Methodological Notes – Health Expenditures Module

Updated: January 2012

Concepts and Definitions

A major challenge in an international comparison of health care expenditures is to ensure that what is counted as health care is the same entity in different countries, with different health care systems and financial management practices. The OECD developed the System of Health Accounts (SHA) to facilitate international comparisons, although its adoption is not universal and deviations exist among countries that have implemented it.

SHA distinguishes between health care (HC) and health care-related (HC.R) expenditures, with the following codes:

HC.1 Services of curative care
HC.2 Services of rehabilitative care
HC.3 Services of long-term nursing care
HC.4 Ancillary services to health care
HC.5 Medical goods dispensed to outpatients
HC.6 Services of prevention and public health
HC.7 Health administration and health insurance
HC.R1 Investment (gross capital formation) in health

HC.1–HC.5 = total expenditures on personal health care
HC.6–HC.7 = total expenditures on collective health care
HC.1–HC.7 = total current expenditure
HC.1–HC.7 and HC.R1 = total health expenditures

The following health-related expenditures are NOT included:

HC.R2 Education and training of health personnel
HC.R3 Research and development in health
HC.R4 “Food, hygiene and drinking water control “
HC.R5 Environmental health
HC.R6 Administration and provision of social services in kind to assist living with disease and impairment
HC.R7 Administration and provision of health-related cash-benefits

In addition there are parallel schemes for providers (HP) such as hospitals, ambulatory care providers, nursing and residential care facilities, etc, and sources of financing (HF).

Public expenditure on health care refers to health expenditure incurred by funds provided by national, regional and local government bodies and social security schemes. Privately funded sources of total health expenditure include out-of-pocket payments, private insurance programmes, charities and occupational health care paid for by the employers.

Health care expenditures based on OECD methodology are largely comparable across countries but not generally produced for regions within countries. The boundary between health care and social welfare services is difficult to delineate in some countries where the two are integrated. This is especially true of the care of the elderly.

Multiple national currencies can be converted into a single, comparable currency – the US dollar purchasing power parities (USD-PPP) – which recognizes the fact that the same amount of currency can buy more things in some countries than others. This permits a common standard against which to compare per capita health expenditures in circumpolar countries. PPPs, however, are established for national economies, and assume homogeneity across the country that is not necessarily valid for northern regions within countries.

Data Sources and Limitations

For within-country comparisons, the OECD method may not be consistently applied or used at all and only certain types of expenditures are available. In order to compare circumpolar regions, CircHOB first calculates the national and regional expenditures in the national currency based on the type of expenditures available to obtain a ratio. This ratio is then applied to the national total health expenditures in USD-PPP as published by OECD Health Data 2011. Russian data are not reported by OECD, but are obtained from the World Health Organization’s National Health Accounts database.

United States

United States national and state data (in US dollars) are available from the National Health Expenditures Accounts maintained by the Centers for Medicare and Medicaid Services. Only data on personal health care (ie. HC.1 to HC.5) are available by state of residence, i.e. services provided to state residents anywhere in the United States.

Canada

Canadian national, provincial and territorial data (in Canadian dollars) are available from the Canadian Institute for Health Information’s National Health Expenditure Database as reported in the annual National Health Expenditure Trends. It follows closely OECD methods.

Denmark, Greenland, and Faroe Islands

Data for Denmark and its two self-governing territories of Greenland and Faroe Islands (in Danish kroner) are available from NOMESCO’s Social and Health Indicators database, supplemented by the annual report Health Statistics in the Nordic Countries.

Iceland

Data for Iceland are from OECD Health Data 2011. There is no “north-south” comparison for Iceland.

Norway

In Norway the delivery of primary health care and public health services is the responsibility of municipalities, whereas “specialized health services” (which include general and psychiatric hospitals, ambulances, substance abuse treatment, and patient transportation) are provided by regional health authorities. Data are available from Statistics Norway’s Statbank and published tables. For municipal health services, net operating expenditures (in Norwegian kroner) in the three northernmost counties are compared to Norway as a whole. For specialized health services (all expenditures inclusive of depreciation), the three counties constitute a single northern health region. The per capita specialized health services for the northern health region is added to the per capita municipal health services of each of the three counties.

Sweden

In Sweden, total health expenditures (in Swedish kronor) are available at the level of the county, which is responsible for primary care, specialized somatic and psychiatric care (i.e., hospitals), dental and other services. Net costs for health care to the county councils are reported annually by the Swedish Association of Local Authorities and Regions (Sveriges Kommuner och Landsting, SKL).

Finland

For Finland, the comparison (in euros) was for “net expenditures of the municipal health sector”, available from SOTKAnet, the indicator bank of the National Institute for Health and Welfare (Terveyden ja hyvinvoinnin laitos, THL). It refers to health services provided by the municipality to its inhabitants or purchased from other municipalities, the central government or private providers. Net expenditures refer to operating costs less operating income (such as payment transfers).

For Russia, expenditures (in rubles) of the “consolidated budget for health care and physical education” by regions are available from the periodic publication Health Care in Russia (Zdravookhranenie v Rossii) by the state statistical agency Rosstat. These budgets combine the regional government budgets with the federal budget attributable to the specific regions. Due to the dissolution of the Taymyr, Evenki and Koryak AOs, data for these regions are incomplete in the later period.