Wealthier nations often allocate more resources to healthcare compared to lower-income countries. However, even among affluent nations, the United States stands out with significantly higher per-person health expenditures. Understanding these differences requires examining various economic factors, including the size of a country’s economy and its priorities. This analysis delves into how U.S. health spending compares to other large and wealthy OECD countries, considering their economic scale and resource allocation.
How Economic Size Relates to Healthcare Spending: Comparing Nations
Comparing health spending across countries is complex. Each nation’s unique political, economic, and social landscape shapes its healthcare expenditure. A crucial factor is a country’s economic size, often measured by GDP. Larger economies generally have more resources available for healthcare. To provide a meaningful comparison, we focus on OECD countries with similarly large economies—those with above-median national incomes and above-median income per person, reflecting substantial economic size and wealth. This selection allows us to compare the U.S. not just with any nation, but with those of comparable economic dimensions.
The Outsized U.S. Spending: More Than Double the Average of Comparably Sized Economies
In 2022, health expenditures per person in the U.S. reached $12,555. This figure dramatically exceeds that of any other high-income nation with a similar economic size. The average health spending per person in comparable countries, possessing similar economic scales, is approximately $6,651—roughly half the U.S. expenditure. This stark contrast highlights the disproportionate allocation of resources to healthcare in the U.S. compared to other nations of comparable economic size.
Growth in Health Spending: A Global Perspective on Economic Priorities
Between 2021 and 2022, per capita health spending increased in almost all economically comparable nations. The Netherlands was a notable exception, experiencing a slight decrease of 0.1%. The U.S. saw a 2.9% increase, a moderate rise compared to many peer nations but greater than Australia (2.4%), Canada (0.7%), and the United Kingdom (0.5%). Belgium recorded the most substantial increase at 9.6%.
This 2.9% growth in U.S. per capita health spending slightly surpassed the 2.4% increase from 2020 to 2021, but remained significantly lower than the 9.8% surge from 2019 to 2020. These fluctuations reflect the dynamic interplay between economic conditions and healthcare priorities within these large economies.
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The Evolution of Healthcare Spending: A Historical Comparison Across Nations
GDP Share and Health Spending: Economic Growth and Resource Allocation in Different Countries
The gap between health spending as a percentage of GDP in the U.S. and comparable OECD countries has widened over the last half-century. In 1970, the U.S. allocated approximately 6.2% of its GDP to health, a figure comparable to several nations of similar economic size (the average for comparably wealthy countries was around 4.9% of GDP in 1970). Until the 1980s, the U.S. was broadly in line with other countries. However, from the 1980s onwards, health spending in the U.S. grew at a considerably faster pace relative to its GDP, indicating a shift in economic priorities compared to peer nations. Since then, health expenditure as a proportion of the economy has increased more rapidly in the U.S. than in comparable nations, reflecting differing approaches to resource allocation as economies grew.
The COVID-19 pandemic caused both a surge in health spending and an economic downturn, leading to increased health spending as a share of GDP in the U.S. and all comparable countries between 2019 and 2020. As economies recovered, this proportion declined in the U.S. and most peer nations. In 2020, U.S. health-related expenditures reached 18.8% of GDP (up from 16.7% in 2019). This share decreased to 17.4% in 2021 and further to 16.6% in 2022. Despite these decreases, the U.S. continues to allocate a substantially larger portion of its economic output to health compared to countries of comparable economic size.
Long-Term Trends in Health Spending Growth: Comparing Economic Trajectories
While the U.S. has consistently exhibited higher-than-average health spending, recent years have shown faster spending growth in other nations with similarly sized economies. The 1980s witnessed 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 significantly outpaced comparable countries, which averaged 7.3% annual growth.
Examining 5-year growth rates reveals that during 2005-2010, the U.S. experienced an average annual health spending growth of 4.1%, down from 7.2% in the preceding five years. Comparable countries also saw a slowdown, averaging 4.5% annual growth during 2005-2010, compared to 5.3% during 2000-2005. In the five years leading up to the COVID-19 pandemic (2015-2020), the U.S.’s health spending per capita growth exceeded the average for comparable countries (5.0% vs. 3.6%). However, between 2020 and 2022, the annual growth rate for comparable countries increased to 7.0%, while the U.S. saw a 2.7% increase. These trends illustrate shifting economic priorities and healthcare investment strategies in the U.S. and other large, wealthy nations.
Learn More About Global Health Systems
The Peterson Center on Healthcare and KFF collaborate to assess the performance of the U.S. healthcare system in terms of both quality and cost.
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