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European austerity halts OECD healthcare spending growth

Cuts in Ireland, Iceland and Greece contrast with continued growth outside Europe

Healthcare spending across the countries of the OECD fell sharply between 2009-10 due in part to austerity measures implemented by European countries hit hardest by the global recession.

According to a new report, overall spend in healthcare by nearly 5 per cent per year in real terms within the 34 countries of the Organisation for Economic Co-operation and Development (OECD) between 2000-2009, but this was then followed by zero growth the following year.

Countries whose healthcare spending decreased significantly included Ireland, Iceland and Greece, all of which have felt extra financial restraints during the economic crisis.

From an average yearly growth rate of 8.4 per cent between 2000 and 2009, Ireland then cut healthcare spending by 7.6 per cent in 2010.

In Iceland, spending fell by 7.5 per cent, while Greece faced a fall of 6.5 per cent after an average yearly growth of 6 per cent between 2000 and 2009.

Other countries to face a significant reduction in health spending included Estonia and Czech Republic.

Average OECD health expenditure growth rates in real terms,
2000 to 2010, public and total (graph from OECD)

Average OECD health expenditure growth rates in real terms 2000 to 2010 public and total

The OECD said: “Reductions in public spending were achieved through a range of policy measures. In Ireland, most of the reductions have been achieved through cuts in wages or the fees paid to professionals and pharmaceutical companies, and through actual reductions in the number of health workers.

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

The reduced spend was also put down to the introduction of methods to make people pay for their own healthcare, as well as efficiencies made by merging hospitals and accelerating the move from in-patient hospitalisation to out-patient care and day surgery.

European countries' fates contrasted with other OECD, notably South Korea, which achieved growth of over 8 per cent, and Chile, which managed to increase it healthcare spending by around 7 per cent. However, both figures were still down on the average yearly growth those countries recorded from 2000 to 2009.

Indeed, the only OECD country to record an improved yearly growth from 2009 to 2010 compared to 2000 to 2009 was Germany.

The country, which has fared better during the recession than most of its European neighbours, managed to record annual healthcare spending growth of 2.6 per cent in 2010, while from 2000 to 2009 it only recorded growth of 2.0 per cent.

2nd July 2012

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