Irish Healthcare Expenditure drops from 1st to 10th in the EU15, depending on how it is measured

The ESRI research report ‘How does Irish Healthcare Expenditure compare internationally?examines how Irish Healthcare Expenditure (HCE) compares to expenditure in other countries. Using international OECD data for 2017, this study finds that how Irish HCE compares differs depending on the expenditure measure used, the service examined and whether the comparison is adjusted for countries’ differing approaches to accounting for Social Care Expenditure.

HCE as a share of national income is a measure that is often used to rank countries’ HCE. However, adjusting for population and relative prices, with the aim of comparing the volume of healthcare consumed per capita, is found to have a considerable impact on rankings of HCE across countries.

Not all countries include the same items in Healthcare Expenditure. Adjusting for countries’ differing accounting methods, by including both HCE and Healthcare-Related Expenditure (HCRE) in international comparison, also changes rankings across countries.

Main findings

The main findings of this study, based on 2017 data and rankings in the EU15, are:

  • Irish HCE ranks differently depending on the measure of HCE examined:

    • Ireland’s total HCE as a share of national income (1) ranks 1st
    • National income measured as modified GNI for Ireland and GDP for other countries
    • Ireland’s total HCE per capita with adjustment for relative prices ranks 9th
    • Irish public HCE per capita (2) ranks 9th, while private HCE per capita ranks 2nd
  • Countries are inconsistent in their accounting for Social Care:
    • Ten EU15 countries allocated some Social Care Expenditure in 2017 to Healthcare-Related Expenditure (HCRE), which is not counted in HCE
    • The Netherlands assigned 12 per cent and the UK assigned 5 per cent of combined Health and Social Care expenditure to HCRE
    • Ireland allocated €4.6 billion in Social Care Expenditures to HCE (22 per cent of Total HCE) and none to HCRE
    • Ireland includes over €900 million in payments to family carers in HCE, comprising 4.3 per cent of total Irish HCE, but the Netherlands does not include these payments in HCE
    • Ireland includes all expenditure on home care services, group homes in the community for people with disabilities and day services for older people under HCE, while the UK excludes much of this expenditure from HCE
    • If Health and Social Care combined are compared, Irish public HCE per capita with adjustment for relative prices ranks 10th in the EU15

Policy Implications

The authors advise caution in applying evidence from international databases to interpret relative Healthcare Expenditure or health system performance. Social Care Expenditure accounted for under HCRE should be included in cross-country comparison of healthcare expenditures. The analysis concludes that ambiguity in OECD System of Health Accounts (SHA) guidelines, combined with Irish data challenges, has led to an overestimation of Irish HCE. The Irish approach to SHA accounting for Social Care Expenditure could warrant review, supported by improved data.

Differing rankings for volume and price measures demonstrate that relatively high HCE may indicate, as in the case of Ireland, a relatively high-price, high-wage economy rather than a relatively high volume of services delivered. Differing rankings for public and private expenditures in Ireland suggest that understanding Ireland’s relatively high HCE as a share of national income requires an understanding of Ireland’s private healthcare system.

Although Ireland has apparently high expenditure on home-based care, this reflects payments to family members of people with disabilities and inclusion of some disability residential services under this heading. When professional home care services are compared, Irish per capita HCE is under half the EU15 mean. Similarly, Irish HCE per capita on inpatient care in public and private hospitals is below the EU15 mean.

Dr Maev-Ann Wren, ESRI Senior Research Officer and lead author, said:

“Healthcare expenditure is sometimes understood as expenditure on hospital services, leading to a disconnect between Ireland’s apparently high HCE and over-stressed hospital system. Our findings examining the many categories of Health and Social Care expenditure which Ireland includes in HCE, makes clear that Ireland’s comparative HCE should not be interpreted as a measure of hospital service expenditure.

Understanding Ireland’s apparently relatively high HCE needs to be informed by an understanding that Ireland’s relatively high prices and wages have obscured the continuing relatively low volume of Irish healthcare services delivered. It is against this backdrop that the Irish health authorities, the HSE and the Department of Health, prepared for the pandemic surge, with understandable fear that the public healthcare system might be overwhelmed. We hope that the analysis in this report will contribute to a better understanding of international HCE comparisons to inform the development and strengthening of the Irish healthcare system.”

[1] National income measured as modified GNI for Ireland and GDP for other countries

[2] All per capita findings also include adjustment for relative prices