1) While European countries have seen major gains in health outcomes over recent decades, this has come at a great financial cost as public health expenditures have outpaced economic growth in most OECD countries. 2) There are still wide disparities among European countries in terms of both health outcomes and spending on health. Life expectancy, mortality rates, and the share of GDP spent on health vary greatly across countries. 3) In response to challenges of ensuring fiscal sustainability of health systems, the OECD created the Joint Network on Fiscal Sustainability of Health Systems to establish dialogue between health and finance ministries and identify best practices for managing health budgets.

1. Budgeting for Healthcare
OECD Joint Network on Fiscal Sustainability
of Health Systems
Camila Vammalle (GOV/BUD)
11th Annual Meeting of Central, Eastern and South-Eastern European
Senior Budget Officials
Warsaw, Poland, 21-22 May 2015

2. European countries have achieved major gains in
population health in recent decades
 Life expectancy at birth: + 6 years since 1980, now at 79 years
 This is mainly due to better access to care, and better quality of care.
However…

3. 3
AUS
AUT
BEL
CAN
CHL
CZE
DNK
EST
FIN
FRA
DEU
GRC HUN
ISL
IRL
ISR
ITA
JPN
KOR
LUX
MEX
NLD
NZL
NOR
POL
PRT
SVK
SVN
ESP
SWE
CHE
TUR
GBR
USA
0%
2%
4%
6%
8%
0% 2% 4% 6% 8%
Growthinrealhealthspendingpercapita
Growth in real GDP per capita
Average annual growth rate of real total health
spending and GDP p.c. 1990-2012 (or nearest year)
5.5
7.9
11.80.8
1.6
2.1
0
2
4
6
8
10
12
14
16
OECD
% Health care
Long term care
Average
(2006-2010)
Cost-containment
scenario: 2060
Cost-pressure
scenario: 2060
Projected public health and long-term
care expenditure as % of GDP in 2060
Source: De La Maisonneuve and Oliveira Martins, 2013
Source: OECD Statistics
1- improving health outcomes came at a great
financial cost
Public health expenditure has outpaced economic growth in OECD
countries in the last couple of decades and is expected to continue
growing as a share of GDP in the decades to come.

4. 2- There are still wide disparities among European
countries, both in terms of outcomes […]
 Life expectancy at birth: from 80 years in Switzerland or Iceland (men) to 70
years in Estonia or Bulgaria

5. 2- There are still wide disparities among European
countries, both in terms of outcomes […]
 Indeed, in spite of large improvements in
mortality rates, there are still large country
variations.
 For example, mortality rate by stroke varies
from 31/100.000 in France to above
214/100.000 in Bulgaria
31
34
37
37
38
38
38
43
43
44
45
47
47
49
51
71
74
75
80
82
83
84
109
110
139
161
195
214
31
43
43
125
198
23
31
36
38
30
30
33
41
41
37
37
37
39
38
41
49
75
58
67
58
65
55
77
73
106
114
150
152
27
32
33
94
174
0 50 100 150 200 250
France
Netherlands
Cyprus
Ireland
Austria
Spain
Germany
Malta
United Kingdom
Belgium
Sweden
Denmark
Luxembourg
Finland
Italy
Slovenia
Greece
EU-27
Czech Republic
Poland
Portugal
Estonia
Slovak Republic
Hungary
Lithuania
Latvia
Romania
Bulgaria
Switzerland
Iceland
Norway
Croatia
FYR of Macedonia
Males
Females
Age-standardised rates per 100 000 population
Stroke, mortalty rates, 2010 (or nearest year)

6. 3- […] and in terms of spending on health
 Total health expenditure varies widely among European countries (from less than
7% of GDP in Romania, Estonia and Latvia, to above 11% in Germany, France and
Netherlands)
 The share of public vs. private expenditure on health also varies greatly (above
80% public in Netherlands or Denmark, and below 50% public in Cyprus and 55%
in Bulgaria)
12
11.6
11.6
11.1
11
10.7
10.5
10.2
9.6
9.6
9.6
9.3
9.2
9
9
9
8.9
8.6
7.9
7.8
7.5
7.4
7.2
7
7
6.8
6.3
6
0
11.4
10.4
9.4
9.3
9.1
7.8
7.1
6.1
0
2
4
6
8
10
12
14
etherland…
France
Germany
Denmark
Austria
Portugal
Belgium2
Greece
Spain
Sweden
United…
Italy
Ireland
Slovak…
Slovenia
EU-27
Finland
Malta
uxembour…
Hungary
Czech…
Cyprus
Bulgaria
Poland
Lithuania
Latvia
Estonia
Romania
witzerland
Serbia
Norway
Iceland
ontenegro
Croatia
FYRof…
Turkey
% GDP
Public Private
Health expenditure as a share of GDP, 2010 (or nearest year)

7. 4- There are also large variations within countries
 There are wide disparities in
health outcomes within
countries
 By region, by age group, by income
or education level
 This is reflected for example in
the unmet needs for medical
examination per income group

8. Therefore, there is room for improving both
quantity and quality of health expenditure
 Main challenge: ensuring that new spending in health is as
effective as possible, and brings the highest possible health
benefits
 In many countries, fiscal sustainability of health systems is
also an important challenge
the role of the Ministry of Finance is essential!

9. But ensuring VFM/Fiscal sustainability of health spending
is not easy, because health is a particularly complex
spending area
 Outcomes are
particularly important
to citizens
 Great number of
actors involved (both
in OECD and non-
OECD countries)
 Great variations in
institutional
framework of health
systems
Social
Security
Doctors
Sub-
national
Gov
Patients/Cit
izens
MoH
MoF/
Budget
Hospitals
Private
insurers
PharmaCo.
Other
private
prov.
Inter-
national
aid

10. But ensuring VFM/Fiscal sustainability of health spending
is not easy, because health is a particularly complex
spending area
 Outcomes are
particularly important
to citizens
 Great number of
actors involved (both
in OECD and non-
OECD countries)
 Great variations in
institutional
framework of health
systems
Social
Security
Doctors
Sub-
national
Gov
Patients/Cit
izens
MoH
MoF/
Budget
Hospitals
Private
insurers
PharmaCo.
Other
private
prov.
Inter-
national
aid
 Need coordination between
Ministries of Finance and
Ministries of health

11.  The main objectives of the Joint Network are:
To establish institutional dialogue, clarity of roles, and common
objectives and vocabulary between all actors involved
To identify and disseminate good practices in managing the
budget of the health sector
 How does it do this?
Annual meetings of health and finance officials
An analytical framework
Survey of budgeting practices for health
Analytical papers
Country case studies
1st publication compiling 3 years work in 2015
This is why the OECD created the
Joint Network of Health and Budget Officials
on Fiscal Sustainability of Health Systems

12. 12
Tool 1: an Analytical Framework
Public management,
coordination and financing
•Direct controls on
pharmaceutical prices / profits
•Health technology
assessment
•Monitoring and evaluation
Demand-side
•Gatekeeping
•Preferred drug lists
•Cost sharing?
Diagnosis: Information
needs
•Political agreement on targets
•Coordination mechanisms amongst key stakeholders
•Degree of decentralisation of health services
•Boundaries between public and private spending on
health
Treatments: Policy levers
•Long-term forecasts
•Medium-term spending
requirements
•Timely information on spending
•Linking spending projections to
estimated revenues
Risk factors: Political and Institutional
context
Supply-side
•Provider payment methods
•Provider competition
•Generic substitution
•Joint purchasing
•Budget caps

13. 13
Tool 2: the survey on budgeting practices for health
National
Health
Systems
Social
Insurance
Systems
Decentralised
Systems
Decentralised,
social insurance
systems
Decentralised,
national health
systems
There is a great variety of treatments of health expenditure in the
budget across OECD countries

14. 14
For example, in some countries, 100% of health
expenditure are in the budget (UK), while only a small
fraction may appear in other countries (France, Austria)
Central
government
budget? Social
Security
budget?
Social
Insurance
Funds?
Sub-national
government
budgets?
Internation
al donors’
agencies?
Health
expenditure
Fully
23%
Partly
77%
Is health expenditure part of the
central government budget?

15. 15
The survey also illustrates a range of policy levers to
control costs, and their limitations
8%
35%
19%
38%
There is an EWS and sets in motion
required action for future years
There is an EWS and sets in motion
required action for the current year
There is an EWS, but an alert does not
legally require action
No EWS 0 1 2 3 4 5 6
Netherlands
Switzerland
Finland
Austria
Czech Rep.
France
Germany
Mexico
Norway
UK
Australia
Chile
Denmark
Estonia
Hungary
New Zealand
Poland
Slovak Rep.
Slovenia
Korea
(months) None 1 to 2 3 to 6 6 to 12 12 to 24
Early warning systems (EWS) Delay in reporting health expenditure to
central budget agency
Many countries have an early warning system, but information can
take up to two years to reach the MoF, which does not allow for
timely responses

16. 16
And the survey revealed that budget over-spending
in health is very frequent in OECD countries
0
1
2
3
4
5
6
7
8
Years out of last 7 without overspending
Years out of last 7 with overspending
Source: OECD survey of budget officials on budgeting practices for health, 2013, Q. 48

17. 17
What are the next steps for the Joint Network?
 Great interest from WHO, World Bank, IDB, etc. to use the Joint
Network approach and tools in non-OECD countries, to help
countries improving their health outcomes without
compromising their fiscal position.
 Creating dialogue between health and finance officials
 Identifying main challenges and bottlenecks in health financing
 Ensuring value for money and effectiveness of new expenditure on health
 Exchanging good practices in budgeting for health
 Plan to expand the Joint Network to other regions and non-OECD
countries: CESEE, LAC, Asia, Africa
 Carry out the survey on budgeting practices for health
 Hold meetings with Health and Budget officials
 Carry out in-depth country reviews

18. 18
What are the next steps for the Joint Network?
 Would your country be interested in participating in such a
project? i.e.:
 Identifying the relevant person in the MoF in charge of the health budget
 Participating in a CESEE Joint Health-Finance Meeting
 Answering the survey on budgeting practices for health

19. THANK YOU
Camila.vammalle@oecd.org
http://www.oecd.org/gov/budgeting/sbonetworkonhealthexpenditures.htm