Health spending growth picks up across wealthy nations

29 Jun 18

Health spending in advanced economies has grown by the fastest rate in seven years, OECD figures have revealed.

Spend within the OECD increased by 3.4% on average in 2016 and spending in 2017 is estimated to have grown by 2.5%, OECD data released on Thursday found.

This is the highest rate since 2009, although it is still below pre-crisis levels. As a share of gross domestic product, health spending accounted for 8.9% in 2016 and 2017 across the OECD.

Michael Mueller, health policy analyst in the OECD health division, said: “Health spending is back on a growth path after the slowdown following the financial crisis and now accounts for close to a tenth of total economic activity.”

In nearly all OECD countries, the majority of health services are funded through government schemes or some form of social insurance.

In the UK, Iceland, Denmark and Sweden around 80% of all spending is financed by national or regional government schemes, such as the National Health Service in the UK.

In the Czech Republic, Germany, France, Japan, Luxembourg and the Slovak Republic, 70% or more of healthcare costs are covered by social health insurance. 

Health spending in the US was the highest at 17.2% of GDP, while Switzerland spent 12.3% and France 11.5%.

At the other end of the scale, Turkey spent 4.2% of GDP while Mexico spent 5.4% on health.

The OECD analysis includes both governments and individuals in the 34 member countries have spent on healthcare.

Before the crisis, average health expenditure rose by between 4-6% per year, as a result of rising prices in the health sector and increased demand for services.

Since 2012, spending has tended to follow economic growth more closely.

The OECD statistics reflect that many countries, particularly in Europe, cut health spending during the financial crisis as they reined in public budgets.

In 2017, health spending in Greece was still almost 30% below the level seen in 2009, while Portugal, Italy and Spain are only just back to pre-crisis levels.

In Korea, health spending has continued to increase by over 6% per year on average since 2009.

Kalipso Chalkidou, director of global health policy at the Center for Global Development, told PF International that health spending figures only gave a partial picture of the effectiveness of health systems.

“Whether more spending on health is a positive development largely depends on the baseline and uses of this money,” she said.

“The productivity of each healthcare system and policy choices is as important as the fiscal capacity.”

Did you enjoy this article?

Related articles

Have your say

CIPFA latest