Healthcare Expenditure Trends in OECD Countries

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The latest analysis of OECD countries reveals that health care expenditures are climbing among all countries and that they will continue to rise. An increasing aging population, changing health care systems, technological advances, and the type of health services used are some of the trends that contribute to increasing health care expenditures. The overall trend is that health care expenditures in OECD countries is exceeding economic growth and necessitates health care reform, cuts in other areas and the tax increases.

Private and Public Spending Health Care Trends

• Out-of-pocket spending makes up two-thirds of private funding for health care.

  Countries use a combination of public and private funding for health care. Private funding sources come from citizens' pockets, private health insurance or other third-party sources like employers. The government bears the majority of health care costs in most OECD countries: 16 percent of health care expenditures were borne by governments in 2008 reports OECD. In 2007, public finding for health care increased in all OECD countries.

  Government responsibility is increased in countries like France, Germany, Norway and Spain where government funds and/or social insurance take up the bulk of health care expenditures. In every OECD country except Mexico and the US, the bulk of health care expenditures come from public funding. A trend of convergence is occurring, reports OECD, in which some countries are decreasing their public spending on health care while others are increasing public expenditures on health care.

  Out-of-pocket payments make up an average of two-thirds of private funding in OECD countries and private health insurance makes up 5 to 6% of health care expenditures.

  Public funding is more heavily used for medical services and medical goods while private funding is increasingly used for out-patient services and dental services. Private expenditure is frequently used to pay for medical goods in Canada, Mexico, Poland and the United States.

Medical Technologies & Health Expenditure Trends

• MRI use increases health care costs.

  The increasing use of medical technologies increases health care costs. Health data from 2010 finds that computed tomography (CT) and magnetic resonance imaging (MRI) scans are on the rise. MRI and CT scans are both expensive to buy and expensive to operate reports the OECD. MRI use per capita has doubled throughout OECD countries and the number of CT scanners is at about 24 per every million people. Greece, Italy, Japan and the US use MRIs much more than countries like Canada, France or the Netherlands. Australia and Korea, along with the U.S., use CT scans to a greater degree than most OECD countries.

Short and Long-Term Health Care Trends

• Out-patient surgeries are on the rise.

  In-patient and out-patient care makes a big difference in health care expenditures in OECD countries. More than a third of health care spending goes to in-patient care in Australia and France while less than a quarter is spent on in-patient care in Portugal and Spain.

  One quarter of total health care expenditures is used in long-term care in Denmark, Norway and Switzerland while countries like Korea and Portugal, where long-term care is more informal or family-based, spend much less.

  Outpatient surgeries are on the rise in OECD countries. This trend is due to medical advances that allow common surgeries like cataract removal and hernia repair to be done quickly and without hospital stays.

Pharmaceutical Health Expenditure Trends

• Pharmacueticals make up the bulk of medical goods spending.

  Pharmaceutical costs make up the bulk of health expenditures on medical goods in OECD countries, at an average of about 20 percent. This number ranges from 11 to 38 percent among countries. New drugs and our aging population contribute to this health care expense trend. In 2007, pharmaceutical spending accounted for 15 percent of the total health care expenditure across OECD countries and the average per capita expense has risen by almost 50 percent over the last decade reports the OECD. The U.S. spent the most on pharmaceuticals per capita in 2007 with Canada and Greece following behind. Mexico spent the least along with Poland and New Zealand. Public funds pay for an average of 60 percent of pharmaceutical costs across OECD countries. Public funds pay for less than 40 percent of pharmaceuticals in Canada and the U.S. and as much as 80 percent in Greece. Pharmaceutical spending has increased the most in Canada and the US over the past decade.

Prevention and Health Expenditure Trends

• Public health campaigns still make up only a small part of health expenditures.

  The OECD suspects that public health and prevention may be making up an increasing portion of health care expenditures but that this amount is buried under the curative care category of health care spending. While preventive programs may be difficult to identify separately, the trend toward preventive practice may reduce overall health care costs in the long run. The OECD estimates that about 3 percent of health care spending goes to educational and preventive programs such as vaccination campaigns and those meant to curb smoking.