The amount of spending on health care depends on various factors. Health spending is significantly influenced by a country's economic capacity rather than the need for medical services, so high-income countries have the ability to spend more money on health care. The amount of health care costs is influenced by the solvency of the population, the level of their taxes and insurance contributions. The richer a person is, the more he spends on health care.
Obviously, the higher the level of development of the country, the more funds are spent on health care, and therefore the higher the health status of the population (eg, the average life expectancy). At the same time, high health care costs are not the main means of improving the health status of the population. USA. It is the richest country in the world, where the most money is spent on health care, but the indicators of the health status of the population are not so high compared to other developed countries.
High expenditures on health care are mainly related to the large number of medical personnel and the introduction of new, expensive medical technologies, rather than the population's need for medical services. A total of 2877.6 million GEL was spent on healthcare in Georgia in 2017, which is 800 million GEL more than in 2010. In relation to the GDP in Georgia, the total expenditure on health care increased from 5.3% to 10.3% in 1995-2010.
An important indicator of health care financing in the country is the share of state expenditures on health care in total health care expenditures. According to the recommendation of the World Health Organization, the public expenditure on health should make up more than 40% of the total expenditure on health. In countries where this figure is less than 40%, the state has limited responsibility to solve problems in the health sector. According to the data of 2019, the share of state expenditures on health care in Georgia is 40.8% of the total expenditures on health care. Accordingly, the share of state funding for health care in Georgia is slightly higher than the limit provided by the recommendation of the World Health Organization. It should be noted that the share of state spending on health care in Georgia increased from 11.4% to 40.8% in total health care spending in 2000-2019. With this indicator, Georgia is in line with the average of low-income countries (41%) and is significantly lower than the average of high-income countries (54%).
An important indicator of health care financing in the country is the state spending on health care in relation to GDP. According to the recommendation of the World Health Organization, the share of public spending on health care in the gross domestic product should be at least 5%. Despite the significant increase in state spending on health care in Georgia, its share in relation to GDP is low (2.7%). In low-income countries, the share of public spending on health care in relation to GDP is up to 2%. In Georgia, the share of public spending on health care in relation to GDP increased from 0.8% to 2.7% in 2000-2019.
The share of private medical insurance in the healthcare system is small. In 2017, the share of private insurance in total health care expenditures was 5.6%, and in private health care expenditures – 9.3%. The share of private health insurance in total health care spending increased from 1% to 5.6% in 2000-2019. Private health insurance in Georgia is provided by private insurance companies and covers 9% of the population (438,302 people in 2020), most of it is voluntary and applies to employees and their families, and it is also mandatory for some groups of people (military personnel). Some private insurance policies cover services that are not included in the universal health care program, such as dental care and some outpatient medications. In 2017, the universal health care program excluded high-income individuals from coverage, however, this did not significantly increase the demand for private insurance.
Thus, despite the fact that the share of state financing in health care costs in Georgia is increasing year by year, it only slightly exceeds the limit provided by the recommendation of the World Health Organization, therefore, significant expenses for medical services, about 54.8%, have to be paid by the population themselves. As a result, a certain part of the population is forced to refuse medical services. In order to improve the functioning of the health care system, Georgia should increase the state spending on health care in order to fully ensure financial access to necessary medical services.

References:
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Keywords: Health care expenditures, public health care expenditures, private health care expenditures
JEL Codes: H51, I10, I18, P36,