The UK is ranked 6th out of the seven countries that form the G7 (a group of large developed economies) for healthcare expenditure as a proportion of Gross Domestic Product (GDP).
ONS’s new internationally-comparable "health accounts"1 show that the UK’s total healthcare spending in 2014 was £179 billion, or 9.9% of GDP.
As a percentage of GDP, the UK spent less on healthcare than USA, Japan, France and Germany and a similar percentage to Canada. The USA spent the most on healthcare as a percentage of GDP at 16.6%.
Out of the G7 group of countries, only Italy spent a smaller percentage of GDP on healthcare (9.1%) than the UK in 2014.
However, all G7 nations, including the UK, spent a higher proportion of GDP on healthcare than the average of 9% for OECD (Organisation for Economic Co-operation and Development) countries.
Current healthcare expenditure as a percentage of GDP for G7 countries, 2014
Healthcare spending and life expectancy
Among OECD countries, life expectancy tends to be longer in countries that spend more per person, on healthcare, however, this is not always the case.
While the USA outspent the UK on healthcare (£6,311 and £2,777 per person2 These figures have been adjusted for difference in purchasing power. Purchasing power parities (PPPs) are the rates of currency conversion that equalise the purchasing power of different currencies by eliminating the differences in price levels between countries.
All spending per capita figures in this article have been adjusted for difference in purchasing power respectively) in 2014, average life expectancy at birth in the USA was 78.8, compared with 81.4 in the UK.
Despite spending, by far, the largest amount on healthcare, the USA was among the 10 OECD countries with the lowest life expectancy.
A range of factors can influence life expectancy including social influences, socio-economic factors, and spending on healthcare.
Within the G7 group of countries, Japan spent the fifth most per person on healthcare and had the highest life expectancy, while Italy spent the least per person and had the second highest life expectancy. France and Germany spent more per person on healthcare than the UK but only France had a higher life expectancy.
Life expectancy at birth and current healthcare expenditure, per person for OECD member-states (current PPPs), 2014
How is healthcare paid for?
The way healthcare is funded differs across the globe. In G7 countries healthcare is mostly financed either directly through government financing (for example through taxation) or through mandatory social insurance schemes. In the UK, healthcare expenditure was principally financed through government revenues (79.5% in 2014) - also the main source of spending in Italy and Canada.
Germany, Japan and France have healthcare systems financed primarily through social health insurance, which is compulsory health cover to ensure access to healthcare, either for the whole population or for specific population groups.
Share of current healthcare expenditure by financing scheme for G7 countries, 2014
The USA is the only G7 country where less than half of healthcare expenditure is financed through government or compulsory insurance schemes. Instead, the USA’s healthcare system relies more heavily on private funding, notably from private health insurance, which makes up 34% of healthcare spending.
Privately financed healthcare was a much smaller component of healthcare spending in the UK, accounting for around one-fifth of total expenditure.
The largest component of this type of spending in the UK was household out-of-pocket spending - direct purchases of healthcare services and products made by individuals. This included spending on pharmaceuticals, medical equipment (such as prescription eyewear) and contributions to long-term care.3
Out-of-pocket spending was also the most substantial component of private healthcare expenditure for Germany, Japan, Italy and Canada.
Private health insurance accounted for 3.6% of total healthcare expenditure in the UK – much less than in France and Canada, where it represented a much larger proportion of healthcare expenditure. In these countries private insurance was used to supplement public coverage.
Government/compulsory and private/voluntary healthcare expenditure for the UK and USA (£ per head), current PPPs, 2014
Despite less than half of the USA’s total healthcare expenditure coming from government expenditure or compulsory insurance schemes, it still spends more per person on these financing schemes than the UK- £3,111 in the USA in 2014, compared with £2,210 in the UK. In the USA spending on privately-funded healthcare is over five times more per person than in the UK.
What types of healthcare do countries spend their money on?
In each of the 10 largest economies in the European Union, the largest category of healthcare expenditure was spent on curative/rehabilitative care, such as hospital operations, GP consultations and emergency care.
In the UK, 57% of all healthcare spending was on curative/rehabilitative care, while for the remaining largest EU economies this ranged from 60% in Poland to just under half of total healthcare expenditure in Belgium.
Share of current healthcare expenditure by function of healthcare for the ten largest EU economies, 2014
The proportion of healthcare expenditure spent on long-term care has been increasing over time in a large number of OECD countries.
In 2014 the UK spent 18% of total healthcare expenditure on long-term care.
Out of the 10 largest EU economies, northern European countries such as the Netherlands, Sweden and Belgium had the largest proportion of long-term care spending.
By comparison southern European countries such as Spain and Italy and eastern European countries such as Poland spent smaller proportions of healthcare expenditure on long-term care.
In these countries, spending on medical goods acquired by patients for treatment outside of a care setting, such as over-the-counter and prescription pharmaceuticals and spectacles, accounted for a greater proportion of healthcare expenditure than in the UK. Spending on medical goods accounted for 22% of total healthcare spending in Spain compared to 15% in the UK and 12% in Sweden.
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- ONS recently published the ‘UK Health Accounts’, for the first time enabling consistent comparisons of UK healthcare expenditure with that of other countries across Europe and fellow member-states of the OECD (Organisation for Economic Co-operation and Development). UK Health Accounts are internationally-consistent healthcare expenditure statistics, produced according to guidelines published by the OECD. Health accounts provide figures for total healthcare expenditure and analyse this spending by three dimensions:
- financing scheme – the source of funding for healthcare
- function – the type of care and mode of provision
- provider organisation – the type of healthcare provider in which care is carried out
In order to meet the international definitions used in health accounts, the definition of healthcare used in health accounts is broader than that used in previous UK healthcare expenditure analyses and includes a number of services which are typically considered as social care in the UK
2._These figures have been adjusted for difference in purchasing power. Purchasing power parities (PPPs) are the rates of currency conversion that equalise the purchasing power of different currencies by eliminating the differences in price levels between countries. All spending per capita figures in this article have been adjusted for difference in purchasing power.
3._Expenditure is classified as long-term care in health accounts where the care is provided with the primary purpose of alleviating pain and suffering and reducing or managing the deterioration of health in patients with chronic conditions, where an improvement in their health is not anticipated.