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Fiscal Sustainability of Health Systems

Bridging Health and Finance Perspectives

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The health systems we enjoy today, and expected medical advances in the future, will be difficult to finance from public resources without major reforms. Public health spending in OECD countries has grown rapidly over most of the last half century. These spending increases have contributed to important progress in population health: for example, life expectancy at birth has increased, rising on average by ten years since 1970. The challenge now is to sustain and enhance these achievements in a context of tight fiscal constraints in many countries combined with upward pressure on health spending from factors such as new technological advances and demographic changes. Finding policies that can make health spending more sustainable without compromising important achievements in access and quality requires effective co-operation between health and finance ministries. Sound governance and co-ordination mechanisms are therefore essential to ensure effective policy choices. Prepared by both public finance and health experts, this report provides a unique detailed overview of institutional frameworks for financing health care in OECD countries. One of the main features of this book is a comprehensive mapping of budgeting practices and governance structure in health across OECD countries.

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Executive summary

Over the last 20 years, the average annual growth rate of public health spending exceeded GDP growth in all OECD countries. While such spending has improved health outcomes, there are concerns on the fiscal sustainability of this upward trend. Indeed, in the absence of effective cost-containment policies, OECD projections show public spending on health and long-term care is on course to reach almost 9% of GDP by 2030, and as much as 14% by 2060. Pressures on health expenditure are mainly due to new technologies, which extend the scope, range and quality of medical services; rising incomes, which engender higher expectations on the quality and scope of care; and population ageing.

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