WASHINGTON—Latin America and the Caribbean must find the fiscal space to invest more in health.
As countries in the region worry about weak growth and the sustainability of their spending, they should consider supercharging their health investments. As regional health, economic, and pharmaceutical leaders have discussed at recent Atlantic Council events, such investments could boost economic productivity significantly—if the countries direct their expenditures toward efforts that tangibly improve public health.
This edition of Economic Pulse of the Americas explores the region’s track record on public health spending and identifies areas where countries can make their health dollars count the most.
The link between health investment and productivity
A healthy population is a more productive population. Countries that spend more on health per capita tend to have longer life expectancy and higher overall productivity levels, when measured as output per hour worked. Our statistical analysis shows a strong positive relationship between overall health spending, including both public and private spending, and productivity—although correlation is not causation, and other factors play a role in productivity gains.
Countries with lower health expenditure per capita stand to gain proportionally more from each additional dollar invested in health than those already spending at high levels, according to the data. This is significant for Latin America and the Caribbean, where most countries have public investment levels that remain below the Pan-American Health Organization’s recommended target of spending 6 percent of gross domestic product.
Just over a decade ago, Latin American and Caribbean countries agreed to increase their health spending, setting the 6 percent recommendation as a benchmark. Yet twelve years later, most countries continue to fall short. The gap is understandable: Budgets are already stretched thin across the region. Late last year, the International Monetary Fund warned that the region’s major economies need more fiscal consolidation. In this context, countries face the choice between spending cuts or raising revenues, such as via tax hikes or increased collection efficiency.
Now, the trend since the pandemic—when governments increased their health-related spending—has flipped, with public health budgets shrinking as a share of countries’ economies.
Satisfaction with health systems has long stalled
Public satisfaction with regional health systems is also a source of concern. When public trust or confidence in the health system falls, individuals become more risk averse, fearing unexpected health costs down the road. When people avoid risk, they are more likely to save for emergencies and reduce spending and investment, holding back economic growth.
Regional satisfaction with healthcare quality stood at 50.1 percent in 2007. Eighteen years later, the 2025 average stands at 50.5 percent, recovering after a persistent period of decline that reached its floor at 40 percent in 2020. In that time, the region has underperformed compared to most other regions. Latin America and the Caribbean, considered an upper-middle-income region, has also underperformed relative to the wider category of upper-middle-income countries around the world.
Few countries have seen notable improvements in health satisfaction. Venezuela, in particular, is a troubling case. Once ranked among the region’s leaders in satisfaction at 72 percent in 2007, it has since experienced a collapse of public confidence, with just 15 percent satisfaction recorded in 2018. Brazil and Chile, meanwhile, show gradual improvement. After dipping to low levels in the 2010s, satisfaction rose to over 50 percent in both countries by 2025. In both cases, satisfaction improved alongside higher spending.
The fiscal and growth benefits of health investment are clear. Targeted spending, especially in primary care and innovation, can reduce absenteeism and premature mortality, strengthen labor force participation, and raise productivity. Over time, it can also build a more resilient workforce and protect long-term human capital.
Closing the health investment gap
The region has a clear challenge, with public health budgets still far below regional targets. That is the case despite the fact that health investment has clear productivity effects, which can support broader economic activity and strengthen tax collection.
Yet spending levels alone do not determine outcomes. Citizen satisfaction is still stagnating (and critically low in several countries, as the chart above shows). That suggests that if additional health spending is not deployed efficiently or if it does not produce clear health outcomes, it will not have a significant economic effect. Thus, health systems across Latin America and the Caribbean must shift toward sustained investment in areas such as preventative primary care and health innovation that streamlines treatment. Such investments would produce stronger public health results.
This piece is part of “Economic Pulse of the Americas,” a series of explainers about the overlooked economic and trade trends in Latin America and the Caribbean, written by the Atlantic Council’s Adrienne Arsht Latin America Center. To get notified about future editions and other related work on the region, sign up here.