Tracking long-term budgetary constraints through forward-looking projections enables decision makers to anticipate and plan for future financial demands in the health and long-term care sectors. With three‑quarters of health spending in OECD countries financed from public sources on average, forecasting the evolution of this expenditure is crucial for fiscal sustainability.
The OECD projection model focusses on current public health spending – defined to include both government-financed schemes and compulsory health insurance. It uses a component-based approach, disaggregating projections by five‑year age groups and attributing changes to four key drivers: income growth, productivity constraints, demographic changes, and technological innovation (OECD, 2024[1]).
From 2024 to 2045, per capita public health spending across OECD countries is projected to grow at an average annual rate of 2.6% under the base scenario. This represents a slowdown from the historical rate of 2.9% between 2001 and 2023 (Figure 7.25). Country-specific projections vary significantly. Public health spending per capita is projected to grow by over 3.5% annually in Costa Rica and Korea, both with strong GDP growth forecasts. In contrast, Austria and Germany are projected to see annual growth below 2%.
While health spending tends to mirror the shape of GDP growth, other cost drivers typically push spending above GDP trends, particularly under the “cost pressure” scenario. This partial decoupling is consistent with previous OECD analysis, which found that economic fluctuations explained less than half of the slowdown in health spending from 2005 to 2013, with policy decisions accounting for the rest (Lorenzoni et al., 2018[2]).
Given that public health spending is expected to grow faster than overall economic growth, public health spending as a share of GDP across OECD countries is projected to rise by 1.5 p.p., reaching 8.4% by 2045 in the base scenario (Figure 7.26). Increases of around 3 p.p. or more are expected in Iceland, New Zealand and Norway, while slight declines are projected in Greece, Latvia, Lithuania and Poland. Scenario analysis shows that public health spending as a share of GDP is projected to grow by around 1 p.p. under the “cost control” scenario and by 1.7 p.p. under the “cost pressure” scenario (Figure 7.27, left panel). In per capita terms, average annual growth under the base scenario is estimated at 2.6%, compared to the 2.7% “cost pressure” growth and 2.3% estimated under the “cost control” scenario (Figure 7.27, right panel).
In summary, the OECD model highlights the importance of policy choices in shaping future public health spending. While spending is expected to rise both in per capita terms and as a share of GDP, proactive planning and transformational policies will be critical to managing pressures and ensuring sustainable, high-performing health systems.
