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.


Budgeting practices for health in OECD countries

Maximising value for money is critical to the performance of health systems. Good budgeting practices in the health sector can help governments retain control over expenditure growth whilst also respecting health policy objectives. This chapter investigates budgeting practices for health across OECD countries, examining how the budget for health is determined, executed, monitored, and reviewed. This chapter is accompanied with five case studies of Belgium, France, Israel, New Zealand and the United Kingdom.


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