The OECD approach to measuring social

and health expenditure

Regional Conference on Enhancing Social Protection
Strategies in Asia and the Pacific

ADB Headquarters, Manila, the Philippines

21-22 April, 2010
Willem Adema
Senior Economist, OECD Social Policy Division
(www.oecd.org/els/social/expenditure)
Disclaimer: The views expressed in this paper/presentation are the views of the author and do not
necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of
Governors, or the governments they represent. ADB does not guarantee the accuracy of the data
included in this paper and accepts no responsibility for any consequence of their use. Terminology used
may not necessarily be consistent with ADB official terms.
What will be discussed in the next 15
minutes or so...
ƒ OECD work on social expenditure and health
expenditure in a wider context of indicators

ƒ Where the SPI and OECD work differ a lot…

ƒ Where the SPI and OECD work are broadly

comparable…

ƒ Where the SPI and OECD work could be more

aligned…
 Social expenditure should be seen in the
context of a wider set of social indicators...
Socio-economic Self- Equity Health Social Cohesion
context sufficiency

Median equivalised
Employment Income inequality Life expectancy General trust
household income

Perceived Health Confidence in

Fertility rates Unemployment Poverty
status social institutions

Student Pro-social
Migration Income difficulties Life satisfaction
performance behavior
Local environment
Age of labour Adequacy of last
Family structure (air/water Voting
force exit resort benefits
quality/noise)
Age-dependency Spending on Public Social Health Care Tolerance of
ratio education Spending Expenditure diversity
.and health indicators as in the forthcoming
Health at a Glance Asia/Pacific by the by
the OECD/Korea Policy Centre
ƒ Mortality and disease, e.g. life expectancy, infant
mortality, maternal mortality, HIV/AIDS.
ƒ Determinants of health, e.g. low birth-weight,
breastfeeding, nutrition, water and sanitation
ƒ Health care resources and utilization, practising
physicians and nurses, hospital beds, vaccination.
ƒ Health spending and financing, e.g. Public
spending, OOP and private health insurance
spending.
 Comparing SPI and OECD work: in
terms of poverty benchmarks OECD and
SPI indicator are very different...

ƒ The OECD measures poverty rates are defined

as the share of individuals with equivalised
disposable income of less than 50% of the
median for the population

ƒ SPI uses an absolute poverty line along $ 1.25

or $2 per day.
But the questions are the same: how can
social spending help alleviate poverty?
Poverty rates and social spending for people of working age, mid-2000s
 What is social spending?
ƒ “…The provision by public and private institutions of
benefits to, and financial contributions targeted at,
households and individuals in order to provide
support during circumstances which adversely affect
their welfare, provided that the provision of the
benefits and financial contributions constitutes neither
a direct payment for a particular good or service nor
an individual contract or transfer. …”

ƒ Public, mandatory private, voluntary private

ƒ Other private spending which is not social.

Public social spending varies widely across
the OECD, which diminishes if one
accounts for tax and private spending
 The structures of SOCX and SPI;
collection of data at programme level:
the ‘bottom up’ approach.
SOCX SPI

1 and 2 Old age and Survivors <--> 2 Pensions (social insurance)

3 Incapacity <--> 3 Social assistance

2 Pensions (social insurance)
Health insurance (social
4 Heath care <--> 2 insurance)

5 Family <--> 5 Child protection (partially)

Labour market policies and
6 ALMPs <--> 1 programs
Micro-credit / finance programs
4 (employment)
7, 8 and 9 Unemployment, housing and <--> 3 Social assistance
Other social policy areas
Public social expenditure in Japan and
Korea is increasing...
40 40
France Japan
OECD Australia
35 35
United States Korea

30 30

25 25

20 20

15 15

10 10

5 5

0 0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
...and is high compared to other Asian
countries.
SPI and SOCX could be better aligned by
using more comprehensive measures of
public health effort.
Public expenditure on health as a per cent of GDP, 2008
 Concluding remarks

ƒ Systemic differences between SOCX and SPI will

remain.
ƒ But indicators should be streamlined where possible,
to facilitate exchange of policy development.
ƒ Detailed collection of information on social spending
per programme.
ƒ More comprehensive measurement of health effort.