Health Spending Outstrips Economic Growth

Spending on health is continuing to outpace economic growth with most countries having seen a near doubling of expenditure as a share of national income over the past 25 years, the Organisation for Economic Co-operation and Development reported on July 18.

Per capita health spending has increased by more than 80 per cent in real terms between 1990 and 2005, outpacing the 37 per cent rise in gross domestic product per head.

In 1970, across the OECD, health accounted for just 5 per cent of GDP. By 2005 that had reached 9 per cent with a quarter of OECD countries now spending more than 10 per cent of national income on health. The US continues by a huge margin to be the biggest spender at 15.3 per cent of GDP in 2005. Switzerland and France both spend more than 11 per cent, while Germany, Belgium, Austria, Portugal and Greece spend more than 10 per cent, with Canada and Australia not far behind. The UK spent 8.3 per cent of GDP on health in 2005 with further growth planned that is likely to take it up to the OECD and European Union average.

Rising demand for healthcare means governments must either raise taxes or social security contributions, cut spending elsewhere or make people pay more out of pocket. There are huge variations around the world as to how much people pay directly for healthcare.

In the UK, a mere 13 per cent of health expenditure comes out of pocket against 57 per cent in Greece and 51 per cent in Mexico. In the US, half of all expenditure is covered either by out-of-pocket payments (13 per cent of the total) or private health insurance.