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Health at a Glance 2011: OECD Indicators
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branch 7. Health Expenditure and Financing
  branch 7.2. Health expenditure in relation to GDP

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.

In 2009, OECD countries devoted 9.6% of their GDP to health spending (Figure 7.2.1 and Table A.8), a sharp increase from 8.8% in 2008, following the recession that started in many countries in 2008 and became widespread in 2009. The rise in the health spending share of GDP was particularly marked in countries hard hit by the global recession. In Ireland, the percentage of GDP devoted to health increased from 7.7% in 2007 to 9.5% in 2009. In the United Kingdom, it rose from 8.4% in 2007 to 9.8% in 2009.

In 2009, the United States spent 17.4% of GDP on health, 5 percentage points more than in the next two countries, the Netherlands and France (which allocated 12.0% and 11.8% of their GDP on health). Of the OECD countries, Mexico and Turkey spent less than 6.5% of their GDP on health. The fast-growing economies of China and India spent 4.6% and 4.2% respectively in 2009, while South Africa and Brazil allocated 8.5% and 9.0% of GDP to health.

The share of public expenditure on health to GDP varies from a high of 9.8% of GDP in Denmark to lows of 4.0% and 3.1% of GDP in Korea and Mexico, respectively. In these two countries, health spending is more evenly split between public and private financing compared to other OECD countries.

For a more comprehensive assessment of health spending, the health spending to GDP ratio should be considered together with per capita health spending (see Indicator 7.1 "Health expenditure per capita" ). Countries having a relatively high health spending to GDP ratio might have relatively low health expenditure per capita, while the converse also holds. For example, Portugal and Sweden both spent a similar proportion of their GDP on health at around 10% of GDP; however, per capita spending (adjusted to USD PPP) was close to 50% higher in Sweden (Figure 7.1.1).

Since 2000, after a period of early growth in the health spending to GDP ratio, there was a period of relative stability until 2009 (Figure 7.2.2). The subsequent reduction in GDP, due to the economic downturn, has led to a rise in the health spending to GDP ratios. The experience from previous recessions shows that, in many countries, the health spending share of GDP has tended to go up strongly during periods of economic downturns, and then to stabilise or go down only slightly during periods of economic recovery. Looking back at the experience following the recession in the early 1990s, some countries such as Canada and Finland did substantially reduce public expenditure on health to cut down their budgetary deficits, leading to a noticeable reduction in the health spending share of GDP over a few years. But these reductions in public spending on health proved to be short-lived and, after a few years of cost-containment, growing demand for and supply of health services led to a revival of health expenditure growth exceeding GDP growth again (Scherer and Devaux, 2010).

Health spending per capita since 2000 has increased more than two times faster than economic growth on average across OECD countries (4.0% versus 1.6%), resulting in an increasing share of the economy devoted to health in most countries (Figure 7.2.3).

Definition and comparability

See Indicator 7.1 "Health expenditure per capita" for the definition of total health expenditure.

Gross Domestic Product (GDP) = final consumption + gross capital formation + net exports. Final consumption of households includes goods and services used by households or the community to satisfy their individual needs. It includes final consumption expenditure of households, general government and non-profit institutions serving households.

In countries, such as Ireland and Luxembourg, where a significant proportion of GDP refers to profits exported and not available for national consumption, GNI may be a more meaningful measure than GDP.

Information on data for Israel: http://dx.doi.org/10.1787/888932315602.

 
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Figures
7.2.1 Total health expenditure as a share of GDP, 2009 (or nearest year) Figure in Excel
Total health expenditure as a share of GDP, 2009 (or
nearest year)
7.2.2 Total health expenditure as a share of GDP, selected OECD countries, 2000-09 Figure in Excel
Total health expenditure as a share of GDP,
selected OECD countries, 2000-09
7.2.3 Annual average growth in real per capita expenditure on health and GDP, 2000-09 (or nearest year) Figure in Excel
Annual average growth in real per capita expenditure on
health and GDP, 2000-09 (or nearest year)