This chapter looks at recent trends in health spending, both at an overall level but also disaggregated by type of health service and by health care provider. A particular focus is on analysing spending on primary health care and pharmaceuticals. The chapter also analyses how health care is financed in Europe, both in terms of the type of financing arrangements in place and the revenues that ultimately fund health spending.

In 2019, health spending across EU countries stood on average at 8.3% of GDP, ranging from over 11% in Germany and France to less than 6% in Luxembourg and Romania. This share remained largely unchanged from previous years as health spending grew in line with the economy but it can be expected that the COVID‑19 pandemic will lead to an increase of the health spending share of GDP in many countries in 2020. On a per capita basis, there is a three‑fold difference between the EU countries in Western and Northern Europe that spend the most on health (Germany, Austria, Sweden and the Netherlands) and those in Central and Eastern Europe that spend the least (Romania, Bulgaria, Latvia and Croatia).

In most countries, payments for curative and rehabilitative care services make up the bulk of health spending, while spending on pharmaceuticals also account for a large share of health expenditure particularly in some Central and Eastern European countries. Regarding the financing of health care, compulsory schemes, either government financed or through compulsory public or private health insurance, account for nearly three‑quarters of overall health spending on average across EU countries. However, out-of-pocket expenditure also plays an important role in health financing in several Southern as well as Central and Eastern European countries.