Healthcare expenditures grew by 13 percent, or €325 million, in 2023 compared to a 7.5 percent (€176 million) increase in 2022.

The public sector accounted for 76 percent of total healthcare expenditures, with spending increasing by 14 percent, or €272 million, year-over-year.

Household healthcare expenses rose by 8 percent, a slower rate than the overall increase in healthcare expenditures and lower than the growth seen in 2022. As a result, the share of households' out-of-pocket expenses in total healthcare spending decreased by 1 percentage point to 22 percent, the same level as in 2021.

The growth in household healthćare expenditures slowed in 2023. However, total household spending still increased by €45.6 million.

The average healthcare expenditure per person in households rose from €439 to €462 annually. Public sector spending per capita stood at €1,584 and overall an average of €2,089 was invested in the healthcare of each individual in 2023.

Growth driven by higher prices

The overall growth in healthcare expenditures in 2023 was notably rapid, reaching 13 percent, said University of Tartu health economist Andres Võrk in an interview with ERR. Publicly funded healthcare services saw even greater growth, with expenditures rising by 14.5 percent, while out-of-pocket costs increased at a slower rate. "Looking at the bigger picture, healthcare expenditures have returned to COVID-era levels," Võrk said.

In comparison to Estonia's gross domestic product (GDP), healthcare expenditures accounted for 7.5 percent in 2023.

"During 2020-2021, the high share of expenditures relative to GDP was due to an economic downturn and significant state investments in COVID prevention. In 2023, however, the main driver was the rising cost of healthcare services," Võrk explained.

The largest expenditure increases were in sectors with high labor costs, such as outpatient care, primary care and inpatient nursing care.

"Outpatient care costs rose by 21 percent and inpatient nursing care saw a staggering 43 percent increase. These are areas where labor costs for healthcare workers are particularly high. However, the number of doctor visits did not grow," Võrk noted.

According to Võrk, the rising expenditures stem from price increases, not an increase in the number of treatments. "The number of treated individuals in 2023 was actually smaller than in 2022," he said.

Out-of-pocket expenses grew by 8 percent in 2023. "Out-of-pocket contributions in Estonia consistently account for 20-25 percent of total healthcare expenditures. Last year, the figure stood at 22 percent. The distribution of these costs is typical: roughly one-third goes to dental care, followed by inpatient nursing care and prescription medicines and over-the-counter drugs," Võrk explained.

Prescription drug expenses rose unexpectedly by 15 percent, raising questions. "The rapid growth in prescription medicine costs needs attention. Is it related to changes in reference prices or an actual increase in usage?" Võrk asked. In contrast, spending on over-the-counter medications did not rise. "It's unclear if this is because people were healthier last year or because price increases for over-the-counter medications were more modest," he added.

Dental care costs also grew, partly due to an increase in dentist visits.

"Out-of-pocket costs in Estonia are extremely high compared to international recommendations, which suggest a maximum of 15 percent," Võrk said.

Võrk questioned whether the rapid increase in public sector healthcare spending is sustainable. "The Health Insurance Fund (Tervisekassa) has signaled that such rapid price increases are not expected in the coming years. This has already influenced ongoing wage negotiations between healthcare workers and institutions. Given the rapid growth in expenditures, it's clear that such increases cannot continue indefinitely," he said.

Looking forward, Võrk noted that the situation may create pressure to reassess the healthcare sector's activities. "It raises questions about whether all activities are necessary and reasonable, as well as whether they can be done more efficiently," he said.

However, if public sector spending growth slows, the burden on households is likely to increase. "The government has confirmed that out-of-pocket costs for prescription medicines and visit fees will rise starting next year. There is clear pressure for household contributions to grow, especially as waiting times for publicly funded healthcare services are unlikely to decrease," Võrk concluded.

People may decide to postpone treatment

Speaking about the risks and benefits of increased out-of-pocket healthcare costs, Mariliis Öeren, head of the health program at Praxis, highlighted that higher personal contributions could impose financial burdens on lower-income individuals, limiting their access to healthcare services and medications and exacerbating health inequities.

"In other words, increasing out-of-pocket costs makes the healthcare financing system more regressive, as it fails to account for people's ability to pay," Öeren told ERR.

She added that this could lead to situations where people delay necessary treatment because they cannot afford it immediately. "This can result in worsening health conditions – potentially even death– and higher costs in the future," she said.

Discussing the potential benefits, Öeren emphasized that the context and availability of supportive measures for socioeconomically disadvantaged individuals are critical.

"For example, when people are required to contribute partially to their health care costs, they may be more deliberate in deciding whether and when to seek care. Additionally, personal investment in their treatment could encourage more attention to preventive behaviors," she noted.

However, Öeren cautioned that this assumes individuals are both willing and able to make informed health decisions. "In practice, intentions do not always translate into behavior," she concluded.

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