Should there be a ceiling on what percentage of GDP countries spend on health? NoBMJ 2008; 337 doi: https://doi.org/10.1136/bmj.a1036 (Published 25 September 2008) Cite this as: BMJ 2008;337:a1036
There are several good reasons for not fixing health spending to a varying gross domestic product (GDP). The funds we choose to allocate to health care should reflect the comparative value that a health service represents for the population in relation to needs of other sectors, rather than GDP. The progress of medical science and an ageing population may increase both the relative benefit and cost of health care, requiring greater expenditure. Health care is labour intensive and therefore its costs may increase more than those of other sectors of the economy that can more easily improve productivity through automation and technological progress, making current distribution of funds inappropriate.
Health spending should reflect medical needs not unstable economic trends. Although suboptimal effectiveness and efficiency may justify temporary caps in further spending to provide necessary pressure for improvements and incentives to reduce slack, it does not legitimise the argument to fix the proportion of GDP spent on health care.
Many developing nations have limited their spending on health care without assessing its contribution to society, often based on recommendations and conditional loans from the World Bank or International Monetary Fund, and often resulting in great harm to their populations.1 2 3 The problem is that there is limited research and literature in health economics on the value and benefit to citizens and community contributed by health and health care as a whole, even if specific technologies have been assessed. Admittedly, it is difficult and controversial to estimate the overall monetary value of health and health care. Such estimates are nevertheless crucial to answer the question raised in this debate.
Economic contribution of health care
Other market based sectors of the economy can refer to sales figures, earnings, and stock value as indicators of benefit, dubious as they may be.4 Health care produces less tangible but quantifiable benefits such as recovery, re-established abilities, health status, and wellbeing.5 However, as these non-monetary benefits are gained at visible financial cost, common economic jargon tends to indicate that most sectors contribute their share of GDP to the economy, while health care costs its share of GDP for society.
Health care not only saves lives, restores capabilities, and reduces suffering, it also contributes to the security and quality of life for individuals, to a compassionate culture, and an equitable and fair community.6 Health is a basic precondition for enjoying many of the other goods and benefits society and the market can provide.
In addition, health institutions contribute to the economy by offering extensive employment, providing environmentally friendly jobs for both less and highly educated people.7 It offers both high tech and high touch (care) service industry careers and generates a substantial volume of tax as well as market demand for supportive products and services. Some of these, like drugs and medical devices, are among the most profitable business sectors in the world with substantial contributions to GDP. New drugs and health technology may increase the volume and cost of health care but also boost the benefit through more effective and less painful care. Healthcare institutions are among the biggest enterprises and employers in any community; the NHS is the single biggest employer in Europe. We therefore need to substantially improve our assessment of health care’s GDP and may then find that current and even increased investment in health is quite “profitable.”
However, before health care can make claim to increased costs and possibly a bigger proportion of GDP using arguments of value, citizens and users need to be convinced that the spending on health systems is efficient, fair, and equitable.8 Services should primarily offer treatments necessary for improvement of unequivocal and reasonable health problems. Only the relevant and most effective evidence based treatments should be performed and paid for to maintain acceptable costs. However, the subjective perception of pain and suffering of patients still needs to be met with empathy for health care to sustain its popular support.9 Finally reimbursements should be cost effective, covering only the least costly of equally effective treatments.
There will be limits on what we choose to allocate to health care, but these should not be defined by a fixed fraction of GDP or by projections of current growth. Instead we should determine overall spending limits according to our estimate of where the total benefits for society have reached an optimum. Such estimates are in most countries reached through administrative and political deliberation and bargaining processes involving professionals, economists, bureaucrats, and politicians.10 Statistics and experience from democratic countries indicate that it is possible to reach a level of health care that is politically acceptable to citizens for 8-12% of GDP,11 given fair agreement on cost effectiveness. A rational choice about the level of healthcare funding may result in limited increases in spending (and in the proportion of the GDP) as societies develop and medicine progresses. This is a natural evolution of welfare as well as of a modern society that most citizens and patients would welcome and support.
Cite this as: BMJ 2008;337:a1036
Competing interests: None declared.