Health is among the largest areas of public expenditure categories, with OECD countries spending around 7% of GDP on average in 2023. In many countries, spending has increased over the past decade and remains above pre-pandemic levels. Long-term care, while smaller, is set to increase significantly, driven by ageing populations. This chapter sets out some of the current measures being implemented to foster savings in health spending. In many cases, these are part of an established toolbox as countries have been implementing savings in this area over the past decade. They broadly fit into five key categories: controlling pharmaceutical spending, shifting care from hospitals to outpatient settings, strengthening primary care and gatekeeping, shifting cost burdens towards private financing, and improving efficiency through digitalisation and administrative simplification. In long-term care, measures include reducing reliance on residential care in favour of home-based services and introducing stricter means-testing and eligibility criteria.
Restoring Public Finances
Enabling Effective Government
Abstract
Health and long-term care are areas where most countries have been experiencing spending pressures. In response, structural reforms have been implemented over the past 10 to 15 years to ensure longer term fiscal sustainability. Against this backdrop, many savings are reported under the RPF Survey, with additional incremental cuts and efficiency enhancing measures. Many of those are part of an established toolbox, and in several countries have been in place for some time in various forms. Some respondents are still in the build-up and renewal phase of their health care system and are reporting reforms for broader strategic transformation of their health and long-term care systems. More structural savings initiatives are observed in long-term care to limit the recourse to the most expensive forms of care in institutions in light of demographic shifts. Some respondents are also active in exploring possibilities to achieve efficiencies, with digital health, simplification, as well as working across medical professional boundaries, reforming health administration and mobilising AI.
Reform initiatives and savings measures – health
1. Savings measure targeting supply and use of pharmaceuticals
Assigning global budget, budget shares or devolved allocations for pharmaceuticals
Focusing on prices with a portfolio approach, to reflect the need for higher prices for new drugs while consolidating purchases for older drugs
Promoting generics and reviewing pricing as part of a continuous effort.
2. Achieving savings in hospital and inpatient care
Reviewing payment methods, including adjusting hospital payments through Diagnostic Related Groups.
Promoting the use of outpatient care.
Restructuring hospitals.
3. Achieving savings through adjusting payments and organisation in primary and ambulatory care
Introducing or reinforcing the gatekeeping role of general practitioners.
Reviewing payment for doctors.
Adjusting fee schedule/pricing for medical services.
Improving continuity of care, co-ordination and chronic disease management.
4. Increasing user charges and shifting burdens to private financing
For medical care, pharmaceuticals and to a lesser extent for hospital care.
Limiting public coverage and shifting towards private insurance.
5. Achieving savings through structural approaches
Reducing administrative costs and leveraging digitalisation.
Improving value for money, extracting efficiencies through purchasing.
Macro controls and overall expenditure ceilings.
Reform initiatives and savings measures – long-term care (LTC)
1. Active shift away from residential care and nursing homes, limiting funding for public LTC institutions
The most common measures, including financial incentives, limiting financing for public LTC facilities, exploring innovative living arrangements, promoting home-based services (home nursing care and/or home-help/personal care services) and supporting informal care.
2. Stricter means-testing, eligibility criteria, increased user changes
Achieving efficiencies, including labour substitution and new technologies.
6.1.1. Recent trends in health spending
Health is the largest expenditure category in a number of OECD countries. In 2023, OECD countries dedicated on average 7% of GDP to health (Figure 6.1). The data in Figure 6.1 rely on international definitions of health expenditure data. However, health systems involve a variety of financing and supply arrangements, where public financing can either be through the general government budget, compulsory social insurance/health insurance programmes, and transfers to subnational governments in charge of part or total provision of healthcare. While government is often the main funding source of health expenditure, health care services are also financed by private health insurance premiums and out-of-pocket payments (user charges). This amounted, on average, to the equivalent of 7.1% of GDP in 2024.
Most countries saw a significant increase of health expenditure for compulsory and government schemes due to COVID, with a 1 percentage point of GDP increase between 2015 and 2021 on average and a significant increase in 2020-2021. Health expenditure also grew as a share of government expenditure during COVID, even though COVID-related economic support measures meant that public expenditure as a whole grew significantly. The most recent years for which data are available (2023 and 2024) show a relative normalisation of health expenditure as a share of general government expenditure (Morgan and Mueller, 2026[1]). Some countries such as Denmark, Italy and Norway have been able to reduce public spending as a proportion of GDP between 2016 and 2023. However, trends for the OECD as a whole point to a general increase in spending for most recent years as compared to pre-COVID levels.
Health expenditure from government or compulsory schemes, 2015, 2021 and 2023
Note: Countries are presented from highest to lowest expenditure levels, using average of the three years presented
Source: OECD Health expenditure and financing data, https://data-explorer.oecd.org/s/4hr.
According to OECD Health at a Glance 2025 (OECD, 2025[2]), even if overall countries with higher overall health spending have better health outcomes, it is not always the case. Figure 6.2 shows the correlation between country expenditure on health and better health outcomes. While correlation of course does not equate to causation, the figure shows a clear positive association between health spending per capita and life expectancy at birth. There are some notable exceptions, where countries spend less than the OECD average but achieve higher than average life expectancy (top left quadrant), perhaps indicating relatively good value for money of health systems (OECD, 2025[2]). Eight countries spend less than average on health as a share of GDP but still achieve better avoidable mortality rates. This may be related to the capacity to better organise and prioritise public spending on health Indeed, some of the countries that have reduced healthcare expenditure levels as a percentage of general government expenditure, such as Norway, Italy, Belgium or Japan, are amongst the OECD countries with the highest life expectancy. The two highest spending countries, such as the United States and Germany, are in the second half of all countries in terms of life expectancy.
Association between health spending and health outcome indicators
Note: The axes represent the relevant metrics as a percentage of the OECD average. For example, in the first figure, USA health expenditure is 250% of the OECD average, and life expectancy is 97% of the OECD average.
Source: OECD (2025[2]), Health at a Glance 2025, Figure 1.7.
While this may reflect other complex non-health factors that can impact longevity, such as nutrition, or exposure to various hazards, the relationship between health care and general population-based outcomes is far from univocal. Behavioural determinants, including diet, sugar consumption, physical activity and other lifestyle choices, are among the most important drivers of population health, but lie largely outside healthcare systems. This underlines the importance of linking decisions in this area with other areas, including education, prevention and taxation, including excise duties for tobacco and alcohol.
Beyond aggregate outcome data, more granular analysis of health outcomes using longitudinal or patient-based data can show stronger impacts of health spending. Recent OECD work (OECD, 2026[3]) shows that countries such as Australia with the Productivity Commission or the United Kingdom Office of National Statistics have made progress in this area, measuring quality adjusted health outputs (Australian Productivity Commission, 2024[4]; Heys, 2025[5]) Yearly increases of up to 3% per year were measured in Australia and in the United Kingdom, and health care was the area with the fastest increase in quality adjusted output.
Besides these directly measurable gains of productivity, health spending can support healthier ageing and can facilitate stronger labour market participation at older ages. Well-targeted spending on prevention, early intervention and effective care can reduce avoidable illness, limit future treatment costs, and support a healthier and more productive workforce. OECD analysis reveals that there are many options for reducing wasteful spending in healthcare, stopping spending on actions that do not result in value, swapping inputs or changing approaches with equivalent but less pricy alternatives (OECD, 2017[6]). In addition, the health and long-term care sectors are major public employers in many countries, so decisions on health spending also have important implications for employment, skills and service capacity, with opportunities for better mobilising skilled labour, as illustrated through several RPF submissions. This will be explored through examples of the savings measures undertaken by respondents in the next section.
6.1.2. Reform initiatives and savings measures
Survey respondents reported a significant number of reform initiatives and savings measures, greater than for any other area of public expenditure. The measures mainly focus on inpatient hospital care, new and costly pharmaceuticals, and gatekeeping access to specialists. Reforms expanding the use of user charges and privately financed health expenditure also appear, although not as commonly reported. Several respondents also report limiting public coverage of certain goods and medical treatments and shifting of health coverage to private insurance. The individual measures identified through the RPF Survey are presented across a range of categories as illustrated in the chart below.
Measures approved or submitted to parliament for the fiscal years of 2025 and 2026
Note: Results based on 39 RPF Survey responses Measures reported as “other” in the RPF Survey have been split into the following three sub-categories, based on the qualitative information provided by respondents: “Achieving savings through reducing administrative costs and digitalisation”, “Macro controls and expenditure ceilings” and “Other”. Data is not available for France.
Source: 2026 OECD Survey on Restoring Public Finances, Question 5: Health.
The individual measures identified through the RPF Survey can also be framed in the context of the wider dialogue between Senior Budget and Health Officials (OECD, 2024[7]). While the current report adopts a public finance perspective, it needs to be contextualised within the broader OECD work on health, considering all the policy options available to governments to contain expenditure growth while preserving access, quality and resilience of health care systems. For health and long-term care, the challenge is less about identifying entirely new instruments than about combining existing ones more coherently and calibrating them more effectively to current fiscal pressures. Some tools can have a more immediate effect on expenditure growth, while others aim to improve efficiency or moderate future cost pressures over time. Furthermore, several countries are pursuing a broader strategic shift from hospital-centred systems towards preventive, community-based models of care. While these reforms may not always yield immediate budgetary savings, they aim to improve long-term sustainability by reducing avoidable hospitalisations and improving health outcomes. Several measures that promote the use of outpatient care and that aim at improving continuity of care, co-ordination and chronic disease management clearly fall within that broader area.
Therefore, while the focus of the chapter is on savings measures reported in the RPF Survey, the analysis is also informed by other relevant OECD analysis, and benefits from exchanges organised as part of the OECD Joint Network of Senior Budget and Health Officials.
Pharmaceuticals
Pharmaceuticals are one of the areas most frequently targeted by savings measures across OECD countries (OECD, 2017[6]). This reflects the fact that pharmaceutical spending sits at the intersection of two conflicting trends. On the one hand, pharmaceuticals are a sector characterised by rapid technological progress, with a continuous flow of new and often more effective products that can improve patient outcomes, including both quality and length of life. On the other hand, many of these new medicines enter the market at very high prices, creating growing affordability concerns for both patients and public budgets. At the same time, older medicines regularly lose patent protection, opening scope for the use of lower-cost generic or biosimilar alternatives. Reconciling these opposing dynamics – creating fiscal space for innovation while capturing savings where lower-cost equivalents exist – lies at the heart of many pharmaceutical cost-containment strategies adopted across OECD countries (OECD, 2018[8]). These strategies most commonly involve reforms to pricing and purchasing arrangements, review and reimbursement processes for new medicines, and policies to increase the uptake of generics and biosimilars, which have been pioneered and expanded by the OECD over the past decades (Moens, Barrenho and Paris, 2024[9]).1 (OECD, 2019[10]; Belloni, Morgan and Paris, 2016[11]).
In practice, respondents use a range of instruments to manage pharmaceutical expenditure more actively. Several rely on expenditure ceilings, devolved budget allocations, or clawback arrangements that shift part of overspending back onto pharmaceutical companies. Selected examples include:
Belgium froze the share of the pharmaceutical expenses in the health budget at 17.3% in 2026. The government plans to distribute the cost of this freeze (estimated at around EUR 466 million) across different parts of the system. The pharmaceutical industry is estimated to cover around 57% of this cost, through a reinforced clawback mechanism and budgetary guarantees, meaning pharmaceutical companies must refund a portion of the spending beyond this limit to the health insurance system.
Greece also has an established system of expenditure ceilings for pharmaceuticals in place since 2012, with clawback mechanisms in case of overspending. Over the years this system has been consolidated with more predictability and flexibility to ensure that any overspending is automatically corrected ex post, without burdening the public budget.
Other respondents focus more directly on pricing policies, seeking to reduce prices where possible, negotiate discounts, or strengthen purchasing arrangements, while preserving room in the budget for new high-cost innovative therapies. This amounts to a form of active portfolio management of pharmaceutical budgets, in which savings on off-patent or lower-value products are used to accommodate the entry of more expensive new treatments. As discussed above, these measures are often complemented by generic substitution policies, joint purchasing approaches, and efforts to strengthen price transparency and negotiation capacity. Their effectiveness, however, depends on the overall design of the system, including how pricing, reimbursement, prescribing incentives and budget constraints interact. Some of the measures are also part of broader measures on purchasing arrangements which are discussed as part of the section on achieving savings through structural reforms further below.
Examples of noteworthy practices include:
In Bulgaria, the Supervisory Board of the National Health Insurance Fund has proposed amendments to a 2009 regulation concerning the conditions, procedures, mechanisms and criteria for payment by the National Health Insurance Fund for medicinal products and medical products. The proposal includes establishing a minimum discount for original medicinal products, as well as a minimum discount for products with a new International Non-Proprietary Name (i.e. new unique pharmaceutical substances or ingredients). As part of this, the Fund plans to establish transitional rules for negotiating discounts.
Japan has reformed its pharmaceutical pricing system and modified insurance coverage, as part of a broader package of reforms in the area of pharmaceuticals discussed in Box 6.1.
Korea implemented price reductions for generic pharmaceuticals, reducing the pricing ratio for generic drugs from 53% of the original drug price to around 40%.
Mexico reformed its model for purchasing medicines, to move towards a centralised model of consolidated purchasing model (see discussion in the section on achieving savings through reducing administrative costs and digitalisation)/
In New Zealand, the body responsible for approving and funding medicines within a fixed budget, is promoting the use of generic drugs and reviewing pricing and purchasing procedures for pharmaceuticals.
In Sweden, the government has also established a public commission of inquiry in March 2026 to discuss pharmaceutical pricing and subsidies.
In Japan, the government is undertaking reforms to improve the efficiency of pharmaceutical spending while balancing the dual objectives of reducing the financial burden on the public and promoting pharmaceutical innovation:
In the FY2025 drug price revision, the government made price adjustments based on the characteristics of individual products, and measures such as additional premiums for innovative medicines and support for the supply of essential drugs were introduced.
Furthermore, in FY2026, the market expansion re-pricing scheme is scheduled to be revised to better reflect actual market prices while enhancing predictability for pharmaceutical companies. Such revisions to the system are also expected to help contain the growth of pharmaceutical expenditure and manage the increase in drug spending within the public health insurance system.
Revisions are also underway to strengthen the long-term sustainability of the high-cost medical care benefit system. In addition, efforts are being made to refine the scope of pharmaceutical coverage under the public health insurance system. For instance, nutrition-related pharmaceuticals that have substitutable food alternatives are excluded from insurance coverage under certain conditions. Moreover, patient cost-sharing has been increased when brand-name medicines are chosen despite the availability of generic equivalents. Several measures also already exist in Japan to encourage prescription of generics.
Source: (Ministry of Health, Labour and Welfare, Japan, 2025[12]).
Hospitals and organisation of inpatient and outpatient care
While pharmaceuticals represent a very dynamic component of public spending on health care, hospital and inpatient care represents a significant area of spending in health in most countries. As of 2023, the average OECD country spent 28% of total healthcare expenditure on inpatient care. Hospitals were also by far the highest-cost form of provision, with 39% of healthcare costs deriving from hospital-provided services (OECD, 2025[2]). Hospitals are relevant across several policy levers at once. Reforms affecting hospitals can impact the price of inputs and services, the volume and appropriateness of care delivered. More structural approaches can impact the future trajectory of costs such as changes in service delivery models and network organisation.
A frequent set of reforms consists of shifting activity from inpatient to outpatient care, in order to minimise the pressure and the demand on costly hospital facilities. This is also in line with many medical advances, which allow for less invasive medical interventions, and quicker rehabilitation of patients. From a general perspective, outpatient care is significantly less resource-intensive in terms of expensive technologies and highly skilled staff than inpatient hospitalisation. In many cases, a large proportion of inpatient care occurs for conditions that do not require long term hospitalisation. As such, several countries are making efforts to reduce unnecessary inpatient care, thereby reducing resource usage and freeing up capacity for those who need acute care the most. This is consistent with OECD findings that a substantial share of hospital use can be avoided or shifted to less intensive settings through stronger primary care, outpatient surgery, better discharge arrangements and improved co-ordination across providers (OECD, 2017[6]). Finally, as is the case for pharmaceuticals, countries are also trying to achieve better value for money by adjusting payments for hospital interventions.
In light of the above, reforms in hospitals, as illustrated in Figure 6.3, fall under several general categories. A first category includes a review of payment methods, to achieve value for money. This first category relates mainly to supply-side measures aimed at improving value for money through changes in provider payment and financing arrangements. This is particularly important in the hospital sector, where payment design shapes incentives for activity, case mix, and the use of costly tertiary facilities, and where standard Diagnosis Related Group (DRG)-based mechanisms often struggle to capture the full complexity of high-cost care (Lorenzoni, 2026[13]). A central challenge is to balance the incentives created by different payment systems. Activity-based payments can strengthen efficiency incentives, but may also encourage oversupply, while more fixed or global budget approaches may contain volume growth but risk inefficiency or undersupply. A related challenge is how to compensate providers for unavoidable differences in costs, linked for example to geography, case complexity, teaching functions or the provision of highly specialised care, without unduly weakening incentives for price discipline and efficiency. For this reason, the effect of activity-based payment reforms depends on their design and on whether they are combined with budgetary safeguards, volume controls, or degressive payment arrangements. Some countries do not use DRG systems and Portugal is currently moving away from it (Morgan and Mueller, 2026[1]).
In terms of measures, the RPF Survey provides the following examples of savings measures related to payment methods for hospitals:
Belgium’s 2026 healthcare budget has introduced several cost-savings measures related to pricing. These include reducing the amount by which hospitals can invoice the health insurance system for certain medicines from 85% to 78% and changing the reimbursement category for several medicines (different reimbursement categories have different reimbursement rates).
Chile is expanding the use of diagnostic related groups to additional hospitals, with a single base price for certain diagnostics/groups of treatments, and standardised care packages for home hospitalisation and radiotherapy, thereby enhancing consistency, transparency, and efficiency in hospital financing.
Portugal’s transition to a value-based financing model where hospitals and medical staff are compensated based on how effectively meet certain criteria. This includes use of performance-based contracts with hospitals and primary care units, and more monitoring to measure value.
A second group of respondents is promoting the use of outpatient care as an alternative to inpatient care, as a way to ensure that when relevant, patients can be treated in more cost-effective settings. These reforms relate primarily to demand-side measures to manage volumes and utilisation, while also contributing to the redesign of service delivery towards less resource-intensive settings. In fact, this is a very common trend across OECD countries, as most countries are trying to take advantage of medical advances that facilitate the transfer to outpatient settings. Recent OECD analysis also shows that many countries are strengthening primary care and reducing inpatient activity in order to improve efficiency and contain costly hospital use (Morgan and Mueller, 2026[1]). This can involve developing home hospitalisation models, which can allow patients to receive specialised treatment in their own homes, and which combined with telemonitoring technologies and the use of mobile multidisciplinary teams can reduce patient susceptibility to emergencies. However, the expenditure effects of such reforms depend on how they are implemented. Savings are also unlikely to materialise automatically unless reductions in inpatient activity are accompanied by corresponding downward adjustments in hospital budgets or capacity.
The RPF Survey included the following noteworthy examples:
Israel is reforming its mental health service system to reduce reliance on inpatient care and increased focus on outpatient treatment. This includes higher hospital payments and greater provision of home hospitalisation as an alternative.
Korea is transitioning the treatments of mild cases to local hospital and clinics with university hospitals reserved for acute cases. This has occurred in the context of more comprehensive healthcare reform, which involved making primary clinics the focal points for preventive care.
Lithuania is promoting outpatient and home-based services. This includes increasing the number of reimbursed home-care services, expanding home-care eligibility to include patients to have been treated after an active surgical procedure, and expanding home-care teams to include occupational therapists.
Chinese Taipei is aiming to strengthen tiered medical care and ensure that large-scale hospital resources are reserved for acute cases. Its healthcare system is divided into three tiers, namely hospitals, clinics and specialised care centres. While in theory, hospitals are for acute care and emergency services and clinics are for outpatient services, in reality many patients use hospitals even for minor issues, leading to higher system costs. As such, the health insurance administration is strengthening its system by setting target goals for number of outpatient visits to larger hospitals and encouraging two-way referrals so that clinics refer patients up to hospitals when needed, while hospitals also refer patients back down to clinics for follow up care. It will also involve new co-payments for emergency medical care and prescription medication, to help direct people away from emergency rooms.
Another group of respondents is restructuring hospitals and hospital networks. Hospital activity involves significant fixed costs, including high-technology equipment and highly specialised staff that need to be concentrated in facilities serving sufficiently broad population groups. OECD work on tertiary care also highlights that some hospital services are particularly complex and resource-intensive to finance, especially where care provision is combined with research and teaching functions or where payment systems struggle to keep pace with technological change (Lorenzoni, 2026[13]). In this context, several countries seek to improve the allocation of fixed costs, concentrate specialised activity and reduce duplication.
This may involve rationalising hospital networks, merging some hospitals, and strengthening the co-ordination between core central facilities and smaller or secondary units that either provide a first line of access in more dispersed areas or specialise in selected elective interventions. Such reforms are more feasible in large metropolitan areas but are often more difficult in sparsely populated rural areas, where efficiency objectives need to be balanced against maintaining reasonable geographic access to care. Unlike short-term price or utilisation measures, they aim to improve efficiency over time by adapting infrastructure and care pathways to changing population needs. This is consistent with OECD work pointing to the importance of recalibrating the hospital landscape and strengthening co-ordination between primary, secondary and tertiary care providers (OECD, 2017[6]; Morgan and Mueller, 2026[1]).
The RPF Survey includes the following noteworthy examples:
Czechia is discussing the merger of the two large hospitals in Prague.
In Denmark, hospital restructuring is part of an overall health care agreement in Parliament which includes transforming hospitals into local health care facilities. This involves strengthening primary care capacity with the aim of reducing unnecessary hospital admissions. This has involved reducing the number of acute hospitals, while investing in clinics intended to provide outpatient procedures.
Finland is considering reducing and merging the hospital network and limiting the number of emergency medical care units. Many of these hospitals will perform outpatient surgeries but will transfer acute cases to larger institutions.
Lithuania is also restructuring its hospital network as part of a wider set of reforms.
Portugal’s reforms to localise health care aim to support a more efficient organisation of service delivery, particularly in response to rising demand in densely populated areas. Services such as hospitals are being organised with a view to integrating care, decentralising competences, and promoting cost-effective partnerships and agreements across providers, including through a stronger focus on expanding outpatient surgery (Box 6.2).
Such reforms are sometimes accompanied by broader institutional changes. Finland for example introduced 21 autonomous “wellbeing services counties” responsible for delivering primary and specialised health care, alongside social services and other welfare functions. The reform aims to improve the integration of services, reduce health inequalities, and help contain cost growth (Government of Finland, n.d.[14]).
Portugal has been grappling with increased demand for healthcare in areas with high population density, and issues with maintaining coverage in areas with lower population density.
A major change, initially approved in 2024, was to expand the system of local health units. This created 31 new Local Health Units that integrate hospitals and health centres under a single management structure. This entailed single entities being responsible for both hospital and primary care in specific geographic areas, leading to more centralised organisation of human and financial resources. The change was introduced alongside agreements for central government to transfer responsibilities from the central government to local authorities in the health sector and aims to reduce duplication of structures and processes.
The change awas accompanied by the introduction of several strategic management tools. This includes the use of financial and non-financial incentives based on positive health outcomes, as well more comprehensive analysis of population health and risk levels to allow for more targeted care planning.
Such reforms typically take extended time to implement and to yield savings. For example, beyond RPF Survey responses, Estonia, for example, has pursued hospital restructuring since the early 2000s, using its Hospital Master Plan to streamline a relatively dispersed network, concentrate more complex care in regional and central hospitals, and shift some smaller facilities towards outpatient roles. OECD work suggests that this process remains ongoing, with further efforts to consolidate the hospital network and strengthen integration with primary care (OECD/European Observatory on Health Systems and Policies, 2023[16]; OECD, 2024[17]).
Primary/ambulatory care, general practitioners and gatekeeping
The third area for savings involves respondents focusing on health and medical care provided in ambulatory care settings. There are three types of reforms being implemented.
A first type of reforms focuses on payment methods. This includes both focusing on the level of payments and fees, but also the methods, as physicians, particularly general practitioners, can receive fixed payments for a given patient during the year (called “capitation”), or “fee for service” remuneration, for each patient visit, or a mix of the two (OECD, 2025[2]). Across OECD countries, a wide variety of payment mechanisms are used for primary care physicians and institutions, including salaries, capitation, fee-for-service, pay-for-performance and mixed models, with different implications for incentives and expenditure control (OECD, 2016[18]). OECD work also underlines that fee-for-service may encourage higher service volumes, while capitation can reduce incentives to oversupply care, although each model has limitations and may need to be combined with additional incentives or safeguards (OECD, 2017[6]).
The RPF Survey includes the following noteworthy examples:
Czechia has introduced a fixed payment per patient for general practitioners.
Denmark has also established a new fee structure for general practitioners. This aims to separate salary negotiations from the definition of professional tasks, so that physicians with patient groups suffering from more severe illnesses receive a higher fee per patient.
Latvia is introducing performance-based payments for general practitioners, with a performance evaluation system including metrics for care delivery and health results. Those meeting performance targets will receive bonuses, and high-performing GPs will mentor weaker practices.
Latvia and Lithuania revised the conditions for the payment of capitation money, maintenance payment and manipulation, as well as the conditions of the rural allowance in Latvia. (Box 6.3 for Latvia).
Mexico standardised salary scales for doctors, with a national doctor hiring scheme.
The United Kingdom is reviewing capitation payments for physicians, with the so-called “Carr-Hill formula” to better take into accounts patients’ characteristics, as well as neighbourhood health and prevention. The goal is to ensure that patients in poorer areas get better access to GPs (Government of United Kingdom, 2025[19]).
The second type of reform involves adjusting how medical services are priced, reimbursed, and updated over time. This has taken the form of changes to reimbursement rules, as well as revisions to fee schedules and pricing formulas aimed at curbing excess volume growth and improving value for money. Such reforms are particularly important where technological progress changes the cost structure of care. OECD work suggests that technological advances and consolidation can generate significant efficiency gains in some outpatient services, including radiology, pathology and laboratories. If fee schedules are not updated to reflect these gains, however, part of the benefit may be captured by providers rather than translated into lower public expenditure (Suzuki et al., 2025[20]). The RPF Survey complemented by discussions at the Joint Health/SBO Network identified examples including the following:
Belgium implemented changes in reimbursements of certain GP and specialist services. For example, it no longer reimburses telephone consultations with GPs.
Czechia developed a new policy, starting in 2026, for tackling its rapidly rising diagnostic costs which places stricter regulations and tapered reimbursement rates on diagnostics that are not deemed to be high value for money. The diagnostic spending was divided into two categories and steered through regulations towards high value categories. For expenditure with high value (or at least minimal scope for abuse) – typically diagnostics related to prevention, screening, chronic disease management or tied to well-described clinical guidelines, most regulations are dropped with reimbursement on a fee for service basis. Conversely, for diagnostic expenditure which does not have a high value or for which there is a risk of abuse, a stricter regulation with binding budget constraints and tapered reimbursement rates applies.
In Korea, the government has changed how often it updates fees for medical services, from every 5-7 years to every two years. This is to reflect how quickly healthcare costs change due to technology and wage growth. The government is also undertaking large scale collection of cost data, analysing hospital data with the aim of identifying profit and cost levels for different medical services.
The third type of reforms involves improving the organisation of care. This includes measures to improve gatekeeping – limiting unnecessary access to more expensive services, measures to strengthen primary care co-ordination, and measures to strengthen the role of nurses – to respond to primary care needs in a more cost-effective way while reducing pressures on GPs and hospitals.
Gatekeeping aims at ensuring that the primary line of action is fully mobilised and helps to limit access to the more expensive services, in terms of specialised care, or hospitals, to when it is needed and directed in the most efficient way. This “gatekeeping” function of general practitioners has a significant impact on health care expenditure, as well as service utilisation, health outcomes, and patient satisfaction. It has been used to reduce the number of specialist consultations and contain spending in the in-patient sector. This is consistent with OECD analysis showing that strong primary care and better co-ordination can help avoid unnecessary hospital use and steer patients towards more appropriate and less costly settings of care (OECD, 2017[6]). Strengthening gatekeeping can help ensure that specialist and hospital care are used when clinically necessary and that care pathways are organised more efficiently. OECD analysis suggests that the absence of gatekeeping and poor co-ordination between office-based and hospital-based physicians can contribute to avoidable hospitalisations and fragmented care, particularly for patients with chronic conditions (OECD, 2019[21]). At the same time, recent OECD work on telemedicine highlights that primary care payment and referral arrangements are evolving, and that financing models need to be aligned with new modes of service delivery so that digital access strengthens, rather than weakens, effective gatekeeping and continuity of care (Keelara, Sutherland and Almyranti, 2025[22]). However, while gatekeeping can shift spending from outpatient specialists to general practitioners, it does not necessarily or automatically reduce total healthcare spending if it is not accompanied by appropriate measures.
A related set of reforms focuses less on gatekeeping in the strict sense than on improving continuity of care, co-ordination, and chronic disease management within primary care. Such measures can help improve care pathways and patient follow-up, particularly for people with complex or chronic conditions, and may also contribute to lower costs indirectly, for example by reducing exacerbations and avoidable hospital admissions. Their effects on expenditure are generally less immediate than those of direct pricing or budgetary measures, but they may still form part of a broader strategy to contain spending growth over time. Examples from the RPF Survey include:
In Korea, as part of pilot programmes for chronic disease management, a primary care physician is assigned to patients to ensure care management.
In Lithuania, primary care and gatekeeping are being strengthened as part of structural reforms aimed at improving the efficiency of health care. This has included expanding the range of primary outpatient personal healthcare services covered under the Mandatory Health Insurance Fund
Portugal has created the Complex Chronic Patients Support Service. This helps ensure the continuous and personalised monitoring of patients with complex and chronic conditions. Many of its aims are preventative, including reducing the number of exacerbations of chronic diseases, and reducing the number of required hospital admissions.
In addition, as highlighted by discussions at the Joint Network of Senior Budget and Health Officials, Austria is seeking to improve efficiency and outcomes by making care pathways more integrated and better sequenced across providers, reducing low-value care and unnecessary interventions, and strengthening the use of performance assessments to monitor results and guide reform implementation.
The effectiveness of such reforms also depends on the ability of primary care systems to resolve a range of health needs directly. This can include access to appropriate diagnostic tests, the organisation of multidisciplinary teams, and the use of digital tools to reduce administrative burdens. For example, Spain has developed several policy frameworks aimed at strengthening primary and community care, including the Primary and Community Care Action Plan, the Strategy for Addressing Chronic Conditions, and the Digital Health Strategy. These initiatives place emphasis on continuity of care, co-ordination across levels of care, and the use of digital tools to support service delivery.
Respondents are also expanding the role of nurses, often as part of broader efforts to improve the organisation and cost-effectiveness of care, as illustrated by several examples from the RPF Survey, such as Latvia (Box 6.3). Similar examples of an expanded role for nurses were also reported for Germany and Lithuania. These reforms reflect a wider trend across OECD countries towards strengthening family and community nursing and promoting greater task-sharing between general practitioners and nurses. These are reflecting broader trends, such as promoting healthy ageing and community care for example (OECD, 2025[23]). By shifting selected activities from doctors to nurses where clinically appropriate, such reforms can help improve access and continuity of care while making more effective use of workforce resources, including through a lower-cost skill mix. This broader trend is analysed in recent OECD work on advanced practice nursing in primary care (Brownwood and Lafortune, 2024[24]).
Latvia’s primary care system faces issues of fragmented services, workforce shortages and uneven service provision. Due to low compensation levels, there is a significant emigration of skilled medical and nursing staff. The country is considering system-wide reforms to improve the efficiency of resource use and reduce fragmentation. Aside from moving to a three-tier hospital model for inpatient care, proposed measures for primary care include:
Redirecting funding towards results and improved service delivery. This will include performance-based payments for general practitioners, with a performance evaluation system including metrics for care delivery and health results. IT upgrades are planned to allow quick monitoring of performance indicators. Practices meeting performance targets will receive bonuses, and high-performing GP practices will mentor weaker practices.
Expanding the roles for nurses and medical assistants, for tasks which are currently performed by doctors (such as renewed prescriptions) which could be handled by them, improving efficiency. Furthermore, the reform will allow for hiring of non-medical staff to handle administrative and co-ordination tasks to allow nurses to focus on patient care.
Increasing user charges
Several respondents are focusing on user charges as part of broader efforts to reassess the boundary between public and private financing. It is useful to distinguish between two types of arrangements: full out-of-pocket payment for services or goods that are not included in the publicly financed benefit basket, and cost-sharing arrangements, such as co-payments, co-insurance or deductibles, where services remain publicly covered but households bear part of the cost directly, or in some cases through voluntary health insurance. In both cases, the objective is generally to reduce pressure on public budgets and, in the case of cost-sharing, also to moderate demand. These measures are more commonly applied in primary care and pharmaceuticals than in hospital care. A significant focus of user charges increases is for pharmaceuticals, which as discussed above, pharmaceutical spending is one of the areas most frequently targeted by savings measures. Changes in co-payment arrangements are one way in which governments seek to moderate public expenditure while influencing utilisation. This is particularly relevant in the case of pharmaceuticals because a large share of out-of-pocket spending across OECD countries relates to such goods.
Overall, the RPF Survey includes the following examples of user charges for medical care and pharmaceuticals:
Belgium has announced savings on reimbursement of pharmaceutical products, through reducing the amounts that are being reimbursed.
Finland has a payment cap in place, putting a maximum on the amount an individual can pay out-of-pocket, above which most services become free at the point of purchase. This has been raised to EUR 815 in 2026. In 2025 it also increased the initial deductible (i.e. the amount a person must pay out of pocket before receiving reimbursement) from EUR 50 to EUR 70. It also tied the deductible to the National Pension Index, so that it will be index adjusted every year.
New Zealand has reinstated a 5-dollar prescription co-payment charge for those aged 14 years and over
Sweden has what is known as a high-cost threshold for medicines, meaning that a customer will never pay more than a certain threshold over a twelve-month period. This ceiling has been raised by 30% from SEK 2 950 to SEK 9 800.
In Chinese Taipei, the government has introduced new rules for co-payments for emergency medical care and prescription medication. This will involve a surcharge on the price of prescription medication. The maximum allowed co-payment will also be increased.
As highlighted by discussions at the Joint Health/SBO Network, research shows that user charges need to be applied with caution and accompanied by effective measures (e.g. exemptions from co-payments and a cap on co-payments) to protect people from experiencing unmet need or financial hardship – particularly people with low incomes (OECD, 2025[2]; WHO Regional Office for Europe, 2023[27]). While higher user charges or co-payments may relieve pressure on public budgets, research suggests that their effects are not uniform across population groups or types of care. They can be potentially sensitive from an access perspective (OECD, 2025[2]). Cost-sharing can reduce utilisation but may also impair access to needed care and disproportionately affect lower-income groups and people with chronic conditions (OECD, 2009[26]). While out-of-pocket spending remains relatively modest on average, accounting for around 3.2% of final household consumption across OECD countries in 2023, with a large share related to pharmaceuticals and outpatient care (OECD, 2025[2]), it can still represent a significant financial burden for some households. User charges can create barriers to access for people with low incomes and high health needs (WHO Regional Office for Europe, 2023[27]) Alongside their possible budgetary effects, such measures may have further implications including, in some cases, future costs if delayed care in ambulatory settings leads to worse health conditions that end up being treated in hospitals.
Limiting public coverage and reconsidering the role of private insurance
Several respondents are limiting public coverage and reconsidering the role of private insurance in order to reduce pressure on public spending. This may involve narrowing the public coverage of certain goods or medical treatments or assigning a greater role to voluntary health insurance (VHI). This concerns not only the level of private contributions, but also what should remain publicly covered, under what conditions, and to what extent private health insurance (should play a complementary, supplementary or substitute role. VHI already plays an important role in many OECD countries, either by complementing public coverage, supplementing it, or providing duplicate coverage. In principle, it can help shift part of health financing outside public budgets.
However, the contribution of VHI to fiscal sustainability depends heavily on its design and interaction with public schemes. Where it mainly covers services already included in public benefit packages, offsets user charges, or is supported by public subsidies, its effect on containing public expenditure may be limited. It may also raise wider questions in terms of access, financial protection and administrative complexity. For this reason, reforms in this area are often linked to broader reassessments of benefit packages and coverage rules, including through health technology assessment and other review mechanisms aimed at identifying which interventions continue to represent good value for public funding (OECD, 2024[7]; OECD, 2015[28]). Recent OECD analysis also shows that the role of voluntary health insurance differs markedly across countries, both in terms of coverage and function, underlining that its contribution to fiscal sustainability depends heavily on system design and its interaction with public schemes (OECD, 2025[2]).
In terms of examples from the RPF Survey of setting limits to public coverage:
In 2023, Finland introduced a care guarantee, meaning the maximum waiting time, or statutory time limit for access to treatment, for a GP was reduced from three months to 14 days for non-urgent care. This has now been lengthened for persons over 23. Finland is also limiting the number of 24-hour urgent and emergency medical care units, as part of efforts to rationalise service provision and, helping reduce costs.
Norway eliminated the coverage for treatment by chiropractors.
Achieving savings through structural reforms improving value for money, reducing administrative costs and leveraging digitalisation
A number of respondents identified the scope for efficiencies in health care through a wide mix of savings measures including management, increased digitalisation and e-health services and reduce administrative costs. These measures relate primarily to forward-looking policies that shape future expenditure trajectories, while also supporting efforts to reduce waste and improve value for money within existing systems. Unlike more immediate cost-containment tools, digitalisation and administrative streamlining can require upfront investment, but they can improve productivity, reduce duplication, strengthen co-ordination, and make the use of resources more efficient over time (OECD, 2019[21]; Fellner, Sutherland and Vujovic, 2025[29]). They can also help to improve health at the workplace, through mobile applications and AI applications combined with health insurance platforms (Vazquez-Venegas et al., 2024[30]).
OECD work on digital health and public health digitalisation highlights that these gains depend critically on interoperability, data governance, workforce capabilities, and the integration of digital tools into routine service delivery and decision making. Some reforms combine several of the levers discussed in this chapter, linking digitalisation, administrative simplification, prevention and a shift away from hospital-centred care. Similarly, efforts to reduce administrative costs can contribute to expenditure control where they simplify procedures, reduce fragmentation, and avoid duplication of functions across providers, payers and public authorities (OECD, 2017[6]). Recent OECD work on telemedicine underlines that digital efficiencies depend on appropriate financing, governance and evaluation arrangements, so that new digital services improve care pathways and system efficiency rather than simply adding parallel costs (Keelara, Sutherland and Almyranti, 2025[22]). In practice, these reforms are best understood not as stand-alone savings measures, but as enabling reforms that can support more efficient care delivery, stronger monitoring, and better expenditure control across the health system.
The RPF Survey highlights the following noteworthy in terms of reforms aimed at reducing administrative costs and leveraging digitalisation:
Estonia has implemented several e-health and IT solutions to reduce costs at its Health Insurance Fund. This includes developing systems allowing doctors to save time on routine tasks such as drafting discharge summaries.
Ireland established a Productivity and Savings Taskforce in January 2024 to identify possible savings and productivity increases options (Box 6.5).
Luxembourg has recently developed a Health System Performance Assessment Framework, to be implemented in 2026, aiming to improve health system performance and reduce administrative costs.
The United Kingdom is abolishing NHS England, an arms-length management body, and reintegrating management functions into the Department of Health and Social Care. This is expected to achieve savings of up to GBP 1 billion per year. This is part of a broader reform, including simplification, digitalisation, a focus on prevention and a shift away from hospital-centred care as part of the United Kingdom’s recent NHS reform strategy reflecting a general cross government saving drive (see Box 6.4).
Thailand is leveraging E-health and AI, to enhance service quality, including Tele-medicines, Health Riders, Lab Anywhere, and other digital services that aim to reduce patients-travel costs and shift care away from hospital to the community.
In 2025, the United Kingdom government announced a 10-year plan for the National Health Service, with the aim of reducing bureaucracy and increasing efficiency of the health system without compromising on patient outcomes. The health plan revolves around three key shifts:
Hospital to community: This aims to reduce fragmentation by moving away from a hospital-centric approach, bringing care into local communities through neighbourhood health services. Care should happen as locally as possible – digitally, if possible, in a patient’s home, in a local centre, and only in a hospital if necessary. This will also see increases in the role of community pharmacies in the management of long-term conditions.
From analogue to digital: This involves advancing capacity of the NHS app, allowing a reduction in bureaucracy through reduced administrative work. Patients will get advice for non-urgent care, choose their preferred provider, book tests and vaccines and manage their children’s healthcare, all through the app. The app will monitor patients’ status continuously, allowing clinicians to reach out early to prevent emergency admissions to hospital.
From sickness to prevention: This includes policy changes aimed at key health issues, including tobacco and vapes, obesity, alcohol, mental health, and vaccination rates. It will also include a new genomics population health service, enabling early identification of individuals at high risk.
In order to deliver on this, the plan announces a new operating model for the NHS. NHS England and the Department of Health and Social Care will be combined to reduce central headcount by 50%. This will result in the abolishment of NHS England as an arms’ length agency, which manages how health services are run, Integrated Care Boards (ICBs) will be made the strategic commissioners of local healthcare services with the aim of localising management structures. This is part of the aim to reduces layers of management and red tape, to create a more efficient system.
The Productivity and Savings Taskforce was established in January 2024, after the Ministry for Health highlighted the need to drive savings and productivity improvements across the Health Service Executive, which involves publicly funded healthcare services. The focus of the taskforce is twofold: to reduce and avoid costs where possible, and to generate the maximum use of resources. It sets a target of savings. For 2025, this was EUR 382 million, with total cumulative savings of EUR 633 million estimated by the end of 2025. It has so far included the following actions:
Reductions in costs in acute settings through requirements that hospitals keep their non-salary spending at consistent levels from one year to another (excluding unavoidable costs such as energy).
Reducing cost of care in long-term residential facilities.
Reduction in expenditure on management consultancy.
Measures to increase productivity and efficiency include:
A performance dashboard, which provides decision makers with real-time data across a range of services, enabling monitoring of key performance indicators, resource utilisation and service delivery.
An outpatient toolkit, which standardises outpatient processes and provides real-time data to improve efficiency and reduce waiting times.
A theatre utilisation programme, to maximise use of surgical capacity.
Countries are also mobilising procurement and purchasing tools to extract efficiencies, including wider purchasing arrangements to improve value for money and contain expenditure growth. This includes measures such as centralising purchasing within a single specialised institution, using joint procurement across public purchasers, or participating in international procurement co-operation agreements. Examples from the RPF Survey include:
Estonia has strengthened the role of the national health insurance fund as an active purchaser. Voluntary joint procurement of hospital medicines is co-ordinated centrally by the Estonian Health Insurance Fund (EHIF), aggregating demand across multiple hospitals (biological medicines, vaccines and selected injectable hospital medicines).
Luxembourg is preparing the creation of a National Purchasing and Logistics Centre (CNAL) for the health sector, to centralise and optimise procurement of medicines and medical devices.
Mexico has reformed its consolidated purchasing for medicines, medical supplies, and high-specialty medical equipment. From 2025 onwards, the Ministry of Health assumes leadership of demand planning, procurement co-ordination across public health institutions, and oversight of contracting procedures. The reform model aggregates demand across the National Health System and applies competitive procurement mechanisms, including consolidated tenders and reverse auction-type processes. For the 2025-2026 biennial procurement cycle, the policy is estimated to generate savings of approximately MXN 30 billion (EUR 1.4 billion) compared to equivalent purchases at prior unit prices (Government of Mexico, 2025[33]).
Beyond these measures that have been adopted, discussions have also taken place among several countries, including Estonia and some of its neighbours, to enable direct cross-border purchasing of hospital medicines. Such arrangements are not yet implemented within the current legal framework. However, joint procurement has been used in the past for vaccines for the national immunisation schedules.
Finally, other areas may also emerge as an opportunity to adopt structural measures to achieve value for money, as highlighted in the discussions held at the Joint Health/SBO Network, including the example of Czechia diagnostic payments highlighted above.
Macro controls and overall expenditure ceilings
Several countries have implemented macro controls in the health care sectors, which involves setting up expenditure ceilings, for countries where health care expenses occur outside of the budget but where nevertheless the budget has to cover the cost ex post (in case of social insurance schemes). These measures are best understood as part of the budgetary governance arrangements that support expenditure control, rather than as policy levers in themselves. They do not directly alter the price, volume or appropriateness of care, but they shape the overall resource envelope within which such policy choices are made.
OECD work has consistently highlighted that medium-term expenditure frameworks, expenditure ceilings, spending reviews, and in-year monitoring mechanisms play an important role in strengthening fiscal discipline in health, particularly where spending is financed through social health insurance or other arrangements operating partly outside the state budget (OECD, 2015[28]; OECD, 2024[7]). In this sense, macro controls are a key enabling condition for the framework set out in this chapter, because they can reinforce the credibility and implementation of measures aimed at containing expenditure growth within the health system. Recent OECD analysis shows that these tools are becoming more important again in a context of tighter fiscal conditions, rising deficits in some social insurance systems, and renewed efforts to balance resilience and sustainability in health financing (Morgan and Mueller, 2026[1]).
For example, as part of the RPF Survey:
In Belgium, the expenditure ceiling has been made stricter, as the amount by which the health care budget is permitted to increase has been reduced to 2% in 2026 and 2027.
The Netherlands continues to renew macro control agreements, through national stakeholder agreements regarding annual restrictions on expenditure, building on the experience that has delivered success over the past 10 years.
6.2.1. Recent trends in long-term care spending
Long-term care represents a modest but rapidly growing area of public expenditure in many countries as it is closely related to ageing populations. In countries such as the Nordic countries, the Netherlands, Switzerland, Luxembourg, Ireland or Japan, it is above 1.5% of GDP. The bulk of this spending is directed to people in institutions, whereas public spending on home care currently represents a smaller but growing share of expenditure. Cross-country comparisons should note that “home care” may combine health-funded home “nursing care” (financed through public health insurance) and social home-help/personal care services, which are financed and reported differently across countries. This is also an area where spending increased during COVID and has normalised since then, though at higher levels than in pre-COVID years for most countries.
A significant part of care is provided informally by families and other unpaid informal care givers. Public expenditure in this area therefore represents only a partial monetisation of the total quantity of care that is necessary to maintain older people facing restrictions in their activities of daily living.
Share of long-term care expenditure 2015, 2021 and 2023
Note: Some countries (Austria, Canada, Chile, Costa Rica, Germany, Italy, Poland, United States) do not report spending for social long-term care. In many countries this component is therefore missing from total long-term care, although in some countries it is partly included under health long-term care. Norway, Israel, Australia, Peru, Thailand data is from 2022.
Source: OECD Health expenditure and financing, https://data-explorer.oecd.org/s/4hs.
This is an area of growing pressures for public spending, with significant disparities across countries, reflecting differences in population structure and the maturity of long-term care systems. Population ageing, and particularly gains in life expectancy at older ages, is the most visible driver (OECD, 2025[2]). Population ageing, and particularly gains in life expectancy at older ages, is the most visible driver. Another aspect is the erosion of traditional informal care networks, due to a weakening family safety net. This is consistent with recent OECD work showing that the supply of informal care is likely to shrink, and that declines in family size, increases in geographical mobility and increasing female labour market participation are reducing the availability of informal carers (Kim et al., 2026[34]). This reflects declining fertility rates, increasing childlessness, geographic dispersion of families and rising female labour force participation.
There are therefore pressures for monetising an increasing share of the care needs. As highlighted in OECD work, the wide variation in LTC spending across countries partly reflects differences in population structure, but mostly the stage of development of formal LTC systems as opposed to more informal arrangements based mainly on unpaid family care (Llena-Nozal, Barszczewski and Rauet-Tejeda, 2025[35]). This may also represent a wealth effect, as wealthier societies tend to invest more heavily in formal care systems. Higher incomes tend to increase long term care spending through multiple effects, including wealth, improved service access, enhanced insurance coverage and greater demand for quality care. At the same time, unmet LTC needs remain significant in some countries, particularly where formal care coverage is limited. This may also generate higher health spending, for example where people remain in hospital unnecessarily or where deteriorating conditions later require more intensive care (OECD, 2023[36]; OECD, 2024[37]).
Long-term care systems are organised in different ways across countries. Depending on the country, they may fall under social policy, be integrated within broader social and health systems, or operate through a distinct long-term care system. Social support systems for the elderly often reflect a mix of responsibilities across local governments and municipalities, formal compulsory insurance in countries where such programmes cover long term care, and publicly funded health care systems. OECD research confirms that responsibilities for LTC are often divided among municipalities, regional governments, central government, insurance funds and third-sector providers, and that countries rely on a variety of funding arrangements including taxes, contributions and mixed systems. Only a limited number of countries rely on a dedicated long-term care insurance scheme. The labour-intensive nature of long-term care implies limited opportunities for productivity growth as care requires human interactions (Blavet, Lorenzoni and Rapp, forthcoming[38]; Llena-Nozal, Barszczewski and Rauet-Tejeda, 2025[35]).
Recent OECD projections show that total long term care spending from public sources is likely to double by 2050 (Blavet, Lorenzoni and Rapp, forthcoming[38]; OECD, 2025[2]). The change is likely to be even more pronounced with countries which have maintained low or moderate long-term care spending up to now, and that are facing significant ageing trends. This is consistent with OECD analysis showing both that some countries currently have very low levels of formal LTC spending and coverage, and that population ageing will accelerate significantly in many countries and economies over the coming decades. In countries with mature long term care systems, spending is set to continue to increase, including because countries with already developed systems are also facing continued population ageing and rising demand for more formal, labour-intensive care.
6.2.2. Reform initiatives and savings measures
Respondents report a significant number of savings measures (Figure 6.5). A key priority is to control and limit the use of the most expensive form of care: nursing homes and residential care. Around half of respondents report measures to promote a shift away from such residential care. This includes a greater emphasis on home-based care (including health-funded home nursing care and/or social home-help/personal care service, depending on country definition) as well as incentivising and supporting family caregivers. However, savings from such a shift depend on the level of care needs and the relative cost structure of home and residential care (OECD, 2024[37]). The greater use of means-testing and user charges is reflected in measures in a smaller number of respondents.
Measures approved or submitted to parliament for the fiscal years of 2025 and 2026
Note: Results based on 39 RPF Survey responses. Among the respondents falling under “other”, Sweden mentioned general savings in the elderly care area, planned for 2028, and Latvia is promoting a broader law on social services and primary care (see Box 6.3). Data is not available for France.
Source: 2026 OECD Survey on Restoring Public Finances, Question 5: Long-term care.
These measures may reflect the fact that long-term care systems are still being developed, refined and adjusted in many cases. The mix of measures reported by respondents reflects decisions made at the level of the budget and central government, even though a significant part of the care is delivered at the local level.
A shift away from residential care and nursing home and limiting funding for public long term care institutions
Several countries are seeking to reduce reliance on residential long-term care as part of broader reforms to reorganise care provision and contain expenditure growth. These reforms typically involve expanding home- and community-based alternatives, and in some cases adjusting the financing and staffing arrangements of residential care. However, savings from such measures need to be interpreted with caution, as lower use of residential care or reduced staffing in institutions may affect care quality and may also shift costs elsewhere in the system if needs are not adequately met (Rocard, Sillitti and Llena-Nozal, 2021[39]).
A number of examples from the RPF Survey are presented below.
Mobilising financial incentives
In Belgium, the Flemish region is aiming to achieve savings through reducing the basic care allowance for residential care and short-stay centres.
Reducing financing for public long term care facilities
Finland lowered the minimum staffing level in 24-hour residential care for elderly people. From 2025, the statutory minimum ratio was set at 0.6 workers per client, down from 0.65. As these wages are funded by the central government, this allows to achieve savings.
Slovenia is reorienting its funding strategy. While the reform of LTC prioritises the expansion of home-based and community care to reduce reliance on institutionalisation, it also introduces obligatory LTC contribution to ensure LTC financial sustainability of the entire sector, including public facilities (see Box 6.6).
Recent LTC reforms have also targeted workforce organisation, administrative simplification and digitalisation, as illustrated by the German example identified through the RPF Survey (Box 6.6).
In 2025, the Bundestag approved the Act on “Expanding Powers and Reducing Bureaucracy in Long-Term Care”. The Act aims to improve the provision of care services, simplify procedures and promote digitalisation. A major tenet of the Act is the strengthening of the role of professional nursing staff, allowing them – under defined conditions and in accordance with their professional qualifications – the independent provision of medical treatments, as well as prescription of home nursing care and certain care aids. This aims to distribute the provision of care more evenly among the relevant professional groups and to make the nursing profession more attractive.
The Act also contains several measures to reduce bureaucracy in the long-term care sector. This includes establishing standardised guidelines and procedures for negotiating care service remuneration, as well as standardising of forms used by long-term insurance funds for applying to insurance benefits.
On top of this, the Act aims to increase digitalisation, with the aim of increasing efficiency. This includes moving administrative procedures into digital formats, reducing documentation duties and the introduction of a requirement for all quality-inspection orders to be issued digitally from 2028 onwards. The increase in digitalisation also involves strengthening the collection and standardisation of data to guide care planning and support evaluations. The long-term care insurance funds will be required to make regional (non-personal) care data available to local authorities.
Source: (Federal Law Gazette, 2025[40]).
Exploring innovative living arrangements
Germany is enabling the provision of long-term care in innovative living arrangements, to shift from residential care to new care settings. In particular, this involves care models that blend both residential and home-based services, for example via models in which senior residences develop services in co-operation with home care providers. This provides more flexibility regarding the provision of through professional outpatient care services, and/ or through informal carers such as family members, neighbours or friends. It is supposed that such care arrangements can help to achieve savings when compared to the service provision in fully residential facilities.
Promoting home care
A number of respondents identified reforms and savings measures in this area, in ways that often cut across health and long-term care. Examples from the RPF Survey include:
Chile is promoting home hospitalisation (i.e. an alternative to hospital admission where patients instead receive care at home). This includes development of a 2024 technical standard for home hospitalisation, which establishes minimum requirements and guidelines for public and private providers delivering home hospitalisation services2. This includes staffing requirements, minimum equipment requirements, and requirements to maintain detailed information for clinical records.
Germany has raised care allowance support levels for home-based care and outpatient services (such as home care assistance) at a greater rate than insurance benefits for inpatient care, incentivising greater levels of home-based care.
Lithuania is promoting home-based services as part of a broader health and long-term care reform.
Luxembourg is implementing a broad care agenda for the elderly. This includes promoting home assistance services to reduce the number of elderly in hospitals without clinical need and measures to promote autonomy, inclusion and quality of life for older persons.
Mexico is introducing a preventive-home care model, including periodic medical visits to the elderly and people with disabilities in their home to reduce pressure on emergency services and tertiary hospitalisation.
In the Netherlands, the Framework Agreement on Elderly Care sets home living as the default starting point, with residential care only considered if necessary. This includes creating a single delivery model for non-residential care, based on tailored care. This aims to allow financing to scale up or down easily depending on care needs
Chinese Taipei is establishing physician networks responsible for home-based care, to reduce hospital readmissions and to assist individuals in returning home from hospitals. Overall, the government is using the long-term care benefit and payment system to steer the public toward home and community-based care. However, for certain cases of moderate to severe disability, which require more comprehensive care facilities and more intensive professional care, the government continues to implement multiple measures to alleviate the financial burden on institutionalised individuals and their families.
Supporting informal care
Support for informal care can help contain direct formal care costs, and is therefore reported in some cases within the RPF Survey as part of their response to rising long-term care needs. However, this often involves complex trade-offs between informal and formal care, with a need to pay attention to implications for labour market participation for some of the care givers. Examples from the RPF Survey include:
The Netherlands grants people who wish to for a family member or friend due to illness, disability or old age) the right to two weeks of leave dedicated to short-term care per year, and six weeks of leave for long-term care situations. Short-term care allows them to retain 70% of their salary, while long-term leave is generally unpaid. Long-term care leave can also be taken by the hour, instead of only full days, allowing for more flexibility. This helps to mobilise informal care, thus substituting for expensive formal care.
Slovenia’s long-term care act aims to provide greater support to informal care, discussed in Box 6.7.
Portugal’s Informal Caregiver Allowance is no longer considered when determining the means-testing conditions for granting other social benefits. This lowers the eligibility threshold for those providing informal care, increasing the incentive to do. The measure forms part of a broader healthcare package, set out in Box 6.2.
Thailand is strengthening the capacity of caregivers to provide long-term care at community level.
Chinese Taipei is strengthening respite care and one-to-many community care plans to alleviate caregiver burden. It is also promoting the prevention and delaying of disability and ageing in place, by using community-based long-term care stations and active ageing courses.
The new Long-Term Care Act was initially introduced in 2021 and came into force in July 2025. It aims to consider long-term care as a third pillar of social security, alongside the pension and health insurance, and therefore ensure sustainable financing. The act introduces a new mandatory social insurance, which is compulsory for those older than 18 years. Workers and employers will have to pay 1% of their gross salary, pensioners 1% of their net pension, and the self-employed 2% of their salary. The contribution is then paid into a special long-term care fund. Payment into the fund does not automatically guarantee eligibility for long-term care. Instead, eligibility is decided by social work centres based on the application, which includes consideration of whether they are able to perform basic daily activities.
The Long-Term Care Act also aims to increase the level of home care, to reduce the burden on publicly funded care facilities. This will take several forms:
The act gives each user of long-term care eligibility for between 20 and 110 hours of home care services per month, depending on the level of need.
The act introduces e-care as a standard service.
Municipalities also are given more power to organise community-based long term care services, through provision of regional providers or concessions to private providers.
Pensioners can now obtain status of family caregiver, which can provide compensation of up to 1.2 times the minimum wage.
Greater use of means-testing, user charges and stricter eligibility criteria
Several countries report greater use of means-testing, user charging and stricter eligibility criteria, which often impact both home care services as well as residents in public and private long-term care facilities. These measures relate primarily to reassessing the boundary between public and private financing, since they determine both the level of public support and the extent to which households are expected to contribute to the cost of care. Means-testing and co-payment arrangements are widely used across long-term care systems to target public support, especially for institutional care. Countries differ significantly in the use of income- and asset-testing, minimum benefit rules, and the level of user contributions required from recipients (Llena-Nozal, Araki and Killmeier, 2025[42]). Stricter eligibility criteria can directly affect the share of older people receiving publicly funded LTC and therefore have an important effect on public expenditure trajectories, particularly in countries facing rapid ageing and expanding formal care needs (Llena-Nozal, Barszczewski and Rauet-Tejeda, 2025[35]; Llena-Nozal, Araki and Killmeier, 2025[42]). At the same time, any savings from such measures need to be interpreted in a broader system perspective. Where higher charges or tighter eligibility limit access to care, some people may delay or forgo needed support, or rely more heavily on healthcare services.
The measures include:
Australia is requiring those with means to contribute more toward daily living and accommodation costs, ensuring government funding is targeted to those with the greatest financial need.
Belgium: The Flemish region will reduce expenditure on family care. This includes introducing a percentage reduction in the funding available for residential care centres, and a freezing of the budget for family care (which was previously projected to grow by 1% in 2026). As part of this, there will be more unannounced inspections of care centres, and stricter sanctions for abuse of services.
Korea is reforming the long-term care eligibility assessment systems to create an integrated assessment system for elderly care services. It is also increasing insurance premiums for long-term care
Under the Netherlands’ 2025 Outline Agreement on Elderly Care, residential care will no longer be an automatic entitlement; instead, access will be subject to an assessment determining whether admission to a nursing home is appropriate. This assessment will consider not only the care needs of the older person, but also their social context, including the capacity and burden of informal caregivers, and the potential for care to be provided outside an institutional setting.
Slovenia has introduced eligibility criteria for home care services dependent on need, thereby improving targeting for long term care provision, and achieving savings through more rigorous assessment system (see Box 6.7).
Overall, the measures reviewed in this chapter highlight both the range of policy tools currently being used by countries Many of the measures reported aim to improve efficiency, strengthen incentives, or shift care towards more appropriate settings. Their fiscal effects are often gradual and depend on implementation, on supporting budgetary frameworks, and on the extent to which providers and users adjust their behaviour. More broadly, this points to the trade-offs between the objective of achieving budgetary savings in the short term through cost containment and the objective to ensure the long-term sustainability and performance of health systems. Measures that generate relatively rapid savings may be easier to prioritise under immediate budgetary pressure, but they do not necessarily address the underlying drivers of spending growth. In some cases, they may even delay or crowd out more structural reforms. By contrast, reforms that are more likely to improve sustainability over the longer term may not always help to achieve savings in the shorter term, may require longer implementation periods, and sustained political commitment. This points to the multiple and complex trade-offs faced with mobilising budgetary tools to achieve structural savings in the area of health and long-term care.
Beyond individual saving measures which are reported in the RPF Survey, countries have developed significant experience in mobilising budgetary tools to address spending pressures and enhance efficiency in health and long-term care. In this area of public spending, effective use of budgetary tools has a critical role to play in supporting efforts to contain health expenditure growth without undermining health system performance. While macro controls and overall expenditure ceilings, medium-term expenditure frameworks, spending reviews, and monitoring and corrective mechanisms do not constitute policy levers in themselves, they can help strengthen the credibility, prioritisation and implementation of the measures discussed in previous sections above. They determine how expenditure targets are set, monitored and enforced, and therefore play a critical role in the effectiveness of cost-containment strategies (OECD, 2024[7]).
Enhancing efficiency in health and long-term care expenditure depends on closer alignment between ministries of finance and health, recognising that effective co-ordination is essential to ensuring fiscal sustainability without undermining health outcomes. Strengthening budgetary governance frameworks is a key enabling condition for this shift, as it underpins the credibility and effectiveness of expenditure control strategies. The following instruments are particularly relevant in strengthening fiscal discipline in the health sector:
Medium-term expenditure frameworks (MTEFs): Moving beyond the annual budget allows governments to better anticipate and manage expenditure trends over time. By linking policy objectives to a multi-year resource envelope, MTEFs support more credible expenditure ceilings and provide greater predictability for health system actors.
Spending reviews and prioritisation mechanisms: Regular spending reviews can help identify inefficiencies, assess the effectiveness of existing programmes, and reallocate resources towards higher-value interventions. In the health sector, they provide a structured approach to revisiting baseline expenditure and aligning it with evolving policy priorities.
Monitoring, early warning, and corrective mechanisms: Robust in-year monitoring systems, combined with early-warning mechanisms and predefined corrective actions, are essential to ensure that expenditure remains within planned limits. These tools help translate expenditure targets into operational control.
Overall, strengthening these budgetary governance arrangements can enhance the credibility and effectiveness of expenditure control strategies from the perspective of ministries of finance, particularly when combined with well-designed measures targeting prices, volumes, and efficiency through ministries of health. While these tools operate at the macro level, they need to be complemented by more micro approaches, to improve the effectiveness of care, including through health technology assessment, and combining with organisational changes highlighted above, such as gatekeeping, strengthening the primary care function, and organising pathways for patients through the health care systems, which are under the remit of ministries of health. These have been addressed as part of OECD reports prepared through the joint SBO Health network (OECD, 2024[7]; OECD, 2015[28]).
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← 1. See also (European Commission, 2019[44]) and (Jacobzone, 2000[43]) for an early reference.
← 2. A non-binding technical orientation on home hospitalisation had already been issued in 2021. The 2024 Technical Standard (N°238) formalises and replaces that earlier framework with binding requirements for public and private providers.