In a nutshell, the financial sustainability of the health system refers to its ability to cover its costs with the available budget, and to ensure it will still be able to so in future. Unfortunately, the sharp increase in life expectancy the world has seen over the last decades means both higher costs (through higher care needs as the population gets older overall) and a smaller portion of the population that works and contributes financially through taxes and social security payments. This puts increasing financial pressure on the healthcare system, forcing it to either find more funds or to reduce expenditures, e.g. by improving efficiency or by cutting back on services. The situation is further complicated by a constant flow of medical and technological innovations, which can improve care and potentially generate savings in the long run, but also have a considerable cost.
In this section, we will examine three indicators which cover both the growth in health expenditure compared to the growth in the gross domestic product or GDP (i.e. the total value of all the goods and services produced in the country over a specific time period, typically a year) and the capacity to collect public revenues to meet those rising costs:
- The percentage of health expenditure financed by public sources, which reflects the system’s ability to continue being financed by public sources (S-3)
- A projection of public expenditure on health expressed as a percentage of the gross domestic product (S-20)
- A projection of public expenditure on reimbursed pharmaceutical products (S-21)
Public expenditure on health refers to the financial resources “the state” (i.e., in Belgium, federal, federated and local authorities) spends on health services. As things stand, the federal state mostly pays for acute care, while long-term care is mainly the responsibility of federated entities (though the federal state also transfers resources to the federated entities to finance some long-term care expenditures).
In this indicator, we will focus on the share of total health expenditure that is paid for by public sources.
It is important to mention that the COVID-19 pandemic caused a massive disruption in health expenditure in all countries, with additional measures to be financed on the one hand (e.g. additional hospital funding, purchases of protective equipment and testing, etc.) and a drop in the consumption of non-urgent care on the other hand (due to lockdowns, postponement of care, etc.). This increased the share of public funding and lowered the share of out-of-pocket payments in total health expenditure.
- In 2021, total current expenditure on health in Belgium amounted to 55.5 billion euros, of which 77.6% were financed by the public sector.
- During the COVID-19 pandemic, an increase in current expenditure on health was observed, both in Belgium (+11% between 2019 and 2021) and on average in EU countries (+17% for the EU-14 average and +20% for the EU-27 average). The increase was, however, slightly later (from 2021 only) and less important in Belgium, which is in part explained by methodological differences (see the technical sheet).
- Between 2010 and 2019, the share of public funding in Belgium was generally close to the EU-14 average and higher than the EU-27 average, except in 2019 where a slight decline was observed in Belgium.
- During the COVID-19 pandemic, the share of public funding increased both in Belgium (+2.4 percentage points between 2019 and 2021) and across EU-14 (+1.8 percentage points) and EU-27 countries (+3.6 percentage points). In 2021, the share of public funding in Belgium was, however, lower than in our neighbouring countries. Based on preliminary OECD estimates, the share of public funding in Belgium is expected to get back to its 2018 level as soon as 2022, while EU averages remain higher.
Data source: OECD health data 2023
This indicator examines what percentage of the GDP the Belgian authorities devote to health and healthcare. The results also include long-term projections, which attempt to predict the evolution of expenditure on health in the next several decades based on a series of assumptions regarding the evolution of the population, the economy, policies, etc.
- In 2022, Belgium devoted 8.0% of its GDP (44.0 billion euro) to the public funding of health, 6.5% for acute care and 1.5% for long-term care.
- Public expenditure on health as a share of the GDP is expected to increase to 10.7% by 2050 and 10.8% by 2070. Long term care expenditure as a percentage of GDP should almost double.
- In 2019, overall expenditure on health in Belgium was very close to the EU average; expenditure on long-term care was above the EU average, expenditure on acute care was lower.
Data source: Study Committee on Ageing
Pharmaceutical treatments play an important role in the healthcare system, and the available offer is constantly evolving as drugs enter (and sometimes leave) the market. New pharmaceutical treatments can be very expensive and have a significant impact on the healthcare budget, which means policy makers need to find the right balance between the need to ensure access to necessary medication and the need to stay within the limits of the available budget.
In Belgium, innovative new drugs often fall under “managed entry agreements” (MEA) which generally involve a financial compensation mechanism (a confidential “rebate”), making it difficult to assess the exact cost of individual medications. In this indicator, corrections have been introduced for these compensations. However, their confidential nature remains an obstacle to reliable estimates.
- In 2022, public expenditure on pharmaceutical treatments amounted to 6.20 billion euros in Belgium – 2.92 billion for drugs sold in public pharmacies, 2.86 billion for outpatient treatments in hospitals and 420 million for inpatient treatments in hospitals. When correcting for the MEA’s compensations, public expenditure on pharmaceuticals amounted to 4.94 billion euros in 2022.
- Total pharmaceutical expenditure is expected to increase by 48.9% between 2022 and 2027. When correcting for the MEAs’ compensations, the expected increase is 36.6%.
- Between 2022 and 2027, expenditure for outpatient treatments delivered by hospital pharmacies is expected to increase much faster (+78.4%) than for drugs sold in public pharmacies (+23.5%) and for inpatient treatments (+25.3%). However, this statement needs to be nuanced, as most MEA relate to outpatient treatments delivered by hospital pharmacies.