Inclusive policies for health financing towards universal health coverage in Pakistan: direct or indirect taxes

PurposeThe unresolved crisis scenario and a prolonged COVID-19 pandemic increased social inequalities, mainly affecting the most vulnerable groups to access health services. The data in Pakistan show that health coverage benefits less than half of the population and a weak health system forces households to finance their health with out-of-pocket expenses. Therefore, it is a pending task to guarantee universal health coverage and design sustainable and inclusive policies to finance and provide health services. This study aims to offer a unique solution for health financing to Pakistan.Design/methodology/approachThis study uses the VECM model by employing the data from Pakistan to indicate sustainable policies for health financing.FindingsThe results of this research show that direct taxes have a positive impact on public health expenditure; on the contrary, indirect taxes have a negative impact; it also confirms the importance of considering the direct tax based on high-income quintiles to guarantee equality and Access to health for all that contributes to human development.Practical implicationsThis article leads to the design of a new health system that will be useful for improving the health of Pakistan by presenting a solution to enhance health financing. Meanwhile, Pakistan will experience better conditions in the face of health crises.Social implicationsImproving health financing through the equality approach can provide public access to the health system and strengthen the positive effects of the health system on socio-economic relations.Originality/valueThis paper provides a unique solution for the ministry of health of Pakistan, International organisations and national authorities to reach a high level of health coverage without any cost to the financial system and increase the cost of living of the Pakistani people.HighlightsIncrease efficient health financing by integrating health coverage programmes.Implementing direct taxes based on income quintiles improves health equality.Indirect tax policies will not positively contribute to health financing.Improving health financing efficiency decreases health inequality.