Wealthy nations typically allocate a larger portion of their resources to healthcare compared to lower-income countries. However, even when focusing on high-income nations, the United States stands out for its significantly higher health expenditure per person.
Comparing health spending across different countries is inherently complex, as each nation’s healthcare system is shaped by unique political, economic, and social factors. Given the strong correlation between a country’s wealth and its health spending, a meaningful comparison necessitates focusing on nations with similar economic profiles. Therefore, this analysis benchmarks the U.S. against OECD countries that have demonstrated comparable economic size, possessing above-median national incomes and above-median income per person (measured by GDP and median GDP per capita) in at least one of the past ten years. This approach allows for a more accurate assessment of the U.S.’s health spending relative to nations of similar economic stature.
U.S. Health Spending Per Person Dwarfs That of Economically Similar Countries
In 2022, the United States’ health expenditure reached a staggering $12,555 per person. This figure surpasses every other high-income nation by a considerable margin, exceeding the expenditure of the next highest spender by over $4,000. In stark contrast, the average health spending per person among comparable countries is approximately $6,651 – roughly half of the U.S. expenditure. This substantial disparity underscores the exceptional level of health spending in the U.S. compared to other nations with economies of similar size.
Health Spending Per Capita Increased Across Most Peer Nations in 2022
Between 2021 and 2022, the trend in health spending per capita was largely upward across economically comparable nations. The majority of these countries witnessed an increase, with the Netherlands being a notable exception, experiencing a slight decrease of 0.1%. The U.S. also saw an increase, with per capita health spending rising by 2.9%. While this is an increase, it’s worth noting that it was a more modest rise compared to many peer nations, and was greater than increases seen in Australia (2.4%), Canada (0.7%), and the United Kingdom (0.5%). Belgium recorded the most significant surge in per capita health spending among nations with available data for this period, with an increase of 9.6%.
The 2.9% growth in U.S. per capita health spending in 2022 represents a slight acceleration from the 2.4% increase observed between 2020 and 2021. However, it remains considerably lower than the substantial 9.8% jump from 2019 to 2020, a period significantly impacted by the onset of the COVID-19 pandemic.
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U.S. Health Spending as GDP Share Decreased in 2022 Amidst Economic Growth
Over the past half-century, the divergence in health spending as a proportion of GDP between the U.S. and comparable OECD countries has become more pronounced. In 1970, the U.S. allocated approximately 6.2% of its GDP to health, a figure comparable to several other wealthy nations (the average for comparably wealthy countries was around 4.9% of GDP in 1970). The U.S. maintained a relatively similar pace with other nations until the 1980s. However, from the 1980s onwards, health spending in the U.S. began to escalate at a considerably faster rate relative to its economic growth compared to peer countries. Consequently, health spending as a share of the economy has expanded more rapidly in the U.S. than in these comparable nations.
The COVID-19 pandemic created a dual effect – increased health spending and economic contraction. This combination led to a surge in health spending as a percentage of GDP in the U.S. and every comparable country between 2019 and 2020. As economies began to recover, health spending as a share of GDP has since decreased in the U.S. and the majority of peer nations. In 2020, U.S. health-related expenditures reached 18.8% of GDP, a significant jump from 16.7% in 2019. This percentage subsequently declined to 17.4% in 2021 and further to 16.6% in 2022. Despite these decreases, the U.S.’s health spending as a share of GDP remains substantially higher than that of comparable countries, highlighting a persistent gap in resource allocation towards healthcare relative to economic size.
Pre-Pandemic, U.S. Health Spending Growth Slightly Outpaced Peer Nations
While the U.S. has consistently demonstrated higher average health spending levels, recent trends indicate a period of accelerated spending growth in other nations. Historically, the 1980s marked a period of rapid expansion in U.S. per capita health expenditures. The average annual growth rate of 10.0% in the U.S. during the 1980s significantly exceeded that of comparable countries, which averaged 7.3% annual growth during the same period.
Examining 5-year growth rates reveals shifts over time. During 2005-2010, the U.S. experienced an average annual health spending growth rate of 4.1%, a slowdown from the 7.2% rate in the preceding five-year period. Comparable countries also saw a deceleration in health spending growth, averaging 4.5% annual growth during 2005-2010, down from 5.3% during 2000-2005. In the five years leading up to the COVID-19 pandemic (2015-2020), the U.S.’s per capita health spending growth (5.0%) surpassed the average for comparable countries (3.6%). However, the annual growth rate for comparable countries collectively increased between 2020 and 2022 to 7.0%, while the U.S. saw a comparatively smaller increase of 2.7% during the same period. This suggests a potential shift in global health spending growth dynamics, even when considering nations of similar economic size.
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The Peterson Center on Healthcare and KFF are partnering to monitor how well the U.S. healthcare system is performing in terms of quality and cost.
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