Do we spend too much on healthcare? The EU Commission seems to think so. In their country-specific recommendations for Ireland they state:
‘Even though Ireland has a relatively young population, public healthcare expenditure was among the highest in the EU in 2012 at 8.7% of GNI, significantly above the EU average of 7.3%.’
The implication is that our spending on healthcare is 16 percent above EU average levels. What more justification does the Government need to continue cutting our health services than to get a recommendation from the EU?
There’s only one problem. The EU Commission numbers are wholly unreliable and not a proper representation of health spending in the EU.
Before getting into the EU numbers, let’s see if we can discover just how much Ireland and other EU countries spend on health care by referring to the OECD’s Health at a Glance.
There are two measurements that can be used; first, health spending as a proportion of economic output. The latest year they have data for is 2011. To compensate for the fact that GDP is not a good measure for Ireland, I have used the Irish Fiscal Advisory Council’s hybrid GDP which measures fiscal capacity. This hybrid measurement stands between GDP and GNP.
Ireland is just below the average expenditure of other Advanced European Economies (i.e. EU-15) – but there is a major caveat which I will refer to below. It should be noted that if we used a straight health spending as a percentage of GDP, Irish spending would be 8.9 percent of GDP. Of course, benchmarking any expenditure against GDP has its problems, especially when a Government has been pursuing austerity policies that actively reduce the GDP.
For an alternative view, we can turn to the OECD’s measurement of healthcare expenditure per capita, using purchasing power parities to account for differences in currency and living standards.