health expenditure trends in oecd countries, 1990-2001

This article presents data on health carespending for 30 OECD countries fromOECD Health Data 2003, the latest editionof OECD’s annual data collection on healthsystems across industrialized countries.OECD data show health care expendituresas a proportion of gross domestic product atan all-time high, due to both increasedexpenditures and overall economic slow-down. The article discusses similarities anddif ferences across countries in how healthcare expenditures are funded and how thehealth care dollar is spent among types ofservices.

INTRODUCTION

OECD countries are currently spendingrecord amounts on health care. In 2001,they spent an average 8.4 percent of theirGDP on health care, up by 0.3 percentagepoints from 2000. Pressures for furthergrowth arise from rapid advances in med-ical technologies, population aging, and ris-ing public expectations. OECD data showthat health care spending has outpacedeconomic growth over the past decade,even before the economic downturn of2001. The latest increase in expenditureratios, therefore, comes as no surprise. Infact, it was anticipated by several authorsfor individual countries, e.g., the U.S.(Heffler et al., 2003) and for Canada(Canadian Institute for Health Information,2003).

Over the 1990s the gap between healthspending growth and economic growthrates was roughly 1 percent for OECDcountries on average, on a per-capita basis.In 2001, the latest year available for inter-national comparisons, health care spend-ing growth has accelerated in severalOECD countries, including the U.S. (Levitet al., 2003) where it was above theunweighted OECD average.

The pressure on public budgets fromaccelerated health care spending has beena major policy concern in OECD countriesduring the past two decades (Docteur andOxley, 2003; Imai, 2002; Mossialos and LeGrand, 1999; Ranade, 1998; Saltman andFigueras, 1997). Recent economic slow-down and a new upsurge in health carespending, especially in the U.S. hasprompted a new round of discussionsabout desirable health policies to influenceaggregate health care spending (Altman etal., 2003; Cutler, 2002).

A common approach of public healthcare policy in OECD countries has been tocombine cost-containment strategies withlong-term structural change to improvevalue-for-money in health care (Docteur andOxley, 2003; Organisation for EconomicCo-operation and Development, 1995). InSweden, for example, one of the majortools for cost containment was downscal-ing in the hospital sector and decreasing inthe number of health care personnel.Sweden is also among the few OECD coun-tries where the number of physicians per1,000 population did not increase during

HEALTH CARE FINANCING REVIEW/Fall 2003/Volume 25, Number 1 1

The authors are with the Organisation for Economic Co-opera-tion and Development (OECD). The research in this article wassupported by the Centers for Medicare & Medicaid Services(CMS) under HCFA Contract Number 500-00-0010. The viewsexpressed in this article are those of the authors and do not nec-essarily reflect the views of the OECD Secretariat or CMS.

NOTE: This is an update of previous articles on spending trends(Huber 1999; Schieber, Poullier and Greenwald, 1992). It focus-es on expenditure trends since 1990 and on comparisons withrecent experience in the U.S.

Health Expenditure Trends in OECD Countries, 1990-2001Manfred Huber, Ph.D. and Eva Orosz, Ph.D.

the 1990s.1 But it is cost-containment mea-sures that are often the more visible part ofreforms, and those which, in many cases,directly affect households who pay forhigher cost sharing, or for goods and ser-vices that are no longer reimbursed underpublic programs (Ros, Groenewegen, andDelnoij, 2000). Among the most recentexamples is the current reform proposal inGermany (Financial Times, 2003). A cen-tral part of the German reform proposal,recently enacted and due to be implement-ed at the beginning of next year, is a shift ofhealth care expenditures to private financ-ing; for example, consumers will face high-er cost sharing for prescription drugs anddental care.

In several countries, an important featureof the changes of health care financing inrecent years has been a reduction in theautonomy granted to social insuranceregimes to simply pass through higher costsinto higher compulsory contributions. Thishas been the case in the Czech Republic,France, Germany, and Hungary. Because ofthe depressive effect on employment thatcould result from higher employer paidsocial charges, the control of contributionrates has become an explicit policy target. Inorder to reconcile this with the financial via-bility of insurance regimes, three relatedstrategies have been followed by govern-ments: (1) impose budget constraints onproviders, (2) require individuals to bear agreater share of expenditures, throughincreasing copayments, and (3) ensure thataccess to care remains available to the poor(general taxation has financed a growingproportion of care, particularly by financingcopayments for those on low incomes).France has introduced municipal socialinsurance specifically to address this lastpoint (Imai, Jacobzone, and Lenain, 2000).

Current problems in many countries,however, show that strong control on pub-lic spending on health care might lead todifficulties in terms of other policy goals(Docteur and Oxley, 2003). Canada,Denmark, United Kingdom, and the U.S.are currently experiencing shortages ofnurses and even physicians.

In Canada, the declining Federalhealth transfers put a strain on provincialhealth care systems (Matteo, 2000).During 4 years in the mid-1990s, realtotal health care spending in Canada fell.This coincided with a decline in the sat-isfaction with the health care system.For instance, the proportion of peoplesaying that the health care system need-ed only minor changes dropped from 56percent in 1988 to 20 percent in 1998.Concerns about underfunding, systemadministration, and access to specialtycare were among the main public con-cerns (Donelan et al., 1999). Followingthis period of restraint, public spendingincreased by an annual rate of 5.1 per-cent between 1997 and 2001. Since 1998public sector spending grew faster thanthat from private sources, and its sharewas about 73 percent of the total in 2001.

The growth rate of total health careexpenditures abated in the U.S. too, dur-ing the period of 1992-1999. While aver-age growth rate of total health careexpenditures was 5.5 percent in the1980s (2.5 times higher than GDPgrowth), it was only 2.5 percent between1992 and 1999.2 This slow-down is gen-erally seen as due to managed carereplacing indemnity insurance as the pri-mary form of private health insurance.Managed care, coupled with robust eco-nomic growth, led to an unprecedentedstability in the health expenditure shareof GDP over this 7-year period (Cowan,

2 HEALTH CARE FINANCING REVIEW/Fall 2003/Volume 25, Number 1

1 This ratio stayed the same in 2000 as the OECD average, whilein 1990 it was 20 percent higher.

2 Calculated at constant, 1995 GDP price level.

et al., 2001). While governments in other countries managed to lower prices forproviders unilaterally, a major tool ofmanaged-care insurers was to excludeproviders from their network. “As aresult, lower prices came along with con-strained access to providers in theUnited States, where it did not in othercountries.” (Cutler, 2002).

Consumers in OECD countries are expe-riencing considerable waiting times forelective surgery (Hurst and Siciliani, 2003)and increasing cost sharing. In a recent sur-vey, shortages of medical personnel, wait-ing times, and inadequate governmentfunding led the list of concerns in Australia,Canada, New Zealand, and the UnitedKingdom; high costs and inadequate cover-age topped the list for the U.S. (Blendon etal., 2003). Furthermore, a wave of recentmedical and technological advances andrising patients’ expectations can be expect-ed to put increased pressure on publicexpenditure on health in the near future.

TRENDS IN EXPENDITUREGROWTH RELATIVE TO GDP

For OECD countries on average, theshare of GDP devoted to health careincreased markedly in 2001 after a period ofrelatively stable health care expendituresratios (Table 1 and Figure 1). This is partial-ly due to slow economic growth. In 2001,OECD countries spent an additional 1.1 per-cent of GDP on health care compared to1990, bringing the average up to 8.4 percent.3

The U.S. devoted the highest share ofGDP to health throughout the decade,increasing to 13.7 percent in 2001.

Internationally harmonized expenditureratios for the U.S. differ slightly from thosepublished by CMS. The OECD Secretariatreports internationally harmonized U.S.GDP that is 0.6 percent lower than thatpublished by the U.S. Department ofCommerce, Bureau of Economic Analysis.Moreover, the OECD definition for totalhealth care expenditures excludes somesmall spending items, such as researchand development, resulting in total healthcare spending which, for 2001, is 2.3 per-cent lower than that reported nationally.Detailed documentation of national datasources and estimation methods used inhealth accounts is available as part of theOECD information system (Organisationfor Economic Co-operation and Develop-ment, 2003a). Following the U.S. in 2001was Switzerland spending 10.9 percent,and Germany spending 10.7 percent ofGDP on health care. At the other end of thescale, the Slovak Republic and Korea spentless than 6 percent of GDP on health care(Figure 2).4

Studying the growth patterns of healthexpenditure and GDP separately providesfurther insight into international variationsin the trend in health care expendituresratios. In Table 2, both components havebeen expressed in per capita and in realterms, using the same GDP deflator.5 Themargin by which health care expendituresgrowth outpaced GDP growth can be readfrom Figure 3 by the relative distance fromthe diagonal line. This diagonal delimitsthe sample of countries with faster growthof per-capita health care spending thanGDP growth.


3 Data availability influences the number of countries than can beincluded in calculating OECD averages for different time peri-ods. Comparable data for the last three decades were availableonly in 18 OECD countries, and in 28 countries for the period of1990 to 2000. Data of 2001 have been reported to the OECD for24 OECD countries until August 2003.

4 Luxembourg also has a low ratio of health spending to GDP, butdata comparability for this small country is limited. This is main-ly due to the close integration of its health care system and econ-omy with neighboring countries, which makes cross-borderadjustments extremely difficult.5 Real growth was calculated using the GDP deflator throughoutthis article, instead of using health-care specific deflators. Thereason for this choice is that countries differ in the constructionof national health price indexes to a degree which would distortcomparisons of real growth across countries.

For an (unweighted) average of 24 coun-tries, there was a gap of 1 percentage pointbetween the average annual growth of per-capita GDP and per-capita health carespending (3.1 versus 2.0 percent). In otherwords, the annual increase in per capitaspending on health care across OECDcountries has outpaced overall economicgrowth per capita by around 50 percentover the past decade.

For health care expenditures trends inOECD countries, the last decade can beroughly divided into three different periodsin terms of health care expendituresgrowth rate and health care expendituresratio to GDP (Table 3).6 The first 3 years ofthe decade (1990 to 1992) saw considerably


Table 1

Total Health Care Expenditures as a Percent of Gross Domestic Product, by Country: 1970-2001

Country 1970 1980 1990 1993 1998 2000 2001

PercentAustralia 5.6 (1971) 7.0 7.8 8.2 8.6 8.9 —Austria 5.3 7.6 7.1 7.9 7.7 7.7 7.7Belgium 4.0 6.4 7.4 8.1 8.4 8.6 9.0Canada 7.0 7.1 9.0 9.9 9.1 9.2 9.7Czech Republic — — 5.0 7.2 7.1 7.1 7.3Denmark 8.0 (1971) 9.1 8.5 8.8 8.4 8.3 8.6Finland 5.6 6.4 7.8 8.3 6.9 6.7 7.0France — — 8.6 9.4 9.3 9.3 9.5Germany1 6.2 8.7 9.9 (1992) 9.9 10.6 10.6 10.7Greece 6.1 6.6 7.4 8.8 9.4 9.4 9.4Hungary — — 7.1 (1991) 7.7 6.9 6.7 6.8Iceland 4.7 6.2 8.0 8.5 8.6 9.3 9.2Ireland 5.1 8.4 6.1 7.0 6.2 6.4 6.5Italy — — 8.0 8.1 7.7 8.2 8.4Japan 4.5 6.4 5.9 6.4 7.1 7.6 —Korea — — 4.8 4.7 5.1 5.9 —Luxembourg 3.6 5.9 6.1 6.2 5.8 5.6 —Mexico — — 4.5 6.1 5.2 5.6 6.6Netherlands 6.9 (1972) 7.5 8.0 8.5 8.6 8.6 8.9New Zealand 5.1 5.9 6.9 7.2 8.0 8.0 8.2Norway 4.4 6.9 7.7 8.0 8.5 7.7 8.3Poland — — 5.3 6.4 6.4 6.0 6.3Portugal 2.6 5.6 6.2 7.3 8.6 9.0 9.2Slovak Republic — — — — 5.8 5.7 5.7Spain 3.6 5.4 6.7 7.5 7.5 7.5 7.5Sweden 6.7 8.8 8.2 8.6 8.3 8.4 8.7Switzerland 5.6 7.6 8.5 9.6 10.6 10.7 10.9Turkey 2.4 3.3 3.6 3.7 4.8 4.8 (1998) —United Kingdom 4.5 5.6 6.0 6.9 6.9 7.3 7.6United States 6.9 8.7 11.9 13.3 13.0 13.1 13.9

OECD Average Countries (28)2 NA NA 7.3 8.0 8.0 8.1 8.4OECD Average Countries (18)3 5.3 7.0 7.6 8.3 8.3 8.4 8.6European Union Average Countries (14)4 NA NA 7.6 8.2 8.2 8.3 8.51 For all years preceding 1990, data for Germany refer to West Germany.2 The average excludes the Slovak Republic and Turkey. The 2001 average includes 2000 figures for Australia, Japan, Korea, and Luxembourg.3 The average excludes Belgium, Czech Republic, France, Hungary, Italy, Korea, Mexico, Netherlands, Poland, Slovak Republic, Switzerland, andTurkey.4 The average includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain, Sweden, and theUnited Kingdom.

NOTES: OECD is Organisation for Economic Co-operation and Development. NA is not available. Numbers in parentheses are the number of countries for which data are available. Not all countries report data for the years shown in column headers. Where this is the case, closest availableyear, shown in parentheses, has been used.

SOURCE: (Organisation for Economic Co-operation and Development, 2003a.)

6 A decade is a rather arbitrary construct and might hide themost important features of health expenditure trends. Hence,Tables 1 and 3 also present the characteristic subperiods (ortheir border years) within the 1990s.

higher growth than the 5-year period from1993 to 1997, when governments in manycountries applied cost-containment mea-sures (Anell and Svarvar, 1999; Häkkinen,1999; Mossialos and Le Grand, 1999; Oroszand Burns, 2000). This is also reflected inthe health care expenditures ratio to GDP.For OECD countries on average, itremained flat between 1993 and 1998(Table 1).

Health care expenditures started to riseagain rapidly at the end of the 1990s and inthe beginning of this decade, reflectingdeliberate policies in some countries torelieve pressures arising from cost contain-ment in previous years. An example in caseis the policy of high real rates of increaseover a number of years in the UnitedKingdom (Towse and Sussex, 2000). Itseems that an observation made about the

U.S. health care system might hold true formany other countries: “The wide range andsharp periodic cycles in spending growthproduce disproportionate strains that con-tribute to the perception of a health systemin constant crisis” (Altman et al., 2003).

Behind the average OECD growth ratethere are wide variations, Table 2 showsthe OECD countries in order of theirhealth care expenditures growth rates.Several countries (e.g., Korea, Ireland, andPortugal) with lower income and lowerhealth care expenditures per capita in 1990experienced high growth in health careexpenditures during the 1990s (Colomboand Hurst, 2002). As a result, they nar-rowed the gap with the OECD averageboth in terms of per-capita expenditure andhealth care expenditures share of GDP. Atthe beginning of this decade, health care


PercentofGrossDomesticProduct

14 Australia

Canada

Germany

Japan

Switzerland

United Kingdom

United States

OECD average

10

8

6

4

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

Year

12

NOTES: OECD is Organisation for Economic Co-operation and Development. OECD average excludes CzechRepublic, France, Hungary, Italy, Mexico, Poland, Slovak Republic, and Turkey due to incomplete data availability.For Germany, the series break between 1990 and 1992 (first year after reunification).


Figure 1

Total Health Care Expenditures as a Percent of Gross Domestic Product: 1980-2001

expenditures per capita in these countrieswas 50-100 percent higher than in 1990(Table 2). A few high-income countries(Japan, Australia, and United Kingdom)also experienced strong growth in healthcare expenditures over the past decade.

Ireland experienced high growth inboth health care spending and GDP (6.8and 6.4 percent per year), and conse-quently the share of health care expen-ditures in GDP increased only slightly.Despite the high growth in health carespending, there was only a modestincrease in services. “It is important torecognize that a significant part of theincrease is due to factors driving up the

costs of health care without increasingthe level of service provision” (Deloitte& Touche, 2001). The rapid growth ofthe Irish economy in the 1990s causedlabor shortages in a number of sectors.This also put an upward pressure onlabor costs in the health care sector, andled to significant real increases in aver-age wages for all categories of healthcare staff.

The United Kingdom underfunding ofthe health care system resulted in grow-ing dissatisfaction by the end of the 1980s.In 1991-1992, in order to oil the wheels ofmajor health care reform, the Tory-gov-ernment considerably increased publicexpenditure on health care (as an average


United StatesSwitzerlandGermanyCanadaFranceGreecePortugalIcelandBelgiumAustralia

NetherlandsSwedenDenmark

ItalyNorway

New ZealandAustriaJapan

United KingdomSpain

Czech RepublicFinlandHungaryMexcioIrelandPolandKorea

Slovak RepublicLuxembourg

13.9

Percent of GDP: 2001 Change in Percent of GDP: 1990-2001

10.910.7

9.79.59.49.29.29.08.98.98.78.68.48.38.27.77.67.67.57.37.06.86.66.56.35.95.75.6

2.02.4

0.8(1992-2001)0.70.9

2.03.0

1.21.5

1.1(2000)0.9

0.50.1

0.40.6

1.30.6

1.7(2001)1.6

0.82.3

-0.8-0.3

2.10.4

1.11.1(2000)

-0.5(2000)

15.0 10.0 5.0 0.0 4.03.02.01.00.0-1.0

NOTES: 2000, for Australia, Japan, Korea, and Luxembourg. For Germany, average annual growth rate iscalculated for 1992-2001.


Figure 2

Health Care Expenditures as a Percent of Gross Domestic Product (GDP): 2001

by 5.2 percent). Total expenditure grewby 6.2 percent per year. Then, between1992 and 1998, the government exerted astrong cost-containment policy again(Koen, 2000); and the growth rate of totalhealth care expenditures was only 2.6 per-cent (which is below the OECD average).Since 2000, the Labour-government hasgiven a higher priority to the nationalhealth statistics (NHS): In January 2000

Britain’s Prime Minister declared therewould be an increase in spending on theNHS in order to reach the EuropeanUnion (EU) average measured by the pro-portion of GDP spent on health care by2006 (Department of Health, 2000; Towseand Sussex, 2000; Ferriman, 2000). Morerecently, in mid-2002 after a review of thelong-term trends affecting the NHS(Wanless, 2002) the Chancellor confirmed


Table 2

Growth of Per Capita Expenditures on Health Care Compared to Gross Domestic Product (GDP)Growth, by Country: 1990-2001

1990-2000 Real 2000-2001 RealAnnual Growth Rate Annual Growth Rate

Ratio of TotalHealth Care 2001 Real Per Expenditures Total Health Capita Health Care

Care Growth to GDP Care ExpendituresCountry GDP Expenditures Growth GDP Expenditures 1990=100

Korea 5.2 7.4 1.42 2.3 — —Ireland 6.4 6.8 1.06 4.2 5.7 203 Portugal 2.5 6.4 2.56 1.0 2.9 191 Poland 3.5 4.8 1.37 1.0 6.6 171 Greece 2.0 4.5 2.25 0.1 -0.7 154 United Kingdom 2.1 4.0 1.90 1.6 5.8 157 Czech Republic 0.2 3.9 19.50 4.1 6.4 156 Australia 2.4 3.8 1.58 2.5 — —Japan 1.1 3.8 3.45 0.1 — —Mexico 1.7 3.8 2.24 -1.7 16.5 169 Spain 2.4 3.5 1.46 1.8 2.7 145 Belgium 1.9 3.4 1.79 0.4 4.5 146 Iceland 1.6 3.1 1.94 1.7 0.5 136 Luxembourg 3.9 3.0 0.77 0.1 — —Netherlands 2.3 3.0 1.30 0.5 4.0 140 United States 2.0 3.0 1.50 -0.7 5.1 141 Norway 3.0 2.9 0.97 0.9 6.3 141 Austria 1.9 2.8 1.47 0.4 0.4 132 New Zealand 1.4 2.8 2.00 2.7 4.5 138 Switzerland 0.2 2.5 12.50 0.2 1.9 130 France 1.5 2.4 1.60 1.3 3.5 131 Germany (1992-2000) 1.2 2.1 1.75 0.4 1.7 130 Canada 1.8 1.9 1.06 0.3 6.2 129 Denmark 1.9 1.8 0.95 1.1 3.8 123 Sweden 1.6 1.8 1.13 0.8 4.7 126 Hungary (1991-2000) 2.5 1.7 0.68 4.1 5.5 —Italy 1.4 1.6 1.14 1.7 4.6 122 Finland 1.7 0.1 0.06 0.4 4.6 106 Slovak Republic — — — 3.5 3.4 —

OECD Average Countries (28)1 2.2 3.3 1.51 — — —OECD Average Countries (24)2 2.0 3.1 1.53 1.2 4.5 —European Union Average

Countries3 2.2 3.2 1.44 1.1 3.4 —1 The average excludes the Slovak Republic and Turkey.2 The average excludes Australia, Japan, Korea, Luxembourg, Slovak Republic, and Turkey.3 The average includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain, Sweden, and theUnited Kingdom.

NOTES: For Germany, the average annual growth rate is calculated for the period of 1992-2001; for Hungary for 1991-2001. OECD is Organisationfor Economic Co-operation and Development.


that there would be a 43-percent increasein real terms in health spending over thenext 5 years (that is more than 7 percentannual average growth). A public serviceagreement published by the Departmentof Health outlined the improvements thatpatients could expect, including reducedwaiting times for hospital outpatientappointments to maximum 3 months andinpatient appointments to 6 months by2005 (Coomber, 2002).

On the other hand, 12 OECD countrieshad below-average health care expendi-tures growth during the past decade(Table 2). Among these countries twogroups can be distinguished, taking intoconsideration GDP growth. In severalcountries (e.g., Switzerland, France, andGermany) health care expenditures stillgrew faster than the economy, resulting ina considerable increase in the ratio of

health care spending to GDP (Table 1). Inother countries, low health care expendi-tures growth between 1990 and 2000 wenttogether with a similar or somewhat high-er GDP growth, resulting in a decrease inthe ratio of health care spending to GDP inFinland and Hungary and a stabilization ofthe ratio in Canada, Italy, and Sweden.

Table 2 shows the proportional gap inreal growth rates of GDP and health careexpenditures during the 1990s. In the U.S.it was 50 percent, which is close to theOECD average. It is interesting to note thatwhile the real health care expendituresgrowth rate was slightly slower in the U.S.than in the EU during the 1990s (3.0 per-cent compared to 3.2 percent), the gapbetween health expenditure and GDPgrowth was somewhat higher in the U.S.(50 percent compared to 40 percent).However, at the beginning of this decadeboth real health care spending growth and


Rea

l An

nu

al G

row

th P

erce

nt

of

Hea

lth

Car

e E

xpen

dit

ure

s8

Austria

Australia

Belgium

Canada

Czech Republic

Denmark

Finland

FranceGermany

Greece

Hungary

Iceland

Ireland

Italy

Japan

Korea

Luxembourg

Mexico

Netherlands

New Zealand Norway

Poland

Portugal

Spain

SwedenSwitzerland

Turkey

United Kingdom

United States

6

5

4

0

0 1 2 3 4 5 6 7

Real Annual Growth Percent of GDP

7

3

2

1


Figure 3

Increase in Per Capita Health Care Expenditures and Gross Domestic Product (GDP): 1990-2000

the gap in growth rates in the U.S. hasagain considerably exceeded the EU aver-age, and even the OECD average (Table 2).

The phenomenon of excess growthprevalent in countries whose health careexpenditures ratio was relatively low in1990 (Figure 4), has led to some conver-gence of expenditure ratios. This figureplots the excess growth of health overGDP with the share of health care expen-ditures in 1990, the beginning of the timeperiod studied in this graph. Countries at

the lower end of the health care expendi-tures ratios tend to have higher excessgrowth rates, whereas several countries atthe higher end of the scale had low or noexcess growth in health care spendingover the GDP (for example, Denmark andCanada). This pattern is not unambiguous:the three countries with high expenditureratios in 1990 (Germany, Switzerland, andthe U.S.) had relatively high excess growthof health.


Table 3

Growth of Per Capita Expenditures on Health Care in Real Terms: 1970-2001

Country 1970-1980 1980-1990 1990-1992 1992-1997 1997-2001 1990-2001

Percent ChangeAustralia 5.2 (1969-1980) 2.6 3.1 3.9 4.0a 3.8Austria 7.4 1.4 4.6 1.4 3.0 2.6Belgium 8.1 3.4 4.7 2.7 3.9 3.5Canada 3.2 4.0 3.5 -0.3 5.1 2.3Czech Republic — — -2.1 8.0 2.6 4.1Denmark 2.9 (1971-1980) 0.8 0.3 1.7 3.0 1.9Finland 4.6 4.8 2.0 -1.4 2.2 0.5France — — 3.6 1.5 3.1 2.5Germany 6.2 1.8 — 2.2 1.8 2.0 (1992-2001)Greece 4.5 1.3 4.4 5.0 2.5 4.0Hungary — — — 0.1 4.1 2.1 (1991-2001)Iceland 8.3 4.2 -0.6 1.8 5.9 2.8Ireland 8.5 0.1 9.5 4.8 7.6 6.7Italy — — 3.3 -0.4 4.0 1.9Japan 7.1 2.6 4.0 3.4 14.2 3.8Korea — — 5.8 7.1 19.0 7.4Luxembourg 7.2 4.8 4.1 1.9 14.1 3.0Mexico — — 11.3 0.4 7.4 4.9Netherlands — 2.3 3.6 1.5 4.9 3.1New Zealand 2.1 2.9 1.5 2.6 4.2 3.0Norway 9.1 3.1 5.6 3.2 2.1 3.2Poland — — 9.1 3.9 4.4 5.0Portugal 11.5 4.2 8.7 6.2 4.7 6.1Slovak Republic — — — — 1.8 —Spain 6.9 4.7 5.6 2.6 3.4 3.4Sweden 4.4 1.1 -1.3 1.3 4.8 2.1Switzerland 4.1 2.7 4.0 1.6 2.6 2.4Turkey — 3.6 3.5 5.2 — 6.1 (1990-1998)United Kingdom 4.1 3.2 6.3 2.8 4.9 4.2United States 4.5 5.5 4.4 2.3 3.7 3.2OECD Average Countries (28)2 NA NA 4.2 2.6 4.2 3.4OECD Average Countries (18)3 6.0 3.0 3.9 2.5 4.0 3.3

1 For those countries not reporting 2001 figures the growth rates cover the period up to 2000.2 The average excludes the Slovak Republic and Turkey.3 The average excludes Belgium, France, Hungary, Italy, Korea, Mexico, Netherlands, Poland, Slovak Republic, Switzerland, and Turkey.

NOTES: Real expenditures are adjusted for gross domestic product deflator. For Germany, the average annual growth rate is calculated for the period of 1992-2001; for Hungary for 1991-2001; and for Turkey for 1990-1998. OECD is Organisation for Economic Co-operation and Development.NA is not available. Numbers in parentheses are the number of countries that OECD had data for. Not all countries report data for the years shown incolumn headers. Where this is the case, closest available year, shown in parentheses for which data are available.


PER CAPITA EXPENDITURE ONHEALTH CARE

Health care expenditures per capita con-verted to US$ purchasing power parity(PPP)7 is commonly used to compare theoverall level of consumption of health caregoods and services across countries.According to this measure, the U.S. contin-ues to spend far more on a per capita basisfor health care than any other country. Itspent over US$4,880 per capita on healthcare in 2001—more than twice the averageof around US$2,080 PPP across OECDcountries (Figure 5). Next in this rankingfor 2001 come Switzerland, Norway,Germany, and Canada; and at the other endof the scale, Mexico, Poland, SlovakRepublic, Korea, and Hungary spent lessthan US$1,000 on health care.

Figure 5 shows per capita expenditureand expenditure as share of GDP together.It is evident that differences in per capitavalues are far greater than in health careexpenditures as percent of GDP. The figurealso reflects that, depending on economicdevelopment, countries having a highshare of health care expenditures to GDPratio might have low per capita expendi-ture, and vice versa. For example, Greeceand France both spent around 9.5 percentof GDP on health care, but health careexpenditures per capita in France was 70percent higher.

Differences in health care spendingacross countries are greater than differ-ences in GDP per capita (Table 4). Forinstance, in 2001, GDP per capita in theU.S. was 40 percent higher than the OECDaverage, while expenditure on health carewas 135 percent greater. Most of the lower


7 PPP indexes are used to adjust spending levels to reflect the var-ious countries’ price level of a fixed basket of goods and services.

RealAnnualExcessGrowth

4.5

Austria

AustraliaBelgium

Canada

Czech Republic

Denmark

France Germany

Greece

Iceland

Ireland Italy

JapanKorea

Mexico

Netherlands

New Zealand

Norway

Portugal

Spain

Switzerland

United Kingdom

United States

3.5

3

2.5

-0.5

4 5 6 7 8 9 10 12

Health Expenditure as Percent of GDP in 1990

4

2

1.5

1

11

0.5

0

NOTES: Data for solid lines show terciles of GDP growth and terciles of national health expenditures growth.Germany, 1992-2000.


Figure 4

Excess Growth in Total Health Care Expenditures Per Capita: 1990-2000

income OECD countries (Korea, CzechRepublic, Hungary, Slovak Republic,Poland, Mexico, and Turkey) see greaterdeviations from the OECD average in rela-tion to health care expenditures per capitathan for GDP per capita. Over the pastdecade, however, the lower income OECDcountries, with the only exception ofHungary, narrowed their gap from theOECD average, both in terms of total andpublic expenditure on health.

For OECD countries on average, the sta-tistical significance of a simple regressionrelationship between growth rates in percapita health care spending and per capitaGDP has declined during the 1990s (Huber,1999). This can be seen with the help of thescatter diagram in Figure 3. If the cluster of

countries that excludes the two outliers ofKorea and Ireland (both saw exceptionalhealth care expenditures and GDP growthduring the 1990s) is studied separately, thecorrelation between GDP growth andhealth care expenditures growth is not sig-nificantly different from zero.8

Trends in Health Care Funding

In all countries, health care is financedthrough a mixture of publicly-funded bene-fits and services, private social provision(largely employer-sponsored social insur-ance, but also some cooperative mutual


Tota

l Hea

lth

Exp

end

itu

res

in U

S$

PP

P

6,000

3,000

2,000

1,000

0

Country

4,000

5,000

16.0

6.0

4.0

2.0

0

8.0

10.0

12.0

14.0

Uni

ted

Sta

tes

Sw

itzer

land

Nor

way

Ger

man

y

Can

ada

Luxe

mbo

urg

(200

0)

Icel

and

Net

herla

nds

Fran

ce

Den

mar

k

Bel

gium

Aus

tral

ia (

2000

)

Sw

eden

Italy

Aus

tria

Ave

rage

Uni

ted

Kin

gdom

Japa

n (2

000)

Irel

and

Fin

land

New

Zea

land

Por

tuga

l

Spa

in

Gre

ece

Cze

ch R

epub

lic

Hun

gary

Kor

ea (

2000

)

Slo

vak

Rep

ublic

Pol

and

Mex

cio

4,88

7

3,2

48

3,01

2

2,80

8

2,79

2

2,71

9

2,64

3

2,62

6

2,56

1

2,50

3

2,49

0

2,35

0

2,27

0

2,21

2

2,19

1

2,08

0

1,99

2

1,98

4

1,93

5

1,84

1

1,73

3

1,61

3

1,60

0

1,51

1

1,10

6

911

893

682

629

586

Total H

ealth E

xpen

ditu

res as a Percen

t of G

DP

1 Measured as US$ purchasing power parities.

NOTES: OECD is Organisation for Economic Co-operation and Development. PPP is purchasing power parity. Figures forLuxembourg, Australia, Japan, and Korea are for 2000 rather than 2001. Data not available for Turkey.


Figure 5

Total Health Care Expenditures Per Capita and as a Percent of Gross Domestic Product (GDP): 2001

8 The R2 equals 0.07 for a linear relationship for the reduced clus-ter. The R2 measure is 0.36 if Korea and Ireland are included inthe sample.

insurance) and direct private purchase ofmedical services, pharmaceuticals andappliances, plus private voluntary insur-ance.

Public third-party payment arrange-ments are either expenditures from gener-al government revenues or based on socialinsurance systems. Although the U.S.health care system is thought of as primar-ily privately funded (only about one-quar-ter of the U.S. population is insuredthrough public programs), the U.S. ranksfourth in the OECD in terms of spendingper-capita from public funds, behindNorway, Luxembourg, and Iceland(Docteur, Suppanz, and Woo, 2003).

Private sources of funding comprise out-of-pocket spending, private health insur-ance (often funded by employers and sub-sidies by tax exemption), and other privatesources. These include direct health bene-fits such as occupational health care, orcharities.

From the view of private households andindividual health care consumers, animportant boundary line is between out-of-pocket spending and all other health carefunding, i.e., the part of health care provid-ed under a third-party payment arrange-ment, which can be either a public or a pri-vate program. According to this definition,out-of-pocket spending includes both


Table 4

Per Capita Gross Domestic Product (GDP) and Total Health Care Expenditures, by Country: 2001

OECD Average=100 OECD Average=100 Per Capita US$ PPPCountry GDP Total Health Expenditure Total Health Expenditure

OECD Average Countries1 100 100 $2,080

Luxembourg 194 131 2,719Norway 146 145 3,012United States 140 235 4,887Ireland 120 93 1,935Switzerland 119 156 3,248Netherlands 117 126 2,626Denmark 117 120 2,503Iceland 115 127 2,643Canada 115 134 2,792Austria 113 105 2,191Belgium 111 120 2,490Australia 109 113 2,350France 107 123 2,561Japan 106 95 1,984Finland 106 88 1,841Italy 105 106 2,212United Kingdom 105 96 1,992Germany 105 135 2,808Sweden 104 109 2,270Spain 85 77 1,600New Zealand 84 83 1,733Portugal 70 78 1,613Greece 64 73 1,511Korea 63 43 893Czech Republic 60 53 1,106Hungary 54 44 911Slovak Republic 48 33 682Poland 40 30 629Mexico 36 28 586Turkey 23 — —

1 The average excludes Turkey.

NOTES: OECD is Organisation for Economic Co-operation and Development. PPP is purchasing power parity. Figures for Luxembourg, Australia,Japan, and Korea are for 2000 rather than 2001.


over-the-counter and similar direct pay-ment to providers that are not refundable,plus cost sharing of private households.This includes the funding of services andmedical goods that are (at least partially)covered under a third-party payment pro-gram.

Figure 6 shows how OECD countriesare ranked by their increasing share of out-of-pocket spending and by total health careexpenditures. The public sector is the mainsource of health care funding in all OECDcountries, except the U.S., Mexico, andKorea. During the 1970s, the public share

of health care spending increased inOECD countries on average, but since1980 has stabilized and even slightlydeclined in the 1990s. On average, the pub-lic share of health care funding accountedfor 72 percent in 2001. The public share wasmore than 80 percent in several countries,including the Czech Republic, Denmark,and the United Kingdom (Table 5 andFigure 6).

The share of out-of-pocket payments wasabove 30 percent of total health care expen-ditures in Switzerland, Korea, and Mexico.It varies between 10 and 30 percent of total


Table 5

Health Care Expenditures Source of Funding, as a Percent of Total Health Expenditure, byCountry: 1990 and 2000

1990 2000Country Public Private Out of Pocket Public Private Out of Pocket

Australia 67 33 17 69 31 18Austria 74 27 — 70 31 19Belgium — — — 71 28 —Canada 75 26 14 71 29 16Czech Republic 97 3 3 91 9 9Denmark 83 17 16 83 18 16Finland 81 19 16 75 25 20France 77 23 11 76 24 10Germany 76 24 11 75 25 11Greece 54 46 — 56 44 —Hungary (1991) 89 11 11 76 25 21Iceland 87 13 13 84 16 16Ireland 72 28 16 73 27 13Italy 79 21 15 73 27 23Japan 78 22 — 78 22 17Korea 37 63 53 44 56 41Luxembourg 93 7 5 88 11 8Mexico 43 57 57 48 52 52Netherlands 67 33 — 63 37 9New Zealand 82 18 14 78 22 15Norway 83 17 15 85 15 15Poland 92 8 — 71 30 —Portugal 66 35 — 69 32 —Slovak Republic — — — 89 11 11Spain (1991) 79 21 19 72 28 24Sweden 90 10 — 85 15 —Switzerland 52 48 36 56 44 33Turkey (1998) 61 39 — 72 28 —United Kingdom 84 16 11 81 19 —United States 40 60 20 44 56 15

OECD Average Countries (27)1 74 26 NA 72 28 NAOECD Average Countries (19)2 73 27 19 72 28 20

1 Excludes Belgium, Slovak Republic, and Turkey.2 Includes Australia, Canada, Czech Republic, Denmark, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, Korea, Luxembourg, Mexico, New Zealand, Norway, Spain, Switzerland, and the United States.

NOTES: Total private includes private insurance, out-of-pocket and other private sources (companies, non-governmental organisations, etc). OECD isOrganisation for Economic Co-operation and Development. NA is not available. Figures for Hungary and Spain are for 1991 rather than 1990; and forTurkey for 1998 rather than 2000.


health care expenditures for most countrieswith available data (Table 5). With a fewexceptions, there is a tendency for the shareof out-of-pocket spending to decline ashealth care expenditures per capita rises.

Out-of-pocket spending on health carecontinues to be among the most dynamiccomponents of private consumption in amajority of OECD countries. There aresubstantial differences between countriesin the baskets of goods and services thatare paid out of pocket. Pharmaceuticals areone of the major components in all coun-tries. However, countries differ markedlyin the share of private spending that isdevoted to services, such as denture and

long-term care (LTC) in nursing homesand home-help services, also reflecting dif-ferences in public coverage of these items.

There is complementarity between pub-lic spending and private insurance in sev-eral countries. Private insurance can pro-vide both basic coverage for those not cov-ered by public systems or provide comple-mentary insurance for specific services orthat part of service cost not covered underpublic programs. Examples of the first typeof private insurance include employer-sponsored private insurance group con-tracts in the U.S. and private insurance con-tracts of state employees in Germany.Complementary health care insurance is a


Per

cen

t o

f E

xpen

dit

ure

s

100

40

20

0

Country

60

80

Luxe

mbo

urg

Cze

ch R

epub

lic

Net

herla

nds

Fran

ce

Ger

man

y

Slo

vak

Rep

ublic

Irel

and

Nor

way

Uni

ted

Sta

tes

Icel

and

New

Zea

land

Can

ada

Den

mar

k

Japa

n

Aus

tral

ia

Aus

tria

Fin

land

Hun

gary

Italy

Spa

in

Sw

itzer

land

Kor

ea

Mex

cio

Public Expenditure on HealthPrivate InsuranceAll Other Private FundsOut-of-Pocket Payments

1 Countries are ranked by their increasing share of out-of-pocket spending.

NOTE: Not all countries have this data available.


Figure 6

Health Care Expenditures1, by Source of Funding: 2000

common way of financing dental and med-ical appliances, or privately paid upgradesof hospital accommodation.

Data for a number of countries suggest thatout-of-pocket spending for health care rose asa share of total household consumption dur-ing the 1990s (Table 6). Of the 19 OECDcountries for which this measure is available,all but 4 experienced such an increase; theshare remained constant in Denmark andFrance, and decreased in Korea and the U.S.

TYPE OF SERVICE EXPENDITURE

OECD countries differ in the wayshealth care expenditures are allocatedaccording to type of service provided and

medical goods consumed (Figure 7). In2001, on average across OECD countries,38 percent of total health care expendi-tures was allocated to inpatient care, 31percent for ambulatory services (includingancillary services and home care), 21 per-cent for medical goods (including pharma-ceuticals and medical appliances) and theremaining 10 percent was spent on collec-tive services (administration and generalpublic health prevention programs). Butthere are significant differences amongcountries. For example, Denmark, theNetherlands, and Switzerland allocated 45percent or more of their health care expen-ditures on inpatient care in 2001, whilecountries such as the U.S. and Canada


Table 6

Out-of-Pocket Payments for Health Care as a Percent of Total Household Consumption of AllGoods and Services, by Country: 1990 and 2000

Country 1990 2000

Australia 2.2 2.7Austria — 2.7Belgium — —Canada 2.4 2.7Czech Republic 0.3 1.2Denmark 2.8 2.8Finland 2.5 2.9France 1.8 1.8Germany 1.8 2.0Greece — —Hungary (1991) 1.5 2.8Iceland 1.8 2.6Ireland 1.8 1.9Italy 2.1 3.1Japan — 2.3Korea 4.9 4.3Luxembourg 0.7 1.1Mexico 3.7 4.3Netherlands — 1.6New Zealand 1.7 2.1Norway 2.4 2.7Poland — —Portugal — —Slovak Republic — 1.1Spain (1991) 2.2 3.0Sweden — —Switzerland 5.5 6.1Turkey — —United Kingdom 1.1 —United States 3.6 2.9

OECD Average Countries (19)1 2.4 2.8

1 Includes Australia, Canada, Czech Republic, Denmark, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, Korea, Luxembourg, Mexico, New Zealand, Norway, Spain, Switzerland, and the United States.

NOTE: Figures for Hungary and Spain are for 1991 rather than 1990.


spent less than 30 percent on this compo-nent of their health care system (Figure 7).Hungary and the Slovak Republic spentalmost 40 percent of their total health careexpenditures on medical goods (includingpharmaceuticals, such as prescriptiondrugs), while Denmark, Switzerland, andthe U.S. spent less than 15 percent on thisitem.

Figure 7 shows that the relative sharesof types of services in overall spending canrefer to quite different absolute spendinglevels in countries. For example, Hungaryand the U.S. each spent roughly the sameshare of their health care expenditures oninpatient care, but in dollar terms the U.S.spent 5.2 times more then Hungary did.Similarly, Hungary devoted 30 percent ofits health care expenditures to medicalgoods, compared to 12 percent in the U.S.,

but dollar spending in the U.S. was 2.1times that in Hungary (Figure 7). In fact,the relatively small share of pharmaceuti-cal spending in the U.S. corresponds to thehighest per-capita spending in the OECD(Figure 8).

Reasons for international differences inthe distribution of expenditures amongprovider types can be traced back to sever-al roots. Constant changes and innovationin medical technology, reforms in paymentmechanisms, and the search for more effi-cient allocation of health care resources allact together over time to modify the divi-sion of labor in health care across providerindustries. This involves complex trends inspecialization and integration, increasingthe need for better coordination to bringbasic services closer to consumers in thecommunity.


United States

Switzerland

Germany

Canada

Luxembourg

Netherlands

France

Denmark

Australia

Italy

Austria

Japan

Finland

Spain

Czech Republic

Hungary

Korea

Slovak Republic

Mexcio

Collective Services

Medical Goods

Ambulatory

Inpatient

5,0004,0003,0002,0001,000002040

Percent of Total Health Care Expenditures Per Capita Expenditures US$ PPP1

6080100

Collective Services

Medical Goods

Ambulatory

Inpatient

1 Measured as US$ purchasing power parities.


Figure 7

Health Care Expenditures, by Type of Service Provision: 2001

CHANGING ROLE OF PHARMACEUTICAL SPENDING

Pharmaceutical products represent animportant and growing share of healthcare expenditures in most countries. Thenumber of new drugs increased consider-ably during the past decade, and the move-ment toward new, more expensive prod-ucts has been one of the main drivingforces in increasing pharmaceutical expen-diture, thereby contributing to the increasein overall health care spending. There areconsiderable differences in pharmaceuti-cal spending across countries, reflectingdifferences in volume, structure of con-sumption, and price level. The U.S. spendsthe most on pharmaceuticals, with expen-diture per capita of US$605 PPP in 2001.

France, Italy, Canada, and Germany fol-lowed the U.S., with spending of more thanUS$400 PPP per capita (Figure 8).

On average the annual growth rate ofpharmaceutical expenditure was 30 per-cent higher than that of total health careexpenditures during the 1990s resulting inincreasing shares of pharmaceuticals intotal spending (Figure 8) (Organisation forEconomic Co-operation and Development,2003b). OECD countries at the lower endof the income scale tend to spend a greatershare of their health care expenditures onpharmaceuticals, partly because pharma-ceuticals have international market priceswhile labor costs are usually based onnational wage structures. For example,Hungary and the Slovak Republic spentaround 30 percent of total health care


Ireland

Denmark

Czech Republic

Netherlands

Hungary

Finland

Australia

Sweden

Switzerland

Germany

Canada

Italy

France

United States

12.210.3

7.5 8.9

21.0 21.9

9.6 10.1

27.6 30.7

9.4 15.7

9.0 12.4

8.0 13.5

10.2 10.7

14.314.3

11.5 16.2

21.222.3

16.9 21.0

9.2 12.4

200

223

242

266

280

289

292

306

338

402

451

493

537

605

Expenditure Per Capita, 2001

US$ PPP Percent

As a Percent of Total Health CareExpenditure, 1990 and 2001

4030201000200400600800

NOTES:The average excludes: Belgium, Czech Republic, France, Hungary, Italy, Korea,Mexico, Netherlands, Poland, Slovak Republic, Switzerland, and Turkey. PPP is purchasingpower parities.


Figure 8

Pharmaceutical Expenditures Per Capita, and as a Percent of Total Health Care Expenditures:1990-2001

expenditures on pharmaceuticals, whileDenmark and the Netherlands spentaround 10 percent. The share spent onpharmaceuticals can also be very differentin countries having similar health carespending per capita. For example,Denmark spends 9 percent of total healthcare expenditures on pharmaceuticalswhile France spends 21 percent (Figure 8),although both have roughly the same totalhealth care spending per capita (Figure 7).

Pharmaceutical expenditure tends to befunded from private sources to a greaterextent than inpatient and outpatient ser-vices, because copayments tend to be high-er on pharmaceuticals and a considerableportion of pharmaceuticals are not coveredunder public insurance schemes (Organi-sation for Economic Co-operation andDevelopment, 2003b).

Most OECD countries have been apply-ing a mix of tools to try to control pharma-ceutical expenditures over the past twodecades. Increased cost sharing for phar-maceuticals has been a common feature(Mossialos, and Le Grand, 1999; Saltmanand Figueras, 1997). The number of drugsnot reimbursed has increased, mainly com-fort drugs or those without proven thera-peutic value. The degree of cost sharing hasbeen increased for many others. In a num-ber of cases, flat-rate payments per pre-scription have been established. Referenceprice systems have also been introduced inseveral countries (e.g., Germany, Denmark,and the Netherlands). These arrangementsincrease cost sharing for individuals usinghigh-cost products while promoting the useof less-costly generic drugs.

REVISIONS OF HEALTH EXPENDITURE ESTIMATES

The reporting on trends in health carespending across countries in a timely, compa-rable, and policy relevant way needs a con-

stant investment both by the internationalcommunity and by individual countries tokeep national reporting systems up-to-datewith rapidly changing health care systems,and to ensure that a core set of expenditureindicators can be reported in an internation-ally harmonized way for comparative purpos-es. To facilitate this process, the OECDSecretariat has published an accountingframework which is now used by an increas-ing number of OECD member and non-mem-ber countries (Organisation for Economic Co-operation and Development, 2000).9

OECD member countries are currently atdifferent stages of implementing the SHAmanual, and/or of harmonizing their report-ing on health care expenditures accordingto main categories and definitions of theInternational Classification of HealthAccounts (ICHA) as proposed by the SHA(Organisation for Economic Co-operationand Development, 2002). In several coun-tries, the reporting on health care accountsaccording to the SHA framework is nowpart of national reporting (e.g., Denmark,Germany, Hungary, Japan, Korea, Mexico,Netherlands, and Switzerland).10 Othercountries produce estimates according tothe OECD framework, but mainly for pur-poses of reporting to the OECD health caredata collection (e.g., Australia, Canada,France, and the U.S.) and detailed resultsand comments on estimation methods aremade available with the description of thenational data sources and estimation meth-ods (Organisation for Economic Co-opera-tion and Development, 2003a). Comparabi-lity of data is still restricted for countries


9 The spread of core concepts and classifications of the Systemof Health Accounts (SHA) manual in non-OECD countries hasrecently been boosted by the publication of a Guide to ProducingNational Health Accounts with Special Applications for Low-Income and Middle-Income Countries (World Bank, World HealthOrganisation, and United States Agency for InternationalDevelopment, 2003).10 The country lists may not be exhaustive as they only providea snapshot picture as of summer 2003. The actual status of SHAprojects in countries may change quickly, depending on avail-able resources in statistical agencies for work on this task.

where SHA pilots are at an early or experi-mental stage (e.g., Finland, and the UnitedKingdom), and where the SHA implementa-tion has not been started (e.g., Austria, ,Italy, Portugal, and New Zealand).

But even where results of the detailedtables of the SHA framework are not yetavailable publicly, some experience with theSHA manual has now been gained in at least25 of the 30 OECD countries. During thisprocess, statisticians have re-examined theiroverall expenditure estimates and the basicbreakdown according to various dimensions(type of services and goods, industries ofproviders, and sources of financing). Theyhave also conducted an inventory of avail-able sources for more detailed estimates. Asthese more detailed estimates are beingimplemented in a growing number of coun-tries, comparability of health care expendi-tures estimates is expected to constantlyimprove in the future.

As a result of this work, the main issuesof comparability are now well known. Twoof the most significant are the boundarybetween health care and other social ser-vices, in particular for older persons inneed of LTC, and the structure and amountof spending from a multitude of privatesources. For example, a better estimate ofLTC increased the estimate for total expen-diture in Sweden by 7.7 percent in 2001. (Itmeant that the new estimate for totalexpenditure as a percentage of GDP was8.7 percent, compared to 8.0 percentbefore adjustment for LTC.11) The OECDSecretariat currently conducts in-houseresearch on both issues in the frameworkof a project on LTC policies, and a projecton private health insurance (Organisationfor Economic Co-operation and Develop-ment, 2003a).

CONCLUSIONS

There are initial reports from severalcountries that the trend of acceleratedgrowth is continuing in 2002, which onceagain brings the discussion of the limits ofhealth care spending growth to the fore-front of public policy debate (e.g. Canada,France, Germany, and the U.S.). Evidenceof growing health care expenditures ratioshas come from preliminary results ofnational health accounts for Canada,France, and the U.S. (Canada Institute forHealth Information, 2003; Fénina andGeoffroy, 2003; Heffler et al., 2003), orfrom public spending trends that exceedexpected GDP growth (German FederalMinistry of Health and Social Security,2002).

Despite a general convergence of coun-tries’ experience over the past decade, theU.S. remains significantly different. TheU.S. started the decade with a substantial-ly higher level than other OECD coun-tries—both in absolute terms in per-capitaPPP, and as a percent of GDP. During the1990s, real annual health care spendinggrowth in the U.S. was compared to that ofother OECD countries and to the EU aver-age (Table 2). However, the 2000-2001 realhealth care spending growth in the U.S.was considerably above the EU average,and even the OECD average. In 2001, theU.S. spent more on health care by 2 per-centage points of GDP than in 1990 (13.9percent of GDP compared to 11.9 percent),while on average the EU spent more onhealth care by less than 1 percentage pointof GDP (8.5 percent of GDP compared to7.6 percent).

In order to present a more completestory about value-for-money that the healthcare dollar buys, the data presented in this


11 OECD data has been revised for Sweden back to 1993.

article need to be complemented by addi-tional indicators. It is access to quality ser-vices and the ability of a health care systemto build confidence that these will be pro-vided in efficient and effective ways, thatdetermine a society’s willingness to dedi-cate a growing share of its overall resourcesto health care.

In order to be able to suggest how closean OECD country comes to its individualideal in this respect, more and better dataare needed on a macro level. In addition,substantially more work is needed on amore disaggregated level, but in ways thatlead to internationally comparable results(Cutler, 2002).

On the aggregate level, work is current-ly undertaken at the OECD Secretariat tocomplement the currently available spend-ing data by a more detailed breakdown ofspending by type of service. This will helpanswer questions such as: to what extent isa relatively generous coverage—and highspending—of LTC services (for older per-sons, but also for younger adults) a com-mon feature of several of the highestspending countries (e.g., in Canada,Germany, and Switzerland)?

An important part of the expenditurestory is differences in prices, for both inputand output of health-service provision(especially pharmaceutical prices andlabor costs). Part of this task, such as abasic data set for comparing income ofhealth professions is also currently on theOECD agenda and can be found athttp://www.oecd.org/health. This willhelp in the future to be better able todecide to which degree differences inhealth expenditure are due to price differ-ences (Anderson et al., 2003).

There is some evidence that differencesin the availability of resources devoted tohealth care, which are also behind differ-ences in expenditure, have an effect on out-comes (Or, 2000). Countries operating all

or parts of their health care system withtightly controlled resources (for example,the hospital sector) may experience wait-ing lists that are increasingly seen as prob-lematic (Hurst and Siciliani, 2003). On asemi-aggregate level, the spread of tech-nology has been linked to expendituregrowth (Moïse, 2003).

Finally, many questions on the relativeefficiency of health care provision acrosscountries can only be answered by detailedanalysis using data on a much more disag-gregated level, such as comparisons basedon how certain health problems are tack-led (treatment of diseases). The tentativeconclusion from this type of study seemsagain to be that there is indeed some evi-dence that patients in the highest spendingcountries have some benefit from relativehigh spending (Organisation for EconomicCo-operation and Development, 2003c).The main challenge for further workremains to build better data bridgesbetween microdata and macrodata onhealth care activities, to find out moreinformation about the most effective waysto spend additional health dollars and tounderstand better how technologicalprogress contributes to both increasingcost and improved outcomes.

ACKNOWLEDGMENTS

The authors would like to acknowledgethe many individuals and organisationsthat have contributed to the developmentof OECD Health Data, in particular the net-work of correspondents to the OECD data-base, and the experts on health accounts inmember countries who are implementingnational versions of the OECD System ofHealth Accounts. We are grateful to DavidMorgan for statistical assistance and toMarianne Scarborough for help with edit-ing. The authors wish to thank JeremyHurst, Peter Scherer, and Andy Thompson


for inputs and comments to earlier ver-sions of this article, and to PatrickHennessy for his comments on the finalversion.

REFERENCES

Altman, S.H., Tompkins, C.P., Eilat, E., and Glavin,M.P.V.: Escalating Health Care Spending: Is ItDesirable Or Inevitable? Health Affairs – WebExclusive January 8, 2003. Intenet address:http://www.healthaffairs.org/WebExclusives/Spending_Web_Excl_010803.htm (Accessed 2003.)Anderson, G., Reinhardt, U.E., Hussey, P.S., andPetrosyan, V.: It’s The Prices Stupid. Why TheUnited States Is So Different From OtherCountries. Health Affairs 22(3):89-105, May/June2003.Anell, A., and Svarvar, P.: Health Care Reforms andCost Containment in Sweden. In Mossialos, E., andLeGrand, J. (eds): Health Care and Cost Containmentin the European Union. Ashgate. Aldershot,Brookfield, Singapore, Sydney. 1999. Blendon, R., Schoen, C., DesRoches, C., et al.:Common Concerns Amid Diverse Systems: HealthCare Experiences in Five Countries. Health Affairs22(3):106-121, May/June 2003.Canadian Institute for Health Information: NationalHealth Expenditure Trends, 1975-2002. Ottawa.2003.Centers for Medicare & Medicaid Services: 2002Annual Report of the Boards of Trustees of theFederal Hospital Insurance and FederalSupplemental Medical Insurance Trust Funds. U.S.Government Printing Office. Washington, DC.March 26, 2002. Internet address: http://cms.hhs.gov/publications/trusteesrepor t/2002/tr.pdf(Accessed 2003.)Colombo, F., and Hurst, J.: Review of the KoreanHealth Care System. Organisation for Economic Co-operation and Development. Paris, France. 2002.Coombes, R.: Chancellor Maps Out Three YearPublic Service Spending Plans. BMJ 325(7356):123,July 20, 2002.Cowan, C.A., Lazenby, H.C., Martin, A.B., et al.:National Health Expenditures. Health CareFinancing Review 22(4):77-110, Summer 2001.Cutler, D.: Equality, Efficiency, and MarketFundamentals: The Dynamics of InternationalMedical-Care Reform. Journal of EconomicLiterature XL:881-906, September 2002.

Cutler, D.: A Framework for Evaluating MedicalCare Systems. In: Organisation for Economic Co-operation and Development: A Disease-BasedComparison of Health Systems. What is Best and atWhat Cost? Paris, France. 2003.Deloitte & Touche (in conjunction with the YorkHealth Economics Consortium): Value for MoneyAudit of the Irish Health System, The Department ofHealth & Children. 2001. Internet address:http://www.doh.ie/publications/audvfm.html(Accessed 2003.)Department of Health: The NHS Has Underfundedfor Decades. The NHS Plan, 2000. London, England.2000.Docteur, E., and Oxley, H.: Health Care Systems:Lessons from the Reform Experience. OECD HealthWorking Papers. (Forthcoming). Organisation forEconomic Co-operation and Development. Paris,France. Docteur, E., Suppanz, H., and Woo, J.: The U.S.Health System: An Assessment and ProspectiveDirections for Reform. Economics DepartmentWorking Paper 350. Organisation for Economic Co-operation and Development. Paris, France. 2003.Donelan, K., Blendon, R.J., Schoen, C., et al.: TheCost of Health System Change: Public Discontentin Five Nations. Health Af fairs 18(3):206-216,May/June 1999.Fénina, A., and Y. Geoffroy : Comptes nationaux dela Santé 2002 (National Health Accounts for 2002),DREES Document de travail No.55, Ministere de laSanté, de Famille et des Personnes Handicapées.Paris, France. 2003.Ferriman, A.: Blair Promises to Raise Spending onNHS to European Average. BMJ 320(7229):205,January 22, 2000.Financial Times: Schröder Victory on HealthcareReforms. Page 1. July 22, 2003.German Federal Ministry of Health and SocialSecurity, Statistik KV45 2002. Internet address:http://www.bmgs.bund.de/downloads/KV45_4_Quartal_2002.pdf, Bonn, Germany. 2003. (Accessed2003.)Häkkinen, U.: Cost Containment in Finnish HealthCare. In Mossialos, E. and LeGrand, J. (eds): HealthCare and Cost Containment in the European Union.Ashgate, Aldershot, Brookfield, Singapore, Sydney,1999.Heffler, S., Smith, S., Keehan, S., et al.: HealthSpending Projections for 2002-2012. Health Affairs22(2):12, March/April, 2003.


Huber, M.: Health Expenditure Trends in OECDCountries, 1970-1997. Health Care FinancingReview 21(2):99-117. Winter 1999.Hurst, J., and Siciliani, L.: Tackling ExcessiveWaiting Times for Elective Surgery: A Comparison ofPolicies in Twelve OECD Countries. OECD HealthWorking Paper No.6. Organisation for EconomicCo-operation and Development. Paris, France.2003. Internet address: http://www.oecd.org/health (Accessed 2003.)Imai, Y.: Health Care Reform in Japan. EconomicsDepartment Working Paper No. 321. Organisationfor Economic Co-operation and Development.Paris, France. 2002.Imai, Y., Jacobzone, S., and Lenain, P.: The ChangingHealth System in France. Economics DepartmentWorking Paper No.269. Organisation for EconomicCo-operation and Development. Paris, France. 2000.Koen, V.: Public Expenditure Reform: The HealthCare Sector in the United Kingdom. EconomicsDepartment Working Paper 256. Organisation forEconomic Co-operation Development. Paris,France. 2000.Levit, K,. Smith, C., Cowan, C., et al.: Trends in U.S.Health Care Spending, 2001. Health Af fairs22(1):154-164, January/February 2003.Matteo, L.D.: The Determinants of the Public-Private Mix in Canadian Health Care Expenditures:1975-1996. Health Policy 52(2):87-112, June 2000.Moïse, P.: The Technology-Health ExpenditureLink. A Perspective from the Ageing-RelatedDiseases Study. In: Organisation for Economic Co-operation and Development: A Disease-basedComparison of Health Systems. What is Best and atWhat Cost? Paris, France. 2003.Mossialos, E., and Le Grand, J.: Cost Containmentin the EU: An Overview. In Mossialos, E. and LeGrand, J. (eds.): Health Care and Cost Containmentin the European Union. Ashgate, Aldershot,Brookfield, Singapore, Sydney. 1999.Or, Z.: Exploring the Effects of Health Care onMortality across OECD Countries, Labour Marketand Social Policy. Occasional Paper 46. Organisationfor Economic Co-operation and Development.Paris, France. 2000.Organisation for Economic Co-operation andDevelopment: New Directions in Health Care Policy.OECD Health Policy Studies No.7. Paris, France.1995.Organisation for Economic Co-operation andDevelopment: A System of Health Accounts, Version1.0. Paris, France. 2000. Internet address:www.oecd.org/health/healthdata (Accessed 2003.)

Organisation for Economic Co-operation andDevelopment: The State of Implementation of theOECD Manual A System of Health Accounts (SHA).Presented at the Meeting of Experts in NationalHealth Accounts. Paris, France. October 10, 2002.Internet address: www.oecd.org/ health/healthda-ta. (Accessed 2003.)Organisation for Economic Co-operation andDevelopment: OECD Health Data 2003, CD-ROMand User’s Guide. Paris, France. 2003a. Internetaddress: www.oecd.org/health/healthdata. (Accessed2003.)Organisation for Economic Co-operation andDevelopment. Health at a Glance— OECD Indicators2003. OECD. Paris, France 2003b.Organisation for Economic Co-operation andDevelopment: A Disease-based Comparison ofHealth Systems. What is Best and at What Cost?OECD. Paris, France 2003c.Orosz, E., and Burns, A.: The Health Care Systemin Hungary. Economics Department WorkingPaper No. 241. Organisation for Economic Co-oper-ation and Development. Paris, France. 2000.Ranade, W. (ed.): Markets and Health Care.Longman. London, England. 1998.Ros, C.C., Groenewegen, P.P., and Delnoij, D.M.J.:All Rights Reserved, or Can We Just Copy? CostSharing Arrangements and Characteristics ofHealth Care Systems. Health Policy 52(1):1-13,2000. May.Saltman, R.B., and Figueras, J.: European HealthCare Reform. Analysis of Current Strategies. WorldHealth Organisation. Copenhagen. 1997.Schieber, G., Poullier, J.-P., and Greenwald, L: U.S.Health Expenditure Performance: An InternationalComparison and Data Update. Health CareFinancing Review 13(4):1-80, Summer 1992.Towse, A., and Sussex, J.: Getting UK Health CareExpenditure Up to the European Union Mean-What Does That Mean?, BMJ 320(7235):640-642,March 4, 2000.Wanless, D.: Securing Our Future Health; Taking aLong-Term View. H.M. Treasury. London, England.2002.World Bank, World Health Organisation, TheUnited States Agency for InternationalDevelopment: Guide to Producing National HealthAccounts with Special Applications for Low-Incomeand Middle-Income Countries. Geneva, Switzerland.2003.

Reprint Requests: Eva Orosz, OECD Health Policy Unit 2, rueAndre-Pascal, 75775 Paris Cedex 16. E-mail: [email protected]


health expenditure trends in oecd countries, 1990-2001

Documents