Background This paper presents an analysis of the main characteristics of the Gulf Cooperation Council's (GCC) health financing systems and draws similarities and differences between GCC countries and other high‐income and low‐income countries, in order to provide recommendations for healthcare policy makers. The paper also illustrates some financial implications of the recent implementation of the Compulsory Employment‐based Health Insurance (CEBHI) system in Saudi Arabia. Methods Employing a descriptive framework for the country‐level analysis of healthcare financing arrangements, we compared expenditure data on healthcare from GCC and other developing and developed countries, mostly using secondary data from the World Health Organization health expenditure database. The analysis was supported by a review of related literature. Results There are three significant characteristics affecting healthcare financing in GCC countries: (i) large expatriate populations relative to the national population, which leads GCC countries to use different strategies to control expatriate healthcare expenditure; (ii) substantial government revenue, with correspondingly high government expenditure on healthcare services in GCC countries; and (iii) underdeveloped healthcare systems, with some GCC countries' healthcare indicators falling below those of upper‐middle‐income countries. Conclusion Reforming the mode of health financing is vital to achieving equitable and efficient healthcare services. Such reform could assist GCC countries in improving their healthcare indicators and bring about a reduction in out‐of‐pocket payments for healthcare. © 2013 The Authors. International Journal of Health Planning and Management published by John Wiley & Sons, Ltd.