This paper explores the health financing challenges that countries face when they transition from low-income towards middle-income level and beyond. While domestic actors bear an increasing share of the national health expenditure in this process, the transition is not automatic nor necessarily smooth. The challenges that emerge in the process are recently exacerbated by the COVID-19 crisis, which risks diverting resources away from basic health services. The role of development actors during this stage can be critical in setting up sustainable systems of health financing in those countries.

The paper starts with a review of the progress on the global health agenda by taking stock of past achievements and remaining challenges. Then, it explores how the health financing landscape transitions with the income level of a country, tracing how this can give rise to transition setbacks. Finally, the paper zooms in on the role of development finance and how it can be reshaped to better facilitate the transition process of countries.