Wealthy nations often have robust economies and complex systems. When we look at the “size” of different aspects within these countries, healthcare spending emerges as a critical area for comparison. This analysis delves into how the United States’ health expenditures compare to those of other large and affluent OECD countries, using median GDP and median GDP per capita as benchmarks for comparison. Our review is based on the OECD Health Statistics database.
U.S. Health Care Spending: A Giant Compared to Economic Size
It’s a well-known trend that wealthier countries, like the U.S., tend to allocate more resources per person to health care than nations with lower incomes. However, even when we focus solely on high-income countries, the U.S. stands out for its significantly higher per capita health spending.
Comparing health spending across different countries is a nuanced task. Each nation has its own unique blend of political, economic, and social factors that influence its spending patterns. Given the strong link between a country’s wealth and its health spending, our subsequent comparisons will focus on OECD countries that are similar in economic “size” to the U.S. – those with above-median national incomes and above-median income per person in at least one of the last ten years.
Per Person Health Spending: The U.S. Spends Double
In 2022, health expenditures per person in the U.S. reached a staggering $12,555. This figure is more than $4,000 higher than any other high-income nation. In fact, the average health spending per person in comparable countries is approximately $6,651, which is roughly half of the U.S. expenditure per person. This stark difference highlights the immense “size” of the US healthcare spending in per capita terms compared to its peers.
Health Spending Growth: A Global Trend with US Peculiarities
Between 2021 and 2022, almost all peer nations experienced an increase in per capita health spending. The Netherlands was a notable exception, with a slight decrease of 0.1%. The U.S. saw a 2.9% increase in per capita health spending during this period. While this is a substantial rise, it is less dramatic than the increases observed in most comparable nations, and greater than Australia (2.4%), Canada (0.7%), and the United Kingdom (0.5%). Belgium registered the most significant increase in per capita health spending among countries with available data, at 9.6%.
This 2.9% growth in U.S. per capita health spending is slightly higher than the 2.4% increase between 2020 and 2021, but considerably lower than the 9.8% surge from 2019 to 2020, a period heavily influenced by the onset of the COVID-19 pandemic.
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GDP Share: US Health Spending Remains a Large Portion
For five decades, the gap between health spending as a percentage of GDP in the U.S. and comparable OECD countries has widened. In 1970, the U.S. allocated approximately 6.2% of its GDP to health, a figure similar to several comparable countries (the average for comparably wealthy nations was about 4.9% of GDP in 1970). Until the 1980s, the U.S. was relatively aligned with other countries. However, starting in the 1980s, health spending in the U.S. began to grow at a much faster pace relative to its GDP. Since then, health spending as a share of the economy has increased more rapidly in the U.S. than in peer nations, indicating a growing “size” of the healthcare sector within the US economy.
The COVID-19 pandemic triggered both an increase in health spending and an economic downturn, leading to a spike in health spending as a share of GDP in the U.S. and all comparable countries between 2019 and 2020. As the economy recovered, health spending as a share of GDP has decreased in the U.S. and most peer nations. In 2020, the U.S. spent 18.8% of its GDP on health-related expenditures, up from 16.7% in 2019. This share declined to 17.4% in 2021 and further to 16.6% in 2022. Despite these recent declines, the proportion of GDP spent on health in the U.S. remains significantly larger than in comparable countries.
Pre-Pandemic Growth: US Spending Outpaced Peers
While the U.S. has consistently had higher-than-average health spending, recent years have witnessed accelerated spending growth in other nations. Historically, the 1980s were marked by rapid growth in health expenditures per capita in the U.S. The average annual growth rate in the U.S. during the 1980s was 10.0%, significantly exceeding comparable countries, which averaged 7.3% annual growth during the same period.
Looking at 5-year growth rates, from 2005-2010, the U.S. experienced an average annual growth rate in health spending of 4.1%, compared to 7.2% in the preceding five-year period. Comparable countries also saw a slowdown 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 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 significantly between 2020 and 2022 to 7.0%, while the U.S. saw a smaller increase of 2.7% during the same period.
In conclusion, when “Comparing Size Of Countries” in terms of healthcare spending relative to their economic size and per capita wealth, the United States stands out as a significant outlier, spending considerably more than other wealthy nations. This analysis underscores the unique nature and immense scale of the US healthcare economy in the global context.
