OECD countries vary enormously in how much they spend on health and the rate at which health spending grows. This reflects a wide array of market and social factors, as well as countries’ diverse financing and organisational structures of their health systems.

Trends in the health spending to GDP ratio are the result of the combined effect of trends in both GDP and health expenditure. Apart from Luxembourg, health spending has grown more quickly than GDP since 2000. This has resulted in a higher share of GDP allocated to health on average across OECD countries.

Spending on the various types of health care services and goods is influenced by a wide range of factors: health system constraints, such as access to hospital beds, medical staff and new technology, the financial and institutional arrangements for health care delivery, as well as national clinical guidelines and the disease burden within a country.

Pharmaceuticals account for almost a fifth of all health spending on average across OECD countries. The increased consumption of pharmaceuticals due to the diffusion of new drugs and the ageing of populations (see Indicator 4.11 “Pharmaceutical consumption”) has been a major factor contributing to increased pharmaceutical expenditure and thus overall heath expenditure (OECD, 2008c). However, the relationship between pharmaceutical spending and total health spending is a complex one, in that increased expenditure on pharmaceuticals to tackle diseases may reduce the need for costly hospitalisations and interventions now or in the future.

All OECD countries use a mix of public and private sources to pay for health care, but to varying degrees. Public financing is confined to government revenues in countries where central and/or local governments are primarily responsible for financing health services directly (e.g. Spain and Norway). It comprises both general government revenues and social contributions in countries with social insurance-based funding (e.g. France and Germany). Private financing, on the other hand, covers households’ out-ofpocket payments (either direct or as co-payments), thirdparty payment arrangements effected through various forms of private health insurance, health services such as occupational health care directly provided by employers, and other direct benefits provided by charities and the like.

Trade in health services and its most high-profile component, medical tourism, has attracted a great deal of media attention in recent years. The impression often given is that large numbers of patients are actively seeking health care abroad or buying their pharmaceuticals over the Internet from foreign providers. The apparent growth in “imports” and “exports” has been fuelled by a number of factors. Technological advances in information communication systems allow patients or third party purchasers of health care the possibility to seek out quality treatment at lower cost and/or more immediately from health care providers in other countries. An increase in the portability of health coverage, whether as a result of regional arrangements with regard to public health insurance systems, or developments in the private insurance market, are also poised to further increase patient mobility. All this is coupled with a general increase in the temporary movement of populations for business, leisure or specifically for medical reasons between countries.