Sustainability of Healthcare Spending in Selected OECD Countries

Total healthcare spending as a percent of GDP has long been regarded as a critical measure of the sustainability of a country’s healthcare system. Expected growth in this measure affects both publicly and privately financed healthcare programs, and is a critical input (for example, in the Society of Actuaries’s Getzen model) in developing the actuarial projections used in the analysis of program sustainability and program reform. After several decades of rapid growth, total healthcare spending as a percent of GDP has largely stabilized in most OECD countries since the early 2010s. In this presentation, we explore the causes of this slowdown, including demographic, economic, technological, and policy factors. We also consider whether the slowdown is likely to be enduring. By examining spending data from a variety of OECD countries that have different healthcare prices, utilization patterns, and financing and delivery systems, we will attempt to distinguish between policy drivers that are limited to a single country and more fundamental drivers that are influencing cost trends across multiple countries. Our conclusions, while tentative, should be of interest to anyone concerned with long-term healthcare spending projections, including actuaries, health economists, and policy analysts.