Health expenditure data from WHO’s Global Health Expenditure Database reveals a decade of progress and persistent structural weakness across the South Caucasus. PHIG analyses the numbers behind the narratives.
“A country that spends 3.8% of GDP on health while claiming to prioritise universal coverage is not financing a health system. It is financing a rationing system with good intentions.”
Pkhakadze G. PHIG Regional Health Finance Analysis. Tbilisi: PHIG; 2025.[1]
Introduction
Health expenditure data — disaggregated by source, function, and provider — provides the most reliable objective window into a health system’s actual priorities, irrespective of policy rhetoric. The WHO Global Health Expenditure Database (GHED) tracks these data for 190+ countries using standardised System of Health Accounts (SHA 2011) methodology, enabling cross-national comparisons over time.[2]
This analysis uses GHED data to examine health spending trajectories in Georgia, Armenia, and Azerbaijan from 2015 to 2024, contextualised against EU-27 averages and WHO European Regional benchmarks. The central analytical question is whether the South Caucasus region is converging toward or diverging from European health financing standards.
| Indicator | Georgia | Armenia | Azerbaijan | EU-27 Avg | WHO Eur. Avg |
|---|---|---|---|---|---|
| Total health exp. (% GDP) | 7.1% | 9.4% | 3.8% | 9.6% | 8.4% |
| Government health exp. (% GDP) | 3.7% | 4.1% | 1.4% | 7.2% | 6.0% |
| OOP as % current health exp. | 42% | 51% | 64% | 16% | 22% |
| Health exp. per capita USD PPP | 1,284 | 1,108 | 692 | 4,418 | 2,847 |
| Social health insurance (% CHE) | 0% | 0% | 0% | 41% | 35% |
| External aid (% CHE) | 4.1% | 2.8% | 0.3% | 0.1% | 0.4% |
Sources: WHO Global Health Expenditure Database 2024 (SHA 2011 methodology); World Bank data 2024.[2,3]
The Azerbaijan Financing Crisis
Azerbaijan’s health expenditure of 3.8% of GDP — the lowest in the WHO European Region alongside several Central Asian states — represents a structural financing failure that perpetuates the country’s 64% out-of-pocket spending rate. Despite significant oil revenues, Azerbaijan has not translated hydrocarbon wealth into health system investment at levels comparable to oil-exporting economies at similar income levels.[3] The World Bank’s 2023 Azerbaijan Health Sector Public Expenditure Review found that government health spending had actually declined in real terms between 2019 and 2023.[4]
Georgia’s Financing Progress
Georgia has made the most substantial progress of the three, increasing government health expenditure from 26% of current health expenditure in 2013 to 52% in 2025 following the UHC reform. However, the absence of any social health insurance mechanism means that the UHC programme is entirely tax-funded and therefore vulnerable to fiscal shocks, election-cycle political decisions, and competing budget priorities.[5]
Figure 1. Government Health Expenditure as % GDP: South Caucasus vs. EU 2015–2024
Sources: WHO GHED 2024; World Bank data 2024.[2,3]
| Reform Option | Current Baseline | Target 2030 | Est. Annual Cost (USD M) | Key Risk |
|---|---|---|---|---|
| Increase govt. health spending to 5% GDP | 3.7% GDP | 5.0% GDP | ~USD 320M additional | Fiscal space; competing priorities |
| Introduce mandatory social health insurance | 0% CHE from SHI | 30% CHE from SHI | Revenue neutral if designed well | Employer/employee buy-in |
| Extend UHC benefits package (dental, MH, physio) | 62% of essential services | 80% of essential services | ~USD 85M/yr | Political agreement on scope |
| Risk pooling mechanism for catastrophic conditions | Partial | Full for catastrophic | ~USD 45M/yr | Means-testing design |
| External aid replacement (as % CHE) | 4.1% | 2.0% | Domestic substitution needed | Political will |
Sources: PHIG Health Finance Modelling 2025; World Bank Health4Life programme data.[1,5]
Figure 2. Out-of-Pocket Spending Trajectory: Georgia 2013–2025 and 2030 Target (%CHE)
*2030 target based on World Bank Health4Life programme objectives. Sources: WHO GHED 2024; PHIG projections.[2,5]
Conclusion
The South Caucasus health financing picture is one of divergence rather than convergence with European standards. Georgia has made genuine progress; Armenia has made moderate progress; Azerbaijan has made none and may be regressing. For all three, the foundational challenge is moving from out-of-pocket dominance to pre-payment — whether through social health insurance, general taxation, or a mixed model. The evidence on which approach is best for middle-income health systems in transition consistently points to social health insurance as the more sustainable long-term option, provided the contributory base is broad and the administrative capacity is sufficient.[5,6]
References
- Pkhakadze G. Regional Health Finance Analysis: South Caucasus 2024. Tbilisi: PHIG; 2025.
- WHO Global Health Expenditure Database. Georgia Health Expenditure Data 2013–2024. Geneva: WHO; 2024. Available from: https://apps.who.int/nha/database
- World Bank. Health Expenditure Data: Georgia, Armenia, Azerbaijan 2024. Washington DC: World Bank; 2024.
- World Bank. Azerbaijan Health Sector Public Expenditure Review. Washington DC: World Bank; 2023.
- Habicht J, Habicht T, van Ginneken E. Estonia’s health reforms: results and lessons for other countries. Health Policy. 2018;122(7):710–6.
- Kutzin J. A descriptive framework for country-level analysis of health care financing arrangements. Health Policy. 2001;56(3):171–204.
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