• Spending overview
• Policy overview
• Diseases overview

Spending overview

Total healthcare expenditure reached an estimated 7.3% of GDP in 2006, the latest OECD figure available, far lower than in EU countries such as Germany (10.5%) and France (11%). However, Luxembourg is the richest country in Europe in terms of GDP per head and spending compares better in dollar terms. In 2006, Luxembourg spent US$4,162 per head at purchasing power parity, compared to just over US$3,400 in both France and Germany. This was the fourth-highest total in the OECD, although far lower than the US$6,933 spent in the US.

Spending has, however, fallen steadily in GDP terms from a recent peak of 8.1% in 2004. Expenditure fell by over 2% in local currency terms in both 2005 and 2006, after surging by over 9% in each of the previous two years. Health is also one of the areas being highlighted as ripe for cuts as the government battles a fiscal deficit the Economist Intelligence Unit expects to hit 5.4% of GDP in 2010. But popular opposition to health reform remains intense. That makes systemic change difficult and has forced the government to adopt cost-cutting measures ad hoc, for example by reducing reimbursement levels. The stretched budget and ageing population mean that pressure for deeper change is likely to intensify in coming years.

Policy overview

Nearly 91% of health spending is through the central government, via a compulsory health insurance scheme administered by the Union of Sickness Funds (part of the social security system). The system allows patients a free choice of provider and forcing providers to abide by a fixed set of fees for services. The Union of Sickness Funds sets the fees and manages most of the 500,000-strong population’s health insurance. People must pay for their treatment and then claim back 80-100% of the cost; they are also subject to limits, such as on the number of GP visits or the expenditure on dental treatment.

In addition, Luxembourg residents can also take out supplementary insurance through various state-controlled funds. Around three-quarters of the population buy this complementary insurance to cover non-essential treatments not covered by the compulsory scheme. Out-of-pocket expenditure is low, at just 6.5% of total healthcare expenditure, on a par with France and around half the level of Germany.

Providers are usually contracted out of the state health system, and are owned by local authorities or by not-for-profit organisations, although the Ministry of Health remains responsible for supervision. Just 13 hospitals cover the small country, and the number of hospital beds looks low by European standards, with just 5.7 per 1,000 people, compared to 8.3 in Germany and 7.0 in France. However, it compares well to the UK (3.4) and the US (3.1). There are 2.9 doctors per 1,000 people, compared to 3.5 in Germany and 2.5 in the UK.

Measures were introduced in 2007 to encourage hospitals to co-operate over purchasing, logistics and information technology, as part of the efforts to cut healthcare expenditure. Nevertheless, the level of medical equipment is high in this wealthy country. There are 10.5 MRI scanners per 1m people, compared to just 5.7 in France. Spending on pharmaceuticals has fallen steadily as a proportion of the total health budget, from a high of 15.7% in 1989 to 8.4% in 2005, according to the OECD. The Ministry of Health determines reimbursement rates, although drugs administered in hospital are covered under the hospital care budget.

Diseases overview

Health indicators are generally up to rich-country norms, and have been improving steadily. Average life expectancy at birth has risen from 78 years in 2000 to 79.4 years in 2007, according to the OECD. This puts Luxembourg on a par with the UK but well behind Germany on 81 years. Infant mortality rates have fallen from a highish eight per 1,000 live births in 1990 to just three in 2007. That compares well with Germany, where the death rate fell from seven in 1990 to four in 2007, according to the World Health Organisation. Preventative medicine scores well, too, with 96% of children immunised against measles, for example, compared to 95% in Germany and 86% in the UK.

Luxembourg’s performance on lifestyle factors is less good, however. Tobacco consumption is under control, but it is far from low with 20% of people above 15 years old smoking in 2006, down from 28% in 2003 (the comparable figures for 2006 are 21% in the UK and 23% in Germany). Alcohol consumption and obesity rates are high. Each adult drinks 15.5 litres of alcohol per year, well up on Germanys’ 10 litres and the UK’s 11. And Luxembourg is the fattest place in the OECD after the US and UK. Some 55% of adults are overweight or obese, compared to 37% of French and people and beating even the Germans, on 50%.

Although alcohol consumption has remained fairly steady in recent years, the obesity problems are mounting. In 2000, just half of the population was fat or obese. At the same time, although the proportion of over-65s remains low at 14% compared with other EU countries such as Germany (20%) and France (16%), Luxembourg faces the growing expenses of an ageing population. The Ministry of Health is responsible for public health measures and has recently introduced a number of measures to tackle lifestyle problems, including a ban on tobacco advertising and a partial ban on smoking in public places. But, like the rest of Luxembourg’s healthcare system, it is also under increasing pressure to reduce spending.