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I am watching a video essay talking about healthcare spending in different countries and one of the first graphs shown was titled: 'Health spending as a share of GDP'. After doing some reading, I think I understand now. It is saying the graph shows money spent on health as a percentage of GDP, but what is GDP. GDP is gross domestic product, which is the total value of goods or services produced and provided in a country in a year. So in my understanding, the phrase means: health spending as a percentage of the value of the entire nations economy. Is this correct? Also does this mean money spent on healthcare by citizens or by governments?

Here is the video. The graph is around 0:16.

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Healthcare spending as a percentage of GDP is the measure of spending relative to the value of entire nations output at market prices in a given year. I suppose you can call the total output the value of the economy so you could say that although note that economy is a wider concept that would normally include things omitted by GDP which can only measure transactions for which there are market prices (hence economic activity such as housework and other non-market transactions are excluded).

According to the video they take the data from OECD data. OECD has multiple series on healthcare spending. Some series include only government spending and some include also private voluntary spending.

However, the data in the video seem to closely match the total health spending % of GDP, 2013. There are some small discrepancies, for example the video says that the ratio was 11% in the Germany while the data show it was 10.9 - but more or less the data seem to match (these might have occurred due to some later corrections of the data or maybe the video is using different dataset - since they dont provide proper reference for the source its hard to know). See below:

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Assuming its indeed the series above, according to the OECD the measure is defined as:

Health spending measures the final consumption of health care goods and services (i.e. current health expenditure) including personal health care (curative care, rehabilitative care, long-term care, ancillary services and medical goods) and collective services (prevention and public health services as well as health administration), but excluding spending on investments. Health care is financed through a mix of financing arrangements including government spending and compulsory health insurance (“Government/compulsory”) as well as voluntary health insurance and private funds such as households’ out-of-pocket payments, NGOs and private corporations (“Voluntary”). This indicator is presented as a total and by type of financing (“Government/compulsory”, “Voluntary”, “Out-of-pocket”) and is measured as a share of GDP, as a share of total health spending and in USD per capita (using economy-wide PPPs).

So it would include both money spent by citizens as well as governments and all private organizations.

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  • $\begingroup$ Thank you. To clarify on meaning of health spending, could you say it's a measure of money put into the health system, including the cost of running the industry(buying bandages, equipment etc) and how much people pay to have access to the system? $\endgroup$
    – Thomas Stokes
    Jun 4, 2020 at 9:56
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    $\begingroup$ @ThomasStokes you can’t say it’s measure of all money flowing into the healthcare because as the definition says it excludes investment spending. So it counts all spending that related to final consumption of healthcare services. The final price of good or service might not necessarily always depend on cost of producing it. Think of recent negative future price for oil. So I don’t think it’s completely correct to think of it as cost of running the industry- if you use cost here in narrow sense at at least. Also it depends what you consider equipment - bandages would be under this definition $\endgroup$
    – 1muflon1 ♦
    Jun 4, 2020 at 10:09
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    $\begingroup$ be included as they can be considered final goods, but when it comes to some capital spending on machines used during the production process of healthcare services that would be counted as an investment spending $\endgroup$
    – 1muflon1 ♦
    Jun 4, 2020 at 10:13

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