Understanding the Public Services Industy

Public Services Industry Review
How are Public Services Financed?
1.6 The financing of public services varies significantly from country to country. Possible
options include:
•
•
•
100 per cent taxpayer financed (‘free at the point of delivery’)
Partially user financed e.g. higher education
Means tested financing e.g. social care
1.7 The choice of financing is independent of the choices around how the service is
delivered and by whom. Different countries have chosen different routes. Figure 1.1
provides an example of how financing and delivery varies across countries for health
care. Each country bar shows the split of total spending between private, public
and PSI for that country. The lower block shows the extent of private spending on
health which is largest in the US. The UK, with its comprehensive system of public
health provision, represents the other extreme on that measure. The top two blocks
in each column show how the government funded healthcare is divided between
that delivered directly by the state and that delivered via the PSI. In this case the UK
represents the largest share of PSI delivery among the comparator countries.
Figure 1.1: Financing of health care varies across a sample of OECD countries
100
80
%
60
40
PSI
Public Spending
Private Spending
20
0
US Sweden France Spain UK
Source: Oxford Economics
Notes: Private spending calculated from country IO tables. Other public spending and PSI calculated from country
COFOG tables and Oxford Economics analysis.
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