health expenditure trends: what are the key issues for policy-makers?

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1 HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS? Eva Orosz and David Morgan Organisation for Economic Co- operation and Development 7 th European Health Forum Gastein 6 – 9 October, 2004

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HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?. Eva Orosz and David Morgan Organisation for Economic Co-operation and Development 7 th European Health Forum Gastein 6 – 9 October, 2004. Main purposes of work related to the System of Health Accounts at OECD. - PowerPoint PPT Presentation

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Page 1: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

1

HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-

MAKERS?

Eva Orosz and David Morgan Organisation for Economic Co-operation and

Development

7th European Health Forum Gastein6 – 9 October, 2004

Page 2: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

2

Main purposes of work related to the System of Health Accounts at OECD

To provide / facilitate policy-relevant, comparative data and analysis on

health expenditure harmonisation across national health accounting

practice methodological development in health accounting data sources for research

www.oecd.org/health/sha

Page 3: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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Recent analytical work concerning health expenditure

Health at a Glance. OECD 2003 Bains, M. and Oxley, H.: Aging-related Spending

Projections on Health and Long-term Care. In: Towards High-Performing Health Systems. Policy Studies, OECD, 2004

Orosz, E and Morgan, D: SHA-based Health Accounts in Thirteen OECD Countries: A Comparative Analysis. OECD Working Papers, No.16.

SHA-based Health Accounts in Thirteen OECD Countries. Country Studies. OECD Health Technical Papers 1 to 13

Page 4: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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Key questions proposed for discussion

1) How can the excess growth of health expenditure be interpreted?

2) Is it possible to move towards a smoother (longer-term) adjustment of public spending to economic circumstances?

3) To what extent can policy influence the key determinants of health expenditure growth?

4) Do we have a reliable picture of the structure of public spending on health?

5) Do we have a reliable picture of the role of private spending on health care?

Page 5: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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Figure 1. Health expenditure as percentage of GDP, 2002

Slovak RepublicKoreaPolandMexico

LuxembourgIrelandFinland

Czech RepublicSpain

United KingdomAustriaJapan

HungaryNew Zealand

ItalyEU15

NorwayDenmark

NetherlandsBelgiumAustraliaSwedenPortugalGreeceCanadaFranceIceland

GermanySwitzerland

United States

Source: OECD Health Data 2004, 2nd edition.

14.611.2

10.99.9

9.79.69.5

9.39.29.19.19.1

8.88.7

8.58.5

7.87.87.77.77.6

7.47.37.3

6.26.16.1

5.95.7

8.5

0246810121416

Source PrivatePublic

-2 -1 0 1 2 3 4 5

1982-921992-2002

% of GDP Change in % of GDP, 1992-2002

Page 6: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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Figure 1b. Public expenditure on health as percentage of GDP, 2002

MexicoKoreaTurkeyPolandGreece

Slovak RepublicLuxembourg

SpainAustriaIrelandHungaryFinlandAustraliaEU-15

United KingdomJapanItaly

SwitzerlandPortugalBelgium

United StatesNew Zealand

CanadaCzech Republic

DenmarkNorwayFranceSwedenIceland

Germany

Source: OECD Health Data 2004, 2nd edition.

8.68.3

7.97.47.47.3

6.86.76.66.66.56.56.56.46.46.4

6.25.55.55.55.45.45.3

5.15

4.44.2

3.22.8

6.4

012345678910 -2 -1 0 1 2 3 4 5

1982-921992-2002

% of GDP Change in % of GDP, 1992-2002

Page 7: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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Different interpretations of excess growth of public (and total) expenditure on health

Poses a greater burden on the public budget – thus should be avoided.

Reflects structural changes in national economies: greater spending on health services reflects the growing role of the whole service sector.

It is an investment in long-term economic development.

Advances in health care and the increased demand is inherent as increasingly wealthy and ageing populations require continuous increase.

Page 8: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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Figure 2. Real annual growth rates, Public Expenditure on Health and GDP, EU15

GDP

GDP

Public Exp. on Health

Public Exp. on Health

-2

0

2

4

6

8

10

1979-1980

1980-1981

1981-1982

1982-1983

1983-1984

1984-1985

1985-1986

1986-1987

1987-1988

1988-1989

1989-1990

1990-1991

1991-1992

1992-1993

1993-1994

1994-1995

1995-1996

1996-1997

1997-1998

1998-1999

1999-2000

2000-2001

2001-2002

Rea

l ann

ual g

row

th in

Pub

lic E

xp. o

n H

ealth

, %

-6

-4

-2

0

2

4

6

Rea

l ann

ual g

row

th in

GD

P, %

Source: OECD Health Data 2004, 3rd edition .

-2

0

2

4 0

2

4

6

Note: The left hand axis refers to GDP growth and the right-hand axis to Public Expenditure on Health.Source: OECD Health Data 2004, 2nd edition.

Page 9: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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How to adjust public spending to economic circumstances?

Have countries tended to over-react to economic ups-and-downs in respect of managing their public spending on health?

Is this short-term attachment of public spending to GDP-growth unavoidable?

Would it be possible to shift toward a smoother long-term adjustment of public expenditure on health to economic growth?

Page 10: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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Figure 3. Public expenditure on Pharmaceuticals

Source: OECD Health Data 2004, 2nd edition. * in real terms calculated at 1995 GDP price levels.

Australia

Canada

Czech Republic

Denmark

France

Germany

Greece

Hungary

Iceland

Ireland

Italy

United States

Poland

Spain

Sweden

Turkey

0153045

19922002

% of Total public expenditure on health

0 15 30 45

% contribution to change* in Total public exp. on health 1992-2002

Pharma

Page 11: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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To what extent can policy influence the key determinants of health expenditure growth?

Public pharmaceutical expenditure has been increasing faster than other components of publicly financed health care

However, figures shows that countries with very similar situations (i.e. similar per capita expenditure and similar growth rate in total expenditure) experienced very different trends.

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Do we have reliable figures on spending structure?

SHA-based Health Accounts in Thirteen OECD Countries. OECD Working Papers, No.16

System of Health Accounts allows for a more reliable analysis of how financial resources are allocated among functions and service providers

In-patient curative-rehabilitative care occupies a far smaller share of health expenditure than hospitals

Page 13: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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Figure 4. Hospital and In-patient Curative-rehabilitative Expenditure

-

10

20

30

40

50

60

Australia Canada Denmark Germany Hungary Japan Poland Spain Switzerland Turkey

Hospital Expenditure Curative-rehabilitative (in-patient)

Source: “SHA-Based National Health Accounts in Thirteen OECD Countries: A Comparative Analysis” (OECD Health Working Papers No. 16)

% current exp. on health

Page 14: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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Figure 5. Public share of health expenditure, 1980 and 2002

Source: OECD Health Data 2004, 3rd edition.

%97

93 93

89 88

85

82 80 80 79 79

76

71

69

64

56

42

91

85 85

83 83

85

75 76

71

76

79

70

82

70 71

53

45

30

40

50

60

70

80

90

100

Cze

ch R

epub

lic

Luxe

mbo

urg

Sw

eden

Uni

ted

Kin

gdom

Den

mar

k

Nor

way

Irela

nd

Fran

ce

Spa

in

Finl

and

Ger

man

y

Can

ada

Japa

n

Aus

tria

Por

tuga

l

Gre

ece

Uni

ted

Sta

tes

1980 2002

Source: OECD Health Data 2004, 2nd edition.

Page 15: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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Do we have a reliable picture of the role of private spending on health care?

Private sector may play a very different role in financing a particular type of service.

The fact that the whole health care system is primarily publicly financed does not entail that public financing plays the dominant role in every area.

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Figure 6. The financing of in-patient, out-patient care and pharmaceuticals

Source: “SHA-Based National Health Accounts in Thirteen OECD Countries: A Comparative Analysis” (OECD Health Working Papers No. 16)

Out-patient expenditure

71

60

66

77

45

82

49

60

48

45

29

40

34

23

55

18

51

40

52

55

58 42

0 25 50 75 100

AustraliaCanada

DenmarkGermanyHungary

JapanKorea

PolandSpain

SwitzerlandTurkey

Out-patient exp.=100

Public sector share of out-patient Private sector share of out-patient

Pharmaceutical expenditure

56

34

53

74

61

66

55

63

63

44

66

47

26

39

34

45

37

37

35

73

65

27

0 25 50 75 100

AustraliaCanada

DenmarkGermanyHungary

JapanKorea

PolandSpain

SwitzerlandTurkey

Pharma. Exp.=100

Public sector share of pharma. exp. Private sector share of pharma. exp.

In-patient expenditure

74

86

97

83

88

90

66

97

60

85

26

14

3

17

12

10

34

3

40

15

88 12

0 25 50 75 100

AustraliaCanada

DenmarkGermanyHungary

JapanKorea

PolandSpain

SwitzerlandTurkey

In-patient exp.=100

Public sector share of in-patient Private sector share of in-patient

Page 17: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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Additional Figures if Questions

Page 18: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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GERMANY

GDP

GDP

Public Exp. on Health

Public Exp. on Health

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

1979-1980

1980-1981

1981-1982

1982-1983

1983-1984

1984-1985

1985-1986

1986-1987

1987-1988

1988-1989

1989-1990

1990-1991

1991-1992

1992-1993

1993-1994

1994-1995

1995-1996

1996-1997

1997-1998

1998-1999

1999-2000

2000-2001

2001-2002

Rea

l ann

ual g

row

th in

Pub

lic E

xp. o

n H

ealth

, %

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

Rea

l ann

ual g

row

th in

GD

P, %

Page 19: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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FRANCE

GDP

GDP

Public Exp. on Health

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

1979-1980

1980-1981

1981-1982

1982-1983

1983-1984

1984-1985

1985-1986

1986-1987

1987-1988

1988-1989

1989-1990

1990-1991

1991-1992

1992-1993

1993-1994

1994-1995

1995-1996

1996-1997

1997-1998

1998-1999

1999-2000

2000-2001

2001-2002

Rea

l ann

ual g

row

th in

Pub

lic E

xp. o

n H

ealth

, %

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

Rea

l ann

ual g

row

th in

GD

P, %

Page 20: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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SWEDEN

GDPGDP

Public Exp. on HealthPublic Exp. on Health

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

1979-1980

1980-1981

1981-1982

1982-1983

1983-1984

1984-1985

1985-1986

1986-1987

1987-1988

1988-1989

1989-1990

1990-1991

1991-1992

1992-1993

1993-1994

1994-1995

1995-1996

1996-1997

1997-1998

1998-1999

1999-2000

2000-2001

2001-2002

Rea

l ann

ual g

row

th in

Pub

lic E

xp. o

n H

ealth

, %

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

Rea

l ann

ual g

row

th in

GD

P, %

Page 21: HEALTH EXPENDITURE TRENDS: WHAT ARE THE KEY ISSUES FOR POLICY-MAKERS?

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UK

GDP

GDP

Public Exp. on HealthPublic Exp. on Health

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

1979-1980

1980-1981

1981-1982

1982-1983

1983-1984

1984-1985

1985-1986

1986-1987

1987-1988

1988-1989

1989-1990

1990-1991

1991-1992

1992-1993

1993-1994

1994-1995

1995-1996

1996-1997

1997-1998

1998-1999

1999-2000

2000-2001

2001-2002

Rea

l ann

ual g

row

th in

Pub

lic E

xp. o

n H

ealth

, %

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

Rea

l ann

ual g

row

th in

GD

P, %