Growth in health spending grinding to a halt: OECD

LONDON Thu Jun 28, 2012 5:56pm IST

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LONDON (Reuters) - Growth in health spending reversed a long-term trend of rapid increase and either slowed or fell in real terms in most OECD countries in 2010, driven by cuts among governments imposing austerity budgets, data showed on Thursday.

Overall health spending grew by nearly 5 percent a year in real terms in the 34 countries of the Organisation for Economic Co-operation and Development (OECD) between 2000-2009, but this was followed by zero growth in 2010.

In its Health Data 2012 report, the OECD also said preliminary figures for a limited number of countries suggest there was little or no growth in health spending in 2011.

"The halt in total health spending in 2010 was driven by a fall of 0.5 percent in public spending for health, following an increase of over 5 percent per year in 2008 and 2009," the report said.

It found that while government health spending tended to be maintained at the start of the economic crisis, cuts really began to bite in 2010.

This was most evident in European countries hardest hit by recession, such as Ireland, Greece and Estonia.

In Ireland, cuts in government spending drove total health spending down by 7.6 percent in 2010, compared with an average yearly growth rate of 8.4 percent between 2000 and 2009.

In Greece, OECD estimates suggest total health spending fell by 6.5 percent in 2010 after a yearly growth rate of more than 6 percent on average since 2000.

In Iceland, health spending fell by 7.5 percent in 2010, and in Estonia it dropped by 7.3 percent, driven by reductions in both public and private spending.

The OECD said most of the health spending cuts in Ireland were made through cuts in wages or fees paid to professionals and pharmaceutical companies, as well as through reductions in the number of health workers.

Estonia cut administrative costs in the ministry of health and also reduced prices of publicly reimbursed health services.

Investment plans have also been put on hold in a number of countries, including Estonia, Ireland, Iceland and the Czech Republic, while other countries have been seeking efficiency gains through mergers of hospitals or ministries, or by accelerating the move from caring for patients in hospitals towards more out-patient care and day surgery.

More generic drugs are also being used by a number of countries, the OECD said, and some other measures have been introduced to make people pay more out of their own pockets.

Outside of Europe, health spending growth slowed in 2010, to about 3 percent in the United States, Canada and New Zealand. Growth remained at more than 8 percent in Korea.

As a result of the zero growth in health spending across OECD countries in 2010, the percentage of GDP devoted to health stabilized or declined slightly in most countries.

Health spending accounted for 9.5 percent of GDP on average across OECD countries in 2010, versus 9.6 percent in 2009.

The United States spent by far the highest proportion of its GDP in health, at 17.6 percent, followed by the Netherlands at 12 percent and France and Germany on 11.6 percent.

The lowest proportions devoted to health were in Mexico, at 6.2 percent and Turkey on 6.1 percent. In Japan, the share of spending allocated to health has increased substantially in recent years to 9.5 percent, up from 7.6 percent in 2000.

The share also increased in Korea to 7.1 percent in 2010, up from 4.5 percent in 2000.

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