Health plays the key role in determining the human capital. Better health improves the efficiency and the productivity of the labour force, ultimately contributes the economic growth and leads to human welfare. To attain better, more skilful, efficient and productive human capital resources, governments subsidise the health care facilities for its people. In this regard, the public sector pays whole or some part of the cost of utilising health care services. The size and distribution of these in-kind transfers to health sector differs from country to country but the fundamental question is how much these expenditures are productive and effective? It very much depends on the volume and the distribution of these expenditures among the people of different areas of the country. Besides the nature of the existing circumstances of the human resource, any marginal change in public sector spending on health services may have positive impact on the human capital and economic growth.

Health generates positive externalities for the society as a whole, as well as the equity concerns that without public sector financial support only the wealthy segment of the population would be able to afford reasonable health care services. Lamiraud, et al. (2005) argued that social health protection is an important instrument aiming at fair burden sharing and reducing barrier underlining access to health care services.  Another good reason for the government spending in delivering basic health care services is to reduce burden of the diseases (BOD) in the productive years of the life. The social rate of return and the BOD force the policy-makers to transfer the public resources towards basic health care facilities.

According to the Economic Survey of Pakistan (2005-06), the government spent 0.75 percent of GDP on health sector in order to make its population more healthy and sturdy. In this regard, a number of vertical and horizontal programmes regarding health facilities are operative in Pakistan. The federally funded vertical programmes include: Lady Health Worker Programme; Malaria Control Programme; Tuberculosis and HIV/AIDS Control Programme; National Maternal and Child Health Programme; the Expanded Programme on Immunisation; Cancer Treatment Programme; Food and Nutrition Programme, and; the Prime Minister Programme for Preventive and Control of Hepatitis A & B.