Financing universal health coverage--effects of alternative tax structures on public health systems: cross-national modelling in 89 low-income and middle-income countries

Lancet. 2015 Jul 18;386(9990):274-80. doi: 10.1016/S0140-6736(15)60574-8. Epub 2015 May 14.


Background: How to finance progress towards universal health coverage in low-income and middle-income countries is a subject of intense debate. We investigated how alternative tax systems affect the breadth, depth, and height of health system coverage.

Methods: We used cross-national longitudinal fixed effects models to assess the relationships between total and different types of tax revenue, health system coverage, and associated child and maternal health outcomes in 89 low-income and middle-income countries from 1995-2011.

Findings: Tax revenue was a major statistical determinant of progress towards universal health coverage. Each US$100 per capita per year of additional tax revenues corresponded to a yearly increase in government health spending of $9.86 (95% CI 3.92-15.8), adjusted for GDP per capita. This association was strong for taxes on capital gains, profits, and income ($16.7, 9.16 to 24.3), but not for consumption taxes on goods and services (-$4.37, -12.9 to 4.11). In countries with low tax revenues (<$1000 per capita per year), an additional $100 tax revenue per year substantially increased the proportion of births with a skilled attendant present by 6.74 percentage points (95% CI 0.87-12.6) and the extent of financial coverage by 11.4 percentage points (5.51-17.2). Consumption taxes, a more regressive form of taxation that might reduce the ability of the poor to afford essential goods, were associated with increased rates of post-neonatal mortality, infant mortality, and under-5 mortality rates. We did not detect these adverse associations with taxes on capital gains, profits, and income, which tend to be more progressive.

Interpretation: Increasing domestic tax revenues is integral to achieving universal health coverage, particularly in countries with low tax bases. Pro-poor taxes on profits and capital gains seem to support expanding health coverage without the adverse associations with health outcomes observed for higher consumption taxes. Progressive tax policies within a pro-poor framework might accelerate progress toward achieving major international health goals.

Funding: Commission of the European Communities (FP7-DEMETRIQ), the European Union's HRES grants, and the Wellcome Trust.

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • Developing Countries / economics*
  • Global Health / economics
  • Government Programs / economics
  • Health Expenditures
  • Health Services / economics*
  • Healthcare Financing*
  • Humans
  • Taxes / economics*
  • Universal Health Insurance / economics*