OECD experience on fiscal
sustainability
Joint OECD/WHO Meeting on Financial
Sustainability of Health Systems
Edwin Lau
Deputy Head, Budgeting & Public
Expenditures Division, OECD
28 June 2012
Health is 2nd largest public expenditure area in OECD
36
Structure of general government expenditures,
2007 & 2010 (% of total expenditures)
32
28
2007
24
2010
20
16
12
8
4
0
Social
protection
Health
Education
Economic
affairs
General
public
services
(excluding
interest)
Interest*
Source: OECD Fiscal Consolidation Survey 2012.
Public order
and safety
Defence
Recreation; Housing and Environment
culture and community protection
religion
amenities
And health expenditures are rising
Annual
average
growth
in real
7.2.3.
Annual
average
growth
inper
realcapita
per capita
expenditure
on
health
and
GDP,
2000-2009
(or (or
expenditure on health and GDP, 2000-2009
nearest
nearestyear)
year)
New challenges:
Annual average growth rate in real health expenditure per
capita (%)
11
•
Ageing populations : ex. Korean
population aged over 65 years will
represent 37% of total Korean
population in 2050
•
Uptake of new technology : more
costly and requires more skills and
training
•
Increase in multi-morbidity :
continuing care, complications &
acute care have considerable bearing
on health spending
SVK
9
KOR
POL
7
EST
GRC
IRE
CZE
TUR
CHL
GBR
5
BEL
ESP FIN
NZL
NLD
SVN
OECD
3
ITA
CAN
DNK
SWE
AUS
USA
MEX NOR
JPN
FRA
AUT
ISL
DEU CHE
HUN
Source: OECD PRT
HealthISR
Data 2011.
1
LUX
-1
1
3
-1
Annual average growth rate in real GDP per
capita (%)
Source: OECD Health Data 2011.
5
Is health crowding out other expenditure areas?
18
Change in structure of spending between 2007 & 2010
(% of GDP)
16
14
2007
2010
12
10
8
6
4
2
0
Social
protection
Health
Education
Economic
affairs
General
public
services
(excluding
interest)
Interest
Source: OECD Fiscal Consolidation Survey 2012.
Public order
and safety
Defence
Recreation; Housing and Environment
culture and community protection
religion
amenities
Health measures frequently
proposed in fiscal consolidation plans
%
75
Out of 30 responding countries
60
45
30
15
0
Source: OECD Fiscal Consolidation Survey 2012.
And proposed reductions are significant
% of GDP
1.2
1.0
Impact of programme measures on the health sector,
2009-16
Plan 2012
0.8
0.6
0.4
0.2
0.0
Source: OECD Fiscal Consolidation Survey 2012.
Plan 2011
Short-term cuts ≠ effectiveness or fiscal sustainability
 Achieving all of these goals:
OBJECTIVES




Delivering healthcare efficiently
Maximizing health outcomes
Increasing the distribution of health (equity)
Maintaining fiscal stability
 Requires these challenges to be tackled:
CHALLENGES
 Both technical & allocative efficiency
 Maximizing outcomes for a given level of
inputs (programme effectiveness )
 A financing system that reflects society’s
consensus on risk pooling & cross subsidies
 A revenue stream that is both stable (broadbased) and predictable (counter-cyclical,
stability for planning & pricing)
 Fiscal sustainability (willingness to pay for a7
level of demand)
Purpose of SBO Health Sustainability Network
•
Financial situation calls on for new forms of co-operation to
achieve fiscal sustainability, but also value for money, and
access and equality of health care.
•
Main objectives:
•
•
•
•
Establish institutional dialogue, clarity of roles, and common
objectives and vocabulary
Find and disseminate appropriate good practice
Better share existing work (analysis and data)
•
Assist countries moving towards universal access to health insurance
OECD organised a first meeting in Nov 2011:
o
o
Successfully brought together Health Budget officials from Ministries
of Health and Ministries of Finance, as well as Social Security
Institutions/Health Insurance Funds
Strong interest by both countries and other international
organisations (WHO, World Bank andADB)
Balancing demand for care with ability to pay
Sessions 3&4
 Design of health financing system
Session 6
 Co-ordination
function
 Setting
healthcare
expenditure
levels
 Estimating future
& current health
Session 6
spending needs
 Expenditure
management
 Revenue
Generation
Sessions 5
Sessions 3&4
9