Fiscal Sustainability of Health Systems

How to Finance More Resilient Health Systems When Money Is Tight?

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Finding sufficient funds to pay for more resilient health systems is challenging in the current economic context. COVID-19 has shown the need for additional targeted spending on public health interventions, the digital transformation of health systems, and bolstering the health workforce. Rising incomes, technological innovation and changing demographics put further upward pressure on health spending. This could result in health spending reaching 11.8% of GDP across OECD counties by 2040.

This publication explores the policy options to finance more resilient health systems whilst maintaining fiscal sustainability. It finds that the scale of the additional health financing needs requires ambitious and transformative policy changes. Robust actions to encourage healthier populations and policies to reduce ineffective spending can put future health expenditure on a far gentler upward trajectory. These would enable spending to reach a more sustainable 10.6% of GDP in 2040.

Better budgetary governance is critical. It improves how public funds for health are determined, executed and evaluated. Therefore, a focus of this report is on how good budgeting practices can increase the efficiency of current public spending, and also enable more ambitious policy changes in the medium to longer-term. Findings of this report are targeted at health and finance policy makers, with improved dialogue between health and finance ministries especially important when governments are operating in a constrained fiscal setting.


Examining the latest trends in health spending: Are we heading back to a time of austerity?

This chapter analyses how health expenditure has developed over the course of the pandemic and where countries stand in terms of spending as they have transitioned out of this health crisis. It examines to what extent OECD countries are on the path to making health systems more resilient and what leeway governments have in increasing the financial resources going to healthcare. This is discussed in the context of the current economic climate: how are OECD countries meeting the various challenges and what could be the implications for the trajectory of health spending in the coming years?


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