OECD analyses four policy levers for financing more resilient health systems: 1) boosting government spending, 2) increasing the allocation to health within current budgets, 3) reassessing the boundaries between public and private spending, 4) maximising efficiency gains. Each of these policy levers needs to be assessed in terms of their benefits and risks, and the extent to which they are feasible in practice.
Health spending and financial sustainability
Health spending in OECD countries has continued to grow over recent decades. This is due to both significant medical advances, as well as inherent cost pressures, such as ageing. The challenge for countries is how to strengthen health systems by improving the quality and accessibility of healthcare while also keeping the rise in health spending under control.
Key messages
OECD is at the forefront of tracking and analysing how much each country is spending on health. Through the annual data collection, comparable and timely data shows where financial resources are going in terms of the type of care, who is providing the care and who is paying. Such information is key to analyse issues of efficiency, equity and the sustainability of health systems.
With the challenges faced by health systems, promoting dialogue between those involved in all aspects of health spending is key. The OECD Joint Network of Senior Budget and Health Officials brings together people from ministries of finance, health and social security agencies. The Network provides an effective space for government officials to openly discuss challenges and solutions to the fiscal sustainability of health systems.
Context
Health systems are under financial pressure
The growing pressure on health system budgets reflects a challenging economic climate, with competing priorities squeezing the public funds available for health. This has been exacerbated by high levels of inflation and the increasing demands of an ageing population.
In 2019, prior to the pandemic, OECD countries spent on average 8.8% of GDP on healthcare, a figure relatively unchanged since 2013. By 2021, this proportion had jumped to 9.7%. However, 2022 estimates point to a significant fall to 9.2%, reflecting a reduced need for spending to tackle the pandemic but also the impact of inflation. This increasing pressure on health systems will require major policy change in the coming years.
Future health spending
Over the long term, growth in health spending from public sources is projected to be twice the average growth in government revenues (2.6% and 1.3% respectively on average across OECD countries). When combined with the need to invest in health systems for future resilience, this could lead to a potential high of 11.8% of GDP being dedicated to health spending by 2040.
However, more transformative policy changes that target wasteful spending and leverage digital technologies have the potential to limit this increase, while also improving health outcomes. However, it is key that any potential savings are redirected to health budgets, rather than absorbed back into the general budget.
