In a global landscape where healthcare costs are a growing concern, understanding how different countries manage these expenses is crucial. This analysis delves into the health spending habits of the United States in comparison to other large and wealthy nations within the OECD (Organisation for Economic Co-operation and Development). We utilize data from the OECD Health Statistics database to provide a clear picture of where the U.S. stands in terms of healthcare expenditure.
U.S. Health Spending Outpaces Other High-Income Countries Relative to Economy Size
It’s a well-established trend that wealthier nations tend to invest more in healthcare per individual compared to lower-income countries. However, the United States stands out even among high-income countries, allocating a significantly larger portion of its economy to health.
Comparing international health spending is inherently complex due to varying political, economic, and social structures across nations. Given the strong link between a country’s wealth and its healthcare spending, our comparison focuses on OECD countries with above-median national incomes and above-median income per capita, ensuring a comparison with similarly resourced nations.
Per Person, U.S. Health Spending Is Roughly Double That of Peer Nations
In 2022, health expenditures per person in the U.S. reached $12,555. This figure is not only the highest among high-income nations but also exceeds the spending of the next highest spender by over $4,000. In stark contrast, the average health expenditure per person in comparable countries is approximately $6,651, nearly half of the U.S. expenditure. This substantial difference highlights the unique position of the U.S. in global health spending.
Health Spending Per Capita Increased Across Most Peer Nations in 2022
The year 2022 witnessed an increase in per capita health spending in almost all comparable nations. An exception was the Netherlands, which saw a marginal decrease of 0.1%. The U.S. experienced a 2.9% increase in per capita health spending, which, while significant, was less than the increase seen in most peer countries. Countries like Australia (2.4%), Canada (0.7%), and the United Kingdom (0.5%) experienced even smaller increases. Belgium recorded the most substantial increase at 9.6% among countries with available data for this period.
It’s worth noting that the 2.9% increase in U.S. per capita health spending is slightly higher than the 2.4% increase between 2020 and 2021. However, it remains considerably lower than the 9.8% surge observed between 2019 and 2020, reflecting the fluctuating nature of health expenditure growth.
U.S. Health Spending as a GDP Share Decreased in 2022 Amidst Economic Growth
Over the last half-century, the gap between health spending as a proportion of GDP in the U.S. and comparable OECD countries has widened considerably. In 1970, the U.S. allocated around 6.2% of its GDP to health, a figure comparable to several other wealthy nations (the average for comparable countries was approximately 4.9%). Until the 1980s, the U.S. was relatively aligned with its peers. However, from the 1980s onwards, U.S. health spending grew at a significantly faster pace relative to its economic output. This trend has continued, leading to a widening disparity over time.
The COVID-19 pandemic caused a spike in health spending and an economic downturn, resulting in elevated health spending as a share of GDP in the U.S. and all comparable countries between 2019 and 2020. As economies recovered, the health spending share of GDP decreased in the U.S. and most peer nations. In 2020, U.S. health expenditure reached 18.8% of GDP, up from 16.7% in 2019. While this share decreased to 17.4% in 2021 and further to 16.6% in 2022, it remains substantially higher than in comparable countries, indicating a persistent trend of higher healthcare costs relative to the size of the economy.
Pre-Pandemic Health Spending Growth Was Slightly Faster in the U.S.
While the U.S. has consistently recorded higher average health spending, recent years have shown faster spending growth in other nations. Historically, the 1980s marked a period of accelerated growth in U.S. per capita health expenditures, with an average annual growth rate of 10.0%, significantly higher than the 7.3% average of comparable countries during the same decade.
Examining 5-year growth rates reveals that between 2005 and 2010, the U.S. experienced an average annual health spending growth rate of 4.1%, a slowdown from the 7.2% in the preceding five-year period. Comparable countries also witnessed a deceleration, from 5.3% average annual growth (2000-2005) to 4.5% (2005-2010). In the five years leading up to the COVID-19 pandemic (2015-2020), the U.S. health spending per capita growth (5.0%) exceeded the average for comparable countries (3.6%). However, the annual growth rate for comparable countries increased to 7.0% between 2020 and 2022, while the U.S. saw a smaller increase of 2.7% during the same period.
In conclusion, the data consistently demonstrates that the United States spends a disproportionately large amount on healthcare compared to other wealthy OECD nations, both on a per capita basis and as a percentage of GDP. While recent trends indicate a slight moderation in the growth rate of U.S. health spending compared to some peer nations, the overall expenditure remains significantly higher, posing ongoing questions about the efficiency and value derived from this level of investment in healthcare.
