Rising health costs put pressure on public finances

In most OECD countries, the bulk of healthcare costs is financed through taxes, with 73% of health spending on average publicly funded in 2004. Ensuring sustainable financing of health systems is therefore critical for governments, as health spending as a share of GDP is projected to increase further due to costly new medical technologies and population ageing.

If current trends continue, governments will need to raise taxes, cut spending in other areas or make people pay more out of their own pockets in order to maintain their existing healthcare systems.

The data also indicates the importance of private payments for health, include those financed by private insurance and those paid directly out of the pocket of private households. Private health insurance represents only around 6% of total health spending on average across OECD countries, even if it plays a large role for certain population groups.

Private sources tend to play a much greater role in paying for pharmaceuticals than for hospital or ambulatory care, because drugs are less well-covered under many publicly-financed insurance schemes. But there are large variations across countries.

OCED Health data is available to subscribers only in the OECD online library.