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Health at a Glance 2011: OECD Indicators
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branch 7. Health Expenditure and Financing
  branch 7.5. Financing of health care

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-of-pocket payments (either direct or as co-payments), third-party 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.

Figure 7.5.1 shows the breakdown of how health care services are paid for across OECD countries in 2009. The public sector remains the main source of health financing in all OECD countries, apart from Chile, Mexico and the United States. In the Netherlands, the Nordic countries (except Finland), the United Kingdom, the Czech Republic, Luxembourg, Japan and New Zealand public financing of health care accounted for more than 80% of all health expenditure. On average, the public share of total health spending was 72% in 2009, more or less unchanged over the last 20 years, although the range has tended to narrow slightly. Many of those countries with a relatively high public share in the early 1990s, such as the Czech Republic and the Slovak Republic, have decreased their share, while other countries which historically had a relatively low level (e.g. Portugal, Turkey) have increased their public share, reflecting health system reforms and the expansion of public coverage.

After public financing, the main financing source for health care are households themselves through so-called out-of-pocket payments. These may be co-payments or cost-sharing arrangements with public or private schemes, say for prescription pharmaceuticals, or simply direct payments borne directly by a patient for services or goods. On average across OECD countries, the share of health care expenditure covered by households was around 19% in 2009, ranging from lows of 6% and 7% in the Netherlands and France, to more than 30% in Korea, Mexico and Chile. In some central and eastern European countries, the practice of informal payments means that the level of out-of-pocket spending is probably underestimated.

Some countries have extended the coverage of their public health systems in recent years and seen the burden on households fall. In the case of Korea and Turkey, the share of health spending borne by households has fallen by around 10 percentage points since 2000 (Figure 7.5.2). On the other hand, some eastern European countries with traditionally high shares of public financing have seen charges shifted towards households over the same period.

In general, a relationship can be seen between out-of-pocket spending as a share of total health spending and the overall level of health spending itself (Figure 7.5.3). The United States, France and the Netherlands, as some of the highest spenders on of health care, also see households financing a relatively small share of the health care costs directly, with the majority of spending made through third-party arrangements - both public or private. Switzerland is notable as having a significant share of its overall high health spending being paid directly by households.

Definition and comparability

There are three elements of health care financing: sources of funding (households, employers and the state), financing schemes (e.g. compulsory or voluntary insurance), and financing agents (organisations managing the financing schemes). Here "financing" is used more in the sense of financing schemes. Public financing includes general government revenues and social security funds. Private financing covers households' out-of-pocket payments, private health insurance and other private funds (NGOs and private corporations).

Out-of-pocket payments are expenditures borne directly by the patient. They include cost-sharing and, in certain countries, estimations of informal payments to health care providers.

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

 
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Figures
7.5.1 Expenditure on health by type of financing, 2009 (or nearest year) Figure in Excel
Expenditure on health by type of financing, 2009 (or
nearest year)
7.5.2 Change in out-of-pocket spending as a share of current expenditure on health, 2000-09 (or nearest year) Figure in Excel
Change in out-of-pocket spending as a share of current
expenditure on health, 2000-09 (or nearest year)
7.5.3 Out-of-pocket and current expenditure on health, 2009 (or nearest year) Figure in Excel
Out-of-pocket and current expenditure on health, 2009
(or nearest year)