Methodological Notes – Health Expenditures Module

Updated: January 2019

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. OECD developed A System of Health Accounts in 2000 (SHA 1.0) to facilitate international comparisons. A new edition was published in 2011, in collaboration with Eurostat and WHO.

According to SHA 2011, there are 3 axes – health care functions (HC), health care providers (HP), and financing schemes (HF), with the following primary (first-digit) codes:

HC.1 Curative care
HC.2 Rehabilitative care
HC.3 Long-term nursing care
HC.4 Ancillary services
HC.5 Medical goods
HC.6 Prevention care
HC.7 Governance and health system and financing administration
HC.9 Other services not elsewhere classified

 

HF.1 Government schemes and compulsory contributing health care financing schemes
HF.2 Voluntary health care payment schemes
HF.3 Household out-of-pocket payment
HF.4 Rest of the world financing schemes

 

HP.1 Hospitals
HP.2 Residential long-term care facilities
HP.3 Ambulatory care providers
HP.4 Ancillary services providers
HP.5 Retailers and providers of medical goods
HP.6 Preventive care providers
HP.7 Providers of health system administration
and financing
HC.8 Rest of the economy (households and industries)

An important difference between SHA 1.0 and SHA 2011 is the discontinuation of aggregating “capital formation” and “total current health expenditures” into “total health expenditures”. The former refers to demand for capital goods by health providers, whereas the latter is the demand for goods and services by consumers. The two entities thus represent different timings in consumption, as capital expenditures represent investment for future provision to consumers. In making cross-jurisdictional comparison, CircHOB focuses only on current health expenditures.

It should be noted that several categories of health-related expenditures are NOT included under SHA: Education and training of health personnel, research and development, environmental health and safety, and social services. Establishing boundaries, while complicated, is necessary, otherwise the entire economy can be considered to play a role in promoting or reducing health. The boundary between health care and social services is difficult to delineate in some jurisdictions 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.

In addition to per capita health expenditures, the health care system can also be characterised by health care’s share of the GDP and the distribution of private and public financing. Data are only available for the 8 Arctic States but not their northern regions.

Data Sources and Limitations

Health care expenditures reported by OECD based on SHA are largely comparable across countries but not generally available for regions within countries. 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, the following steps are adopted by CircHOB:

  • The total current health expenditures (all functions, all providers, and all financing schemes) in USD-PPP for the 8 Arctic States are extracted from OECD > Health > Health expenditure and financing
  • The national and regional expenditures in the national currency based on the type of expenditures available are estimated from data available in the national statistical or health administration agencies. A regional/national ratio is computed for each country.
  • The regional/national ratios are then applied to the OECD data for the countries to yield the regional expenditures in USD-PPP.

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 the 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. Capital expenditures are subtracted from total health expenditures to produce total current health expenditures.

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 > Health expenditure and financing.

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. Health > Health services > Municipal health services > Table 4904 Health > Health services > Specialist health services > Table 6464 (from 2005 onwards) Earlier years data on specialist health services are obtained from the published table.

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 (Helse Nord). 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 (ie. 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). Select year – only 10 most recent years archived.

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.

Services and resources > Municipal finances in social and health care > Indicators on municipal social welfare and health care finances > Operating net expenditure of municipal health care (Indicator # 3268).

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). These budgets combine the regional government budgets with the federal budget attributable to the specific regions.