There is broad agreement that government has an important role to play in the development of human capital, especially in health and education. Multilateral organizations, such as the World Bank, commonly call for public sector investment in human resources but the use of health spending to combat unemployment remains controversial. This article examines public sector expenditures in health and focuses on three arguments: 1) public goods; 2) investment in human capital; and 3) Keynesian spending in periods of high unemployment.