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Mr. David Coady


This chapter analyzes the health care spending trends of 27 advanced economies and 23 emerging economies over the past four decades. Total health expenditures have risen sharply during this period, particularly in advanced economies (Figure 2.1).1 Since 1970, real per capita total health spending has increased fourfold in advanced economies, while spending as a share of GDP has increased from 6 percent to almost 12 percent.2 Two-thirds of this increase has been due to greater public health spending, whose share of total health spending rose from 55 percent to 60 percent. In the emerging economies, the increase in total health spending has been more moderate over the same period—from below 3 percent of GDP to about 5 percent—and public spending on health has increased from around 1½ to 2½ percent of GDP, about the same as the increase in private spending.

Mr. David Coady, Mr. Benedict J. Clements, and Mr. Sanjeev Gupta

All countries around the world are struggling with the financial strain of rising health care costs. For example, public health care spending relative to GDP rose from 5.2 percent of GDP in 1990 to 7.3 percent in 2008 in advanced economies, while in emerging economies it is predicted to rise by roughly 1 percent of GDP over the next 20 years (Clements and others, 2010). While technological gains in health care are anticipated to bring wider health benefits, the additional costs will also place considerable pressure on already overstressed tax systems. Patient

International Monetary Fund. External Relations Dept.

with the concept of solidarity among generations underlying the Austrian pension system, government budget transfers help cover the deficit. Wide-reaching health and long-term care In Austria, the responsibility for almost all health care lies with the federal government. Public health insurance is compulsory and practically all Austrians are covered. Public health care spending is comparable to that in other industrial countries. In 2000, it was about 5 percent of GDP (excluding long-term care spending), close to the EU average of 5.3 percent. Health