Cross-country comparisons of health spending reflect both differences in the prices of healthcare goods and services, and the amount (“volume”) of care individuals consume. Breaking down health spending into these two components helps policymakers better understand the drivers of spending variation.
Achieving this requires spending data to be expressed in a common currency, and the choice of conversion method can strongly influence the results and their interpretation. One option is to convert local currencies using market exchange rates, but these are often volatile. Moreover, exchange rates may be unsuitable for predominantly non-traded sectors like healthcare, as they fail to capture the real domestic purchasing power of currencies. A more appropriate method is to use PPPs, which take account of price level differences at the level of the whole economy, for industries, and for specific spending aggregates (OECD/Eurostat, 2007[1]). Due to their widespread availability, AIC PPPs – which include all goods and services consumed by households – are commonly used as conversion rates for health spending (see section “Health expenditure per capita”). However, using AIC PPPs means that the resulting price levels reflect not only differences in healthcare volume and price but also any variations in the prices of healthcare goods and services relative to prices of all other consumer goods and services across countries.
Figure 7.6 presents health-specific price levels based on a standardised basket of healthcare goods and services across OECD countries. The same set of healthcare items costs 55% more than the OECD average in Iceland, and 52% more in Switzerland and the United States – the countries reporting the highest prices. Australia and Israel also exhibit relatively high healthcare prices. By contrast, countries including France, Slovenia and Spain have lower price levels, with the same healthcare basket costing roughly two‑thirds of the OECD average. Türkiye records the lowest healthcare prices among OECD countries, at just 18% of the average.
By removing the price component from health spending, it is possible to estimate the quantity of healthcare goods and services (“the volume of healthcare”) consumed by the population. These volumes vary less than overall health expenditure across countries (Figure 7.7). The United States continues to have the highest per capita healthcare use, with volumes about 50% above the OECD average. In contrast, Mexico and Costa Rica report the lowest volumes, at around one‑fifth of the average. Differences in healthcare volume per person are shaped by factors such as the population’s age and disease profile, how healthcare services are organised and delivered, the extent of pharmaceutical use, and barriers to access that may result in lower utilisation of care.
Prices in the health sector are closely linked to overall price levels in the economy. However, unlike internationally traded goods – which tend to converge in price across countries – services like healthcare are mostly produced locally. In wealthier countries, higher wages often drive up service costs, including healthcare. When comparing health-specific and economy-wide price levels relative to the OECD average, variation in healthcare prices is usually greater (Figure 7.8). Generally, countries with low overall prices have even lower healthcare prices, and vice versa. Still, this pattern does not apply universally. In Denmark, for example, general price levels are relatively high, but healthcare prices remain below the OECD average. This may reflect policy decisions to regulate healthcare prices.
