Health spending continues to rise in OECD countries and, if current trends continue, governments will need to raise taxes, cut spending in other areas or make people pay more out of their own pockets in order to maintain their existing healthcare systems, new OECD data indicate.
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| Source: OECD |
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According to OECD Health Data 2006, health spending has grown faster than GDP in every OECD country except Finland between 1990 and 2004. It accounted for 7% of GDP on average across OECD countries in 1990 but reached 8.9% in 2004, up from 8.8% in 2003. OECD Health Data 2006 provides a comprehensive database of comparable health statistics in major developed countries, with more than 1200 indicators including some time series going back to 1960.
Ireland
Public spending on health is one of the lowest of any developed country, in spite of massive increases in health expenditure since the late 1990s.
Total Irish spending on health was 7.1 per cent of gross domestic product (GDP) in Ireland in 2004, below the 8.9 per cent average across developed countries.
Only Mexico, Poland, the Slovak Republic and South Korea ranked lower than Ireland in the survey of 30 countries.
The number of acute care hospital beds in Ireland is also well below average. In 2004, Ireland had 2.9 acute beds per 1,000 population, below the OECD average of 4.1 beds per 1,000 population.
Between 1997 and 2002 public health spending in Ireland jumped by 125 per cent. Health spending per capita in Ireland grew by an average of 9.1 per cent per year between 1999 and 2004 - one of the fastest growth rates of all OECD countries.
However, the strong growth in the Irish economy over the same period has meant that the proportion of GDP spent on health has increased by only one percentage point over the period.
The expenditure on health as a percentage of GDP has not changed sine 1992.
Elizabeth Docteur, deputy head of the OECD’s health division, said:
‘‘Ireland has one of the highest per capita GDPs in the OECD, but the country’s per capita spending on health is only average.”
Bulk of healthcare costs is financed through taxes
In most OECD countries, the bulk of healthcare costs is financed through taxes, with 73% of health spending on average publicly funded in 2004. Ensuring sustainable financing of health systems is critical for governments, as health spending as a share of GDP is projected to increase further due to costly new medical technologies and population ageing.
Although the public share of health spending has fallen in countries such as Poland, Hungary and the Czech Republic which had a relatively high public share of health spending in 1990, it has risen in countries where it was low, such as Korea, Mexico, Switzerland and the United States. In Korea, for example, the public share of health spending rose from 38% in 1990 to just over 50% in 2004. In the United States, it increased from 40% to 45% between 1990 and 2004. Although the private sector in the United States continues to play the dominant role in financing, public spending on health per capita is still greater than that in most other OECD countries, because overall spending on health is much higher than in other countries.
Private spending an important source of financing
Private payments for health include those financed by private insurance and those paid directly out of the pocket of private households. Direct, out-of-pocket spending is an important source of financing in some OECD countries, particularly where private health insurance is low. In 2004, the share of direct, out-of-pocket spending was highest in Mexico (51%), followed by Greece (45%), and Korea (37%).
Private health insurance, that is the money paid out by insurance companies on health services, represents only around 6% of total health spending on average across OECD countries, but it plays a large role for certain population groups in Germany and the Netherlands, and for most of the non-elderly population in the United States, where private health insurance accounted for 37% of health spending in 2004. In France and Canada, private health insurance covers 10 to 15% of overall spending, providing optional, enhanced coverage in a public system with universal coverage.
Private sources tend to play a much greater role in paying for pharmaceuticals than for hospital or ambulatory care, because drugs are less well-covered under many publicly-financed insurance schemes. But there are large variations across countries. In 2004, public coverage of spending on drugs was lowest in Mexico (12%), the United States (24%), Poland (37%) and Canada (38%). By comparison, more than two-thirds of spending on drugs was paid by public sources in a number of countries, including Austria, France, Germany, Spain and Sweden.
OECD Health Data 2006
