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News : International Last Updated: Jul 12, 2010 - 7:19:02 AM


OECD says share of public spending on health rose from average of 12% in 1990 to an all-time high of 16% in 2008
By Michael Hennigan, Founder and Editor of Finfacts
Jul 9, 2010 - 4:46:28 AM

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The OECD says the share of public spending on health increased in most countries, rising from an average of 12% in 1990 to an all-time high of 16% in 2008.

In all OECD countries total spending on healthcare is rising faster than economic growth, pushing  the average ratio of health spending to GDP from 7.8% in 2000 to 9.0% in 2008. Factors pushing health spending up - - technological change, population expectations and population ageing  - - will continue to drive cost higher in the future.

In some countries the recent economic downturn, with GDP falling and healthcare costs rising, led to a sharp increase in the ratio of  health spending to GDP. In Ireland, the percentage of GDP devoted to health increased from 7.5% in 2007 to 8.7% in 2008. In Spain, it rose from 8.4% to 9.0%. The United States spent $7,538 per person on health in 2008, well over double the $3,000 average of all OECD countries. The next biggest spenders, Norway and Switzerland, spent much less than the US per capita but still some 50% more than the OECD average.  

Governments of most OECD countries shoulder the lion’s share of healthcare costs. The share of government expenditure devoted to health increased in most countries, rising from an average of 12% in 1990 to an all-time high of 16% in 2008. The OECD says given the urgent need to reduce their budget deficits, many OECD governments will have to make difficult choices to sustain their healthcare systems: curb the growth of public spending on health, cut spending in other areas, or raise taxes.

The November 2009 OECD report on Ireland said the Government should introduce greater competition in the provision of healthcare.

Seán Byrne, lecturer in economics at the Dublin Institute of Technology, wrote in the Irish Times last month: "The very high incomes earned by GPs in Ireland is partly due to the fact that the number of them per 1,000 population in Ireland is only 60% of that in most other European countries. While the demand for GP services is rising due to an increasing population and larger numbers of older people, the supply is not increasing in line with this.

The supply is further constrained by the fact that in order to set up as a GP, a doctor must undertake four years of postgraduate training, but the number of training places is not adequate to meet the demand for them. The first two years of this training is hospital based and must be undertaken even if the doctor has previous hospital experience."

Seán Byrne referred to a survey published recently by the National Consumer Agency, which showed that 70% of dentists and half of doctors do not display their fees.

A GP in Dublin 4 charged €70 per visit, twice the fee charged by a GP in Kerry. The charge for a tooth extraction varied from €40 to €150 depending on where the dentist was located.

Byrne said only 30% of the population hold medical cards and the determination of GPs to protect their excessive earnings is shown by the fact that the IMO (Irish Medical Organisation) has demanded that if the proportion of the population with medical cards were to rise to 40%, the GP contract must be renegotiated.

Medical technologies are driving up spending

New medical technologies are improving diagnosis and treatment but they also increase health spending.  OECD Health Data 2010 shows that there has been rapid growth in the supply and use of computed tomography (CT) scanners and magnetic resonance imaging (MRI) units used for diagnostic purposes.  MRI units per capita more than doubled on average across OECD countries between 2000 and 2008, reaching 13 machines per million population in 2008, up from 6 in 2000.  The number of CT scanners rose to 24 per million population, up from 19 in 2000. The number of MRI units per capita is much greater in Japan, the United States, Italy and Greece than in other countries. These countries, along with Australia and Korea, also have more CT scanners. 

MRI and CT scanners are expensive to buy and to operate. There are big differences in their use per capita - - far more in the United States than in Canada, France or the Netherlands. The rapid growth in these diagnostic procedures over the past decade in the United States has raised concerns that some imaging may not be useful. To reduce unnecessary procedures and cut costs, many OECD countries are trying to promote rational use of costly medical technologies. 

These are some of the findings from OECD Health Data 2010, the most comprehensive source of comparable statistics on health and health systems across the 31 OECD countries (including Chile as a new member this year) and 3 prospective members (Estonia, Israel and Slovenia).  Covering the period 1960 to 2008, this interactive database can be used for comparative analyses on:

  • Health status

  • Risk factors to health (including trends in smoking and obesity)

  • Health care resources and utilisation

  • Long-term care resources and utilisation

  • Health expenditure and financing

  • Social protection (including public health coverage and private health insurance)

  • Pharmaceutical markets

The Paris- -based OECD think thank for governments has 31 mainly developed country members: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.

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