OECD analyses four policy levers for financing more resilient health systems: 1) boosting government spending, 2) increasing the allocation to health within current budgets, 3) reassessing the boundaries between public and private spending, 4) maximising efficiency gains. Each of these policy levers needs to be assessed in terms of their benefits and risks, and the extent to which they are feasible in practice.
Health spending and financial sustainability
Health spending in OECD countries has continued to grow over recent decades. This is due to both significant medical advances, as well as inherent cost pressures, such as ageing. The challenge for countries is how to strengthen health systems by improving the quality and accessibility of healthcare while also keeping the rise in health spending under control.
Key messages
OECD is at the forefront of tracking and analysing how much each country is spending on health. Through the annual data collection, comparable and timely data shows where financial resources are going in terms of the type of care, who is providing the care and who is paying. Such information is key to analyse issues of efficiency, equity and the sustainability of health systems.
With the challenges faced by health systems, promoting dialogue between those involved in all aspects of health spending is key. The OECD Joint Network of Senior Budget and Health Officials brings together people from ministries of finance, health and social security agencies. The Network provides an effective space for government officials to openly discuss challenges and solutions to the fiscal sustainability of health systems.
Context
Health systems are under financial pressure
An analysis of trends in per capita health spending and GDP over the past 20 years highlights two major shocks: the 2008 economic and financial crisis and the impact of COVID‑19 in 2020. While OECD economies sharply contracted in 2009, health spending growth was briefly maintained before slowing to near zero between 2010 and 2012 as measures were introduced to contain public spending. This was followed by a return to moderate growth. In 2020, widespread lockdowns and other public health measures severely restricting economic activity sent many OECD economies into freefall, while health spending soared. Russia’s war on Ukraine, the energy crisis, and supply chain disruptions later led to high inflation and slower-than-expected growth in 2022 and 2023. As countries moved beyond the acute phase of COVID‑19, real per capita health spending declined on average by 2.5% in 2022 and stagnated in 2023. However, in 2024, health spending began to return to pre‑pandemic growth rates, with per capita expenditure estimated to have increased by more than 3% in real terms.
Future health spending
Over the long term, growth in health spending from public sources is projected to be twice the average growth in government revenues (2.6% and 1.3% respectively on average across OECD countries). When combined with the need to invest in health systems for future resilience, this could lead to a potential high of 11.8% of GDP being dedicated to health spending by 2040.
However, more transformative policy changes that target wasteful spending and leverage digital technologies have the potential to limit this increase, while also improving health outcomes. However, it is key that any potential savings are redirected to health budgets, rather than absorbed back into the general budget.
