Staying informed about healthcare costs is crucial.
In this analysis, we delve into how healthcare expenditure in the United States measures up against other OECD nations of comparable economic stature. Our review is based on the OECD Health Statistics database, focusing on countries with similar wealth and economic output to provide a relevant comparison to the U.S.
U.S. Health Spending Dwarfs That of Peer Nations Relative to Economy Size
It’s well-established that wealthier nations tend to allocate more resources per person to healthcare compared to lower-income countries. However, even when compared to other high-income economies, the United States stands out for its significantly higher per capita health spending.
Comparing the U.S. healthcare system to others is complex due to differing political, economic, and social landscapes. Given the strong correlation between national wealth and health spending, our analysis benchmarks the U.S. against OECD countries with above-median national incomes and above-median income per person (GDP and median GDP per capita) in at least one of the past ten years. This ensures a comparison against genuinely comparable wealthy nations.
Per Person, U.S. Healthcare Costs Are Roughly Double the Average of Peer Countries
In 2022, health expenditures per person in the U.S. reached $12,555. This figure is not just higher, but over $4,000 more than any other high-income country. When we compare this to the average health spending per person in similar countries, which is $6,651, it becomes clear that the U.S. spends approximately twice as much per person on healthcare. This stark difference highlights a significant deviation in healthcare spending priorities or system efficiency when we Compare To its economic peers.
Per Capita Health Spending Saw Widespread Growth in Peer Nations in 2022
The year 2022 saw an increase in per capita health spending across almost all comparable nations. The Netherlands was a notable exception, experiencing a slight decrease of 0.1%. In the U.S., per capita health spending rose by 2.9%. While this represents an increase, it was actually a more modest rise compared to the majority of its peer nations. Countries like Australia (2.4%), Canada (0.7%), and the United Kingdom (0.5%) saw smaller increases. Belgium recorded the most substantial surge in per capita health expenditure among nations with available data for this period, with a striking 9.6% increase.
This 2.9% growth in U.S. per capita health spending is slightly up from the 2.4% increase between 2020 and 2021. However, it remains considerably lower than the substantial 9.8% jump observed from 2019 to 2020, a period heavily influenced by the onset of the COVID-19 pandemic.
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U.S. Health Spending as GDP Share Decreased in 2022, Yet Remains High
Looking at the bigger picture over the last half-century, the gap between U.S. health spending as a proportion of its economy and that of comparable OECD countries has expanded. In 1970, the U.S. allocated approximately 6.2% of its GDP to health, which was on par with several comparable nations (the average for similarly wealthy countries was around 4.9% of GDP in 1970). Until the 1980s, the U.S. remained relatively aligned with other countries. However, from the 1980s onwards, U.S. health spending grew at a considerably faster pace relative to its GDP. Since then, health expenditure as a percentage of the economy has increased more rapidly in the U.S. compared to peer nations.
The COVID-19 pandemic caused a dual effect: increased health spending and an economic downturn. This resulted in a surge in health spending as a share of GDP in the U.S. and all comparable countries between 2019 and 2020. As economies recovered, health spending as a GDP percentage has since decreased in the U.S. and most peer nations. In 2020, the U.S. spent 18.8% of its GDP on health-related expenditures, a rise from 16.7% in 2019. This share declined to 17.4% in 2021 and further to 16.6% in 2022. Despite these recent decreases, the proportion of GDP spent on health in the U.S. remains significantly higher when we compare to peer countries.
Pre-Pandemic, Health Spending Growth Was Slightly Faster in the U.S.
While the U.S. has consistently had higher average health spending, recent trends indicate faster spending growth in other nations. Historically, the 1980s marked a period of accelerated growth in per capita health expenditures in the U.S. The average annual growth rate of 10.0% in the U.S. during the 1980s was significantly higher than that of comparable countries, which averaged 7.3% annually.
Looking at 5-year growth rates, from 2005-2010, the U.S. saw an average annual health spending growth rate of 4.1%, a slowdown from 7.2% in the preceding five-year period. Comparable countries also experienced a slowdown, averaging 4.5% annual growth during 2005-2010, down from 5.3% in 2000-2005. In the five years leading up to the COVID-19 pandemic (2015-2020), the U.S. growth in per capita health spending outpaced the average for comparable countries (5.0% versus 3.6%). However, the annual growth rate for comparable countries increased between 2020 and 2022 to 7.0%, while the U.S. saw a smaller increase of 2.7% during the same period. This suggests a shifting landscape in comparative health spending growth.
About this site
The Peterson Center on Healthcare and KFF are collaborating to track the performance of the U.S. healthcare system in terms of both quality and cost.
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