Health at a Glance 2013 – OECD Indicators

OECD, November 21, 2013

Editorial: From expenditure growth to productivity growth in the health sector

By Stefano Scarpetta, Director for Employment, Labour and Social Affairs

Almost six years since the start of the global financial and economic crisis, economic conditions vary widely across OECD countries, with the United States, Canada and Japan on a path to recovery, while the economic prospects of many European countries remain subdued. After a period in which, as part of the stimulus packages, greater resources were channelled to welfare and social protection programmes, the shift towards restoring sound fiscal conditions has often implied substantial cuts in public spending. Like other government programmes, health care has been the target of spending cuts in many OECD countries.

The crisis has had a profound impact on the lives of citizens across the world, and has tested the resilience of many families as they see their wealth and incomes decline. Millions of people have joined the ranks of the unemployed and millions more are experiencing financial stress. The combined effects of the crisis with the associated recent expenditure cuts as well as health care reforms have led to uncertainty about the impact on the health and well-being of the population. The most recent OECD health statistics, presented in this edition of Health at a Glance, provide a comprehensive picture of how health systems have evolved during the crisis and the challenges which lie ahead.

Growth in health spending has slowed markedly in almost all OECD countries since 2008. After years of continuous growth of over 4% per annum, average health spending across the OECD grew at only 0.2% between 2009 and 2011. Total health spending fell in 11 out of the 34 OECD countries between 2009 and 2011, compared to pre-crisis levels. Not surprisingly, the countries hit hardest by the economic crisis have witnessed the biggest cuts in health expenditure growth.

In order to limit or reduce public health expenditures, countries have worked to lower the prices paid for publicly financed health care, including cutting the price of medical goods, particularly pharmaceuticals. Governments have targeted hospital spending through budgetary restrictions and cuts to wages. Several countries including Greece, Ireland, Iceland and Estonia have reduced nursing wages in response to the crisis as well as those of salaried GPs. Expenditure on prevention and public health has also been cut since 2009. Further, in several OECD countries, patients are now expected to assume a greater share of health costs.

There is evidence that more people in countries such as Greece and Italy are foregoing medical care due to financial constraints, reflecting reduced household incomes, but also perhaps rising out-of-pocket costs. Low-income groups are the worst affected, although they are likely to have the highest health care needs, and they may be foregoing necessary care such as medicines or routine medical check-ups for chronic conditions. This may have long-term health and economic consequences for the most vulnerable groups in society.

Many of the reforms implemented since the start of the crisis have had an immediate impact on public expenditure. Some have been controversial, with considerable unrest and political pressure from industry groups, and some may also have had undesirable consequences for access, outcomes and equity. For example, greater out-of-pocket costs are likely to reduce health care use among those in highest need, leading to greater inequity and inefficiency over the longer term.

In the new, more constrained, fiscal climate, the challenge for health care policy makers is to preserve quality health care coverage for the whole population while converting a system built on notions of unconstrained growth to one that is based on greater productivity and fiscal sustainability. This challenge is not new. Countries have pursued the twin objectives of efficiency and equity in health for decades. The economic crisis means that health care policy makers must swiftly and convincingly adopt a health care productivity agenda.

Health at a Glance 2013 – OECD Indicators (213 pages): http://www.oecd.org/els/health-systems/Health-at-a-Glance-2013.pdf

The 2013 edition of OECD’s “Health at a Glance,” in text, graphs and tables, provides updates of international comparisons of indicators of health and health systems. The graphs are likely familiar to many of you. This report is worth downloading just to have the updates.

The editorial discusses the stresses on health systems resulting from the Great Recession, and the government responses to those stresses. A trend that should alarm us all is that “patients are now expected to assume a greater share of health costs.” Further, more people are forgoing medical care due to financial constraints. There is concern that the responses may be having undesirable consequences for access, outcomes and equity.

The editorialist emphasizes that nations should pursue the objectives of efficiency and equity by adopting a new health care productivity agenda. Improving productivity is fine, but for the United States, it is imperative that we immediately adopt a financing infrastructure that ensures equity. All other OECD nations are light years ahead of us on that.