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Private pay health care growth slower and more volatile than public/statutory growth across big 5

Both private and public/statutory expenditure on health care grew substantially over the course of the 2010s across the UK, Germany, France, Italy and Spain. But public/statutory expenditure growth was both significantly higher and less volatile.

Total health care expenditure across the five countries grew by 38% in nominal (i.e. not inflation-adjusted) terms over the decade, equating to a 3.2% compound annual growth rate (CAGR). But the vast majority of this growth came from public/statutory expenditure growth, which grew by 43% (3.6% CAGR).

Private pay (covering both voluntary insurance and out-of-pocket expenditure) did also see strong, albeit substantially slower, growth over the period. Total private pay expenditure across the five countries was 18.6% higher in 2020 than in 2010 (1.7% CAGR). The total expenditure growth rate was much closer to the public/statutory expenditure growth rate because private pay expenditure accounts for a much smaller proportion of the total in all five countries.

Moreover, the growth in private pay was much more volatile. Whilst public/statutory expenditure grew every single year, private expenditure saw substantial falls in both 2013 and 2020. At one level, this should be unsurprising: private expenditure on health care is discretionary, and will therefore be more responsive to macroeconomic conditions than public/statutory expenditure.

But it’s a relatively common view amongst private health care investors that private pay is a safer option than outsourced private care, due to ideological resistance to private involvement in public health systems. This data would appear to pour a certain amount of cold water on that idea.

The data from this infographic is from the OECD’s Health Statistics 2022.

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