• The amount a country spends on health and the rate at which it can grow over time is influenced by a wide array of social and economic determinants, as well as the financing arrangements and organisational structure of the health system itself. In particular, there is a strong relationship between the overall income level of a country and how much the population of that country spends on health care.

  • How much a country spends on health care in relation to all other goods and services in the economy and how that changes over time depends not only on the level of health spending but on the size of the economy as a whole.

  • A variety of factors, from disease burden and system priorities to organisational aspects and costs, help determine the share of spending on the various types of health care goods and services. In 2016, EU member states spent three-fifths of their health expenditure on curative and rehabilitative care services, 20% went on medical goods (mainly pharmaceuticals), while 13% was on health-related long-term care. The remaining 7% was spent on collective services, such as prevention and public health as well as the governance and administration of health care systems.

  • Breaking down health spending by provider offers an organisational perspective, by identifying the setting in which different health services are delivered. Care can be provided in a variety of institutions, ranging from hospitals and medical practices, to pharmacies, care homes and even private households caring for family members.

  • Pharmaceuticals play a vital role in the health system. After inpatient and outpatient care, pharmaceuticals (excluding those used in hospitals) represent the third largest item of health care spending, accounting for a sixth of health expenditure in the EU in 2016. The challenge for policymakers, acknowledging that health care budgets are limited, is to balance access for new medicines while providing the right incentives to industry.

  • Health care can be paid for through a variety of financing arrangements. In countries where individuals are entitled to health care services based, for example, on their residency, government schemes are the predominant arrangement. In others, some form of compulsory health insurance (either social health insurance or cover organised through private insurers) usually covers the bulk of health expenditure. In addition, payments by households (either standalone payments or as part of co-payment arrangements) as well as various forms of voluntary health insurance intended to replace, complement or supplement automatic or compulsory coverage make up the rest of health spending.