Health Expenditure in Relation to GDP

7. HEALTH EXPENDITURE Health expenditure in relation to GDP

How much a country spends on health care over time and increased health coverage for the population. In 2003, relative to spending on all other goods and services in the health spending in Korea accounted for only 4.3% whereas economy can be down to both growth in health spending in 2016 it was estimated to have reached 7.2%. At the other itself as well as how well the economy is performing overall. end of the scale, no discernible impact can be seen for In 2016, health spending is estimated to have accounted Mexico which has seen its health spending to GDP ratio for 9.0% of GDP on average across OECD countries, largely remain relatively constant throughout the period at around unchanged in recent years. This comes after a period of 6% of GDP. health spending growth above that of the overall economy In Europe, Germany has seen its health spending to GDP in the 1990s and 2000s that saw health expenditure as a ratio stabilise since 2009 as health spending growth has share of GDP rise sharply in many OECD countries. aligned with economic growth with a slow but steady In 2016, the United States spent 17.2% of GDP on health, increase to reach 11.3% in 2016, almost one percentage almost five percentage points above Switzerland, the next point above the level in 2003. Greece, on the other hand, highest country, and more than eight percentage points where there have been significant cuts in health spending above the OECD average (Figure 7.3). A group of ten high- since 2009, has seen the health spending to GDP ratio income OECD countries, including Germany, France, Japan fluctuate – approaching close to 10% in 2010 – before and Canada, follow with around 11% of GDP going on returning to a similar level to that in the early 2000s at health services. Another large group of countries spanning around 8% of GDP. Europe, as well as Australia and New Zealand (and South Africa) fit roughly within a band of between 8-10% of GDP. A similar sized group of mainly Central and Eastern European countries, such as Hungary, the Czech Republic and Poland Definition and comparability allocate between 6-8% of their GDP to health. Only Mexico, Latvia and, notably Turkey at 4.3%, spend less than 6% of See indicator on “Health expenditure per capita” for a GDP on health services. Turkey’s health spending as a share definition of expenditure on health. of GDP is at a similar level to that in India. Gross Domestic Product (GDP) = final consumption + Looking at changes over time, the average health spending gross capital formation + net exports. Final to GDP ratio jumped sharply in 2009 as overall economic consumption of households includes goods and conditions deteriorated rapidly in many countries while services used by households or the community health spending growth was sustained at around 3% on to satisfy their individual needs. It includes final average in 2008 and 2009 (Figure 7.4). While subsequent consumption expenditure of households, general health spending growth also significantly declined – government and non-profit institutions serving approaching zero growth on average in 2010/11 – this step households. increase in the health spending to GDP ratio has been In countries, such as Ireland and Luxembourg, where a largely maintained as the rate of health spending growth significant proportion of GDP refers to profits exported has tended to closely track the growth in the overall and not available for national consumption, GNI may economy since 2012. be a more meaningful measure than GDP. However, behind the overall OECD average, some different Note that data for 2016 are based on preliminary patterns emerge on a country by country basis. In the figures provided by the country or estimates made by United States, after a number of years (2009-14) when the OECD Secretariat. ratio of health spending to GDP has been stable at around 16.4%, 2015 and 2016 have seen this increase again to reach the 17.2% in 2016 (Figure 7.5). This mirrors the period before the economic crisis when health spending rose almost a References percentage point between 2003 and 2008. Korea has seen the most notable increase in the share of economic resources OECD/Eurostat/WHO (2017), A System of Health Accounts allocated to health over time with a significant progression 2011: Revised edition, OECD Publishing, Paris, http://dx.doi. in the ratio over many years on the back of growing wealth org/10.1787/9789264270985-en.

134 Health at a Glance 2017 © OECD 2017 7. HEALTH EXPENDITURE

Health expenditure in relation to GDP

7.3. Health expenditure as a share of GDP, 2016 (or nearest year)

Government/Compulsory Voluntary/Out-of-pocket % GDP 18 .2

16 17

14 .4 12 .3 .0 .0

12 .9 11 .6 .5 11 .5 11 .4 .4 .4 10 10 10 10 10 10 10 7 6 3 9. 2 9. 1 0 0 9 10 9 9. 9. 9. 6 9. 9. 6 8. 8. 5 8. 8 3 8. 8. 8. 8. 8 7 6 7. 4 7. 3 7. 2

8 7. 7. 7. 7 5 6. 9 4 3 6. 2 6. 6. 6. 8 6. 7 6 5 5. 5. 5. 6 5. 8 4. 3 4. 4 8 2.

Italy Chile FranceJapan Spain Korea Israel² Brazil Latvia China²India²Turkey Sweden Canada Norway Austria Finland Iceland² GreeceIreland Estonia Poland Mexico Germany BelgiumDenmark OECD35 Portugal Slovenia Hungary Lithuania ited States Australia¹ Colombia² Indonesia² Switzerland Netherlands Costa Rica² Un New Zealand South Africa² Luxembourg United Kingdom Czech RepublicSlovak Republic ssian Federation Ru

Note: Expenditure excludes investments, unless otherwise stated. 1. Australian expenditure estimates exclude all expenditure for residential aged care facilities in welfare (social) services. 2. Includes investments. Source: OECD Health Statistics 2017, WHO Global Health Expenditure Database. 12 http://dx.doi.org/10.1787/888933604229

7.4. Average annual growth in per capita 7.5. Health expenditure as a share of GDP, selected health expenditure and GDP, 2003-16 OECD countries, 2003-16 (OECD average) OECD35 Greece Korea Health GDP Germany Mexico United States % % GDP 6 18

16 4

14 2

12 0

-2 8

-4 6

-6 4 03 05 09 03/04 20 20 2007 20 2011 2013 2015 20 2005/06 2007/08 2009/10 2011/12 2013/14 2015/16 Source: OECD Health Statistics 2017. Source: OECD Health Statistics 2017. 12 http://dx.doi.org/10.1787/888933604267 12 http://dx.doi.org/10.1787/888933604248

Access the complete publication at: https://doi.org/10.1787/health_glance-2017-en

Please cite this chapter as:

OECD (2017), “Health expenditure in relation to GDP”, in Health at a Glance 2017: OECD Indicators, OECD Publishing, Paris.

DOI: https://doi.org/10.1787/health_glance-2017-45-en

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