Growth in health spending ‘grinds to a halt’
pharmafile | June 28, 2012 | News story | Business Services, Sales and Marketing | Financial, GDP, OECD, growth, pharma
Growth in health spending slowed or fell in real terms in 2010 in almost all OECD countries, reversing a long-term trend of rapid increases, according to the newly published OECD Health Data 2012.
Spending on health systems grew consistently and strongly in OECD countries in the first ten years of the century (2000-2009), with overall health spending growing nearly 5% per year in real terms over the period, but this came to an abrupt halt in 2010, when the overall rate slumped to zero growth.
Preliminary figures for a limited number of countries suggest little or no growth in 2011. The halt in total health spending in 2010 was driven by a fall of 0.5% in public spending for health, following an increase of over 5% per year in 2008 and 2009.
The OECD says governments tended to maintain health spending at the start of the economic crisis in 2007-8, but cuts really began to take effect in 2010. This was particularly the case in the European countries hardest hit by the recession, such as Greece, Spain, Ireland and Portugal.
In Ireland, cuts in government spending drove total health spending down by 7.6% in 2010, compared with an average yearly growth rate of 8.4% between 2000 and 2009. Similarly, health spending in Iceland fell by 7.5%, as a result of a 9.3% reduction in public spending.
In Estonia, following an average growth rate of nearly 7% per year from 2000 to 2009, expenditure on health dropped by 7.3% in 2010, driven by reductions in both public and private spending. In Greece, estimates suggest that total health spending fell by 6.5% in 2010 after a yearly growth rate of more than 6% on average since 2000.
Reductions in public spending were achieved through a range of policy measures. In Ireland, most of the reductions have been achieved through cuts in wages or the fees paid to professionals and pharmaceutical companies, and through actual reductions in the number of health workers. Estonia cut administrative costs in the ministry of health and also reduced the prices of publicly reimbursed health services.
Investment plans have also been put on hold in a number of countries, including Estonia, Ireland, Iceland and Czech Republic, while gains in efficiency have been pursued through mergers of hospitals or ministries, or accelerating the move from in-patient hospitalisation towards out-patient care and day surgery. The use of generic drugs has also been expanded in a number of countries.
Other measures have been introduced to make people pay more out of their own pockets. For example, Ireland increased the share of direct payments by households for prescribed medicines and appliances, while the Czech Republic increased users’ charges for hospital stays.
Beyond Europe, health spending growth slowed in 2010, to around 3% in the United States, Canada and New Zealand. Growth remained at more than 8% in Korea.
As a result of the zero growth in health spending across OECD countries in 2010, the percentage of GDP devoted to health stabilised or declined slightly in most countries. Health spending accounted for 9.5% of GDP on average across OECD countries in 2010, compared with 9.6% in 2009.
In 2010, health spending as a share of GDP remained by far the highest in the US (17.6% of GDP), followed by the Netherlands (12%), France and Germany (11.6%). The lowest shares of national income devoted to health are in Mexico (6.2%) and Turkey (6.1%). In Japan, the share of spending allocated to health has increased substantially in recent years to 9.5%, up from 7.6% in 2000, and is now equal to the OECD average. The share also increased in Korea to 7.1% in 2010, up from 4.5% in 2000.
Andrew McConaghie
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