HEALTH EXPENDITURES

Health is a precondition for economic prosperity and ensuring populations remain healthy makes good financial sense. Healthcare expenditure is recognised as growth-friendly expenditure; when efficient and cost-effective, it can increase the quantity and productivity of labour by increasing healthy life expectancy. Yet current ways of thinking about healthcare expenditure see healthcare simply as a cost. And healthcare costs are rising. Currently the average healthcare spending of European countries is 8.7% of GDP and could surpass 10% if nothing is done. Short-term cost-cutting measures can have long-term negative results. How can countries reduce the gap between resources and expenses? There are several options:

• Factoring in the financial benefits that result from high-quality healthcare
• Focusing on investing in prevention and early intervention: preventing disease is far more effective for improving patient well-being and provides better value than treatment
• Exploring new ways to improve patient outcomes while lowering costs such as measuring and tracking outcomes and rethinking how healthcare is supplied and paid for.

The OECD defines healthcare expenditures as “…total expenditure on health care measures: the final consumption of health goods and services plus capital investment in health care infrastructure. It includes spending by both public and private sources (including households) on medical goods and services, on public health and prevention programmes, and on administration.”

It’s not always simple to compare healthcare expenditures in different countries. The OECD recommends comparing both health spending to GDP ratios and per capita spending to get a clearer picture of how different countries’ spending compares.