Total health spending

If you wonder why arguments about the funding of health care are rarely out of the news, Table 6.1 offers a big clue. It shows total spending on health by governments, private organisations and individuals, expressed as a percentage of national income (GDP), and demonstrates how rapidly health spending grew in the selected countries over the last 40 years of the 20th century. On average, health spending's share of GDP has more than doubled. But the table shows also how much faster the growth has been in some countries than others, so that the United States' spending share is almost twice that of Finland's, with Australia close to the 18-nation mean.

It should be remembered that when spending on any item rises over time as a percentage of GDP, this means it is growing at a faster real rate than the overall economy. Thus the increases revealed by Table 6.1 are even more notable than they may at first seem. It is undoubtedly true that health spending has increased because of general inflation and because of growing populations. But those two factors do not explain the rise in health spending's share of GDP shown in Table 6.1 because the comparison with GDP effectively takes account of inflation and population growth. This conclusion is confirmed by Table 6.2, which reveals big increases in real average annual health spending per person – thus controlling explicitly for general inflation and population growth.