreover, deeper reforms are needed in order to improve the quality and competitiveness of the sector and the current pandemic situation can be a good pretext for that.
Kursiv.kz (2020). How much salary supplement doctors will receive for the risks in the fight against Coronavirus? Retrieved from https://kursiv.kz/news/medicina/2020-03/skolko-vrachey-poluchat-nadbavku-k-zarplate. Accessed on 10.04.2020.
Ministry of Finance of Kazakhstan (2020). Budget process statistical bulletins. Retrieved from http://www.minfin.gov.kz/irj/portal/anonymous?NavigationTarget=ROLES://portal_content/mf/kz.ecc.roles/kz.ecc.anonymous/kz.ecc.anonymous/kz.ecc.anonym_budgeting/budgeting/reports_fldr. Accessed on 09.04.2020.
Numbeo.com (2020). Health care index by country 2019 mid-year. Retrieved from https://www.numbeo.com/health-care/rankings_by_country.jsp?title=2019-mid. Accessed on 07.04.2020.
Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan (2020). Statistics of labor and employment. Retrieved from https://stat.gov.kz/official/industry/25/statistic/6. Accessed on 09.04.2020.
Tandon, Ajay, Christopher Murray, Jeremy Lauer, and David Evans (2000). Measuring overall health system performance for 191 countries retrieved from https://www.who.int/healthinfo/paper30.pdf. Accessed on 09.04.2020.
World Bank data (2020). Domestic general government health expenditure (% of GDP). Retrieved from https://data.worldbank.org/indicator/SH.XPD.GHED.GD.ZS. Accessed on 07.04.2020.
 World Bank and IMF classification as part of their debt-relief initiative.
Note: The views expressed in this blog are the author’s own and do not necessarily reflect the Institute’s editorial policy.
Kanat Makhanov is a research fellow at the Eurasian Institute of the International H.A Yassawi Kazakh-Turkish University. He holds a BA in Business Economics from the KIMEP University from 2012. In 2014 he earned his Masters degree in Economics from the University of Vigo (Spain), completing his thesis on “Industrial Specialization in autonomous regions of Spain and Kazakhstan”. His main research interests are Spatial Economics, Economic Geography, Regional Economics, Human and Economic Geography.