Dáil Éireann Debate, Wednesday - 21 November 2018
168. Deputy Louise O'Reilly asked the Minister for Health his views on EUROSTAT figures and OECD figures on health spend here; his further views on the different price deflators used (details supplied); his further views on whether GDP is not a robust measure for health spend; and his further views on whether using the actual individual consumption price deflator is the best way to measure health spend. [48473/18]
View answerSystem of Health Accounts is the most widely accepted methodology for estimating health expenditure and is used by both the Organisation for Economic Cooperation and Development (OECD) and Eurostat. It is important to note that SHA focuses solely on expenditure for health purposes and excludes other expenditures, such as elements of social care expenditure, which would also come under the remit of my Department. While there are known issues in the international comparability of SHA estimates, such as those around Out-of-Pocket and Long-Term Care expenditures, SHA still represents a useful approach to measuring the level of health expenditure on health goods and services, including public and private expenditure, across countries.
The SHA methodology produces estimates of health expenditure in the currency and price level of the relevant country. Purchasing Power Parities (PPPs) are used to turn these estimates into a common currency, valued at a uniform price level. The values resulting from this exercise should reflect only differences in the volumes of goods and services consumed in countries. For this calculation the OECD uses PPPs based on Gross Domestic Product while Eurostat uses Actual Individual Consumption PPPs. The differences in these approaches reflects the set of prices included in their calculation.
GDP is a measure of all expenditures in an economy. PPP based on prices from GDP includes the most comprehensive coverage of goods and services. Irish GDP has experienced significant volatility in recent years as a result of globalised activities in the economy. My Department have been in communication with the OECD to clarify whether this has distorted the GDP PPP for Ireland, however it is not clear at this point whether this is the case. More generally, the OECD and Eurostat note that while GDP is a good indicator of the level of economic activity, it is not an accurate measure of material well-being, when material well-being is defined in terms of individual goods and services consumed by households, that is, the goods and services that households consume to satisfy their individual needs.
AIC relates more to the domestic consumption of goods and services. It includes all goods and services consumed by households whether purchased by themselves or provided by Government or Non-Profit Institutions Serving Households, whereas GDP includes items such as net exports.
For certain countries, such as Ireland, there is a significant difference in the value of the AIC and GDP PPP. Given the importance of this parameter for measuring the volume of health goods and services consumed in Ireland, work is ongoing by my officials to evaluate the most appropriate PPP to use in international comparisons.
