In 2008, Norway recorded the highest spending per person on health goods and services among European countries at about EUR 4 300 (Figure 4.1.1) – almost twice the average of European Union countries. This was nonetheless far below the health spending per capita in the United States. Switzerland, Luxembourg and Austria were the next highest spending countries in Europe. Most northern and western European countries spent between EUR PPP 2 500 and 3 500 per person, that is, between 10% and 60% more than the EU average. Those countries spending below the EU average are eastern and southern European countries such as Turkey, Romania, Bulgaria, Poland and Hungary.

In 2008, European Union countries devoted 8.3% of their GDP on average to health spending (Figure 4.2.1), up from 7.3% in 1998. The ratio of health spending to GDP among European countries in 2008 ranged from around 6% in Cyprus and Romania to more than 11% of GDP in France (Figure 4.2.1). This compares with 16% in the United States. Of the other European countries, Switzerland, Austria, Germany and Belgium all allocated more than 10% of their national economies to health spending.

The allocation of health spending across the different types of health services and goods is influenced by a range of factors, including the availability of resources such as hospital beds, physicians and access to new technology, the financial and institutional arrangements for health care delivery, as well as by national clinical guidelines and the disease burden within a country.

Spending on pharmaceuticals account for a significant proportion of total health spending in European countries. Increased consumption of pharmaceuticals due to the introduction of new drugs and the ageing of populations has been an important factor contributing to increased overall heath expenditure (OECD, 2008a). However, the relationship between pharmaceutical spending and total health spending is a complex one, in that increased expenditure on pharmaceuticals to tackle diseases may reduce the need for costly hospitalisation and intervention now or in the future.

All European countries use a mix of public and private financing of health care, but to differing degrees. Public financing is confined to government revenues in countries where central and/or local governments are primarily responsible for financing health services directly (e.g. Sweden and the United Kingdom). It consists of both general government revenues and social contributions in countries with social insurance based-funding (e.g. France and Germany). Private financing, on the other hand, covers households’ out-of-pocket payments (either direct or as co-payments), third-party payment arrangements effected through various forms of private health insurance, health services such as occupational health care directly provided by employers, and other direct benefits provided by charities and the like.

The trend towards globalisation, reinforced by the relaxation of regulatory obstacles in Europe, has fuelled a steady growth in international trade in health services in recent years, albeit from relatively low levels. However, despite much attention from health analysts, the medical professions and health policy makers, discussions on the opportunities and challenges related to such trade have so far been conducted with relatively little data to inform them.