The United States’ national health spending as a percentage of GDP hit an all-time high of 19.7% in 2020. In terms of GDP percentage, the United States has the greatest health spending among developed countries. The United States spends far more on health care, both public and private, than other developed countries.
How much of our GDP will be spent on healthcare in 2020?
The gap between health spending as a percentage of GDP in the United States and comparable OECD countries has increased over the last five decades. In 1970, the United States spent roughly 6% of its GDP on health, which was equivalent to the spending of numerous comparable countries (the average of comparably wealthy countries was 5 percent of GDP in 1970). Until the 1980s, when health spending in the United States expanded at a much faster rate than GDP, the United States was comparatively on par with other countries. In every comparable country with accessible data between 2019 and 2020, the COVID-19 pandemic resulted in an increase in health spending as well as an economic slump, resulting in a decreasing GDP. In 2020, the United States spent 19 percent of its GDP on health consumption (up from 17 percent in 2019), whereas the next-highest similar country (the United Kingdom) spent 13 percent (up from 10 percent in 2019).
Which country spends the most of its gross domestic product on healthcare?
The United States spent by far the most on health care, accounting for 16.9% of its GDP – considerably above Switzerland, which spent 12.2% of its GDP (Figure 7.3).
Why do Americans spend so much money on health care?
Prescription drug prices and administrative costs are frequently cited as the key sources of excessive health spending in the United States when compared to other countries in political debates about health spending. Prescription drug pricing is the focus of current policy ideas. Although drug prices in the United States are higher than in other high-income nations, this study demonstrates that cutting drug spending alone would have a much lesser impact on the difference between health expenses in the United States and comparable countries. Spending on inpatient and outpatient care is the largest contributor to the cost disparity between the United States and comparable countries. Despite this, Americans consume less care and have lower health outcomes than those in other countries.
In 2019, how much money did the US spend on healthcare?
In 2019, health-care spending in the United States climbed by 4.6 percent to $3.8 trillion, or $11,582 per capita. This growth rate is similar to that of 2018 (4.7%) and somewhat faster than that of 2017. (4.3 percent). Following a period of very rapid growth during the introduction of the Affordable Care Act in 2014 and 2015, 2019 was marked by slower and more stable growth, which continued from 2016 to 2018. Similarly, health spending accounted for only 17.7% of GDP in 2019, down from 17.6% in 2018.
Is it true that the United States spends more on healthcare than other countries?
This set of graphs compares health-care spending in the United States and other industrialized countries, including data on per-person spending and growth rates in recent years and over time. The data reveals that the United States spends much more on health care than other countries, both per capita and in relation to their wealth, until 2020.
The slideshow is part of the Peterson-Kaiser Health System Tracker, an online information hub committed to tracking and evaluating the health-care system in the United States.
Is it true that the United States spends the most on healthcare?
- Most countries and their residents must spend a significant amount of money on healthcare in order to stay healthy and well-cared for.
- Despite the fact that outcomes and quality of care are not always ranked first, the United States continues to spend the most on healthcare per person.
- Many European countries spend the same amount on healthcare as the United States, but the major difference is that the government subsidizes the majority of the expense, whereas the United States relies on expensive, private health insurance policies.
Why does healthcare account for such a huge portion of GDP?
The vast contrast in experience between the two doctors helps to explain why the United States’ healthcare system has significantly greater administrative costs than that of Canada and other countries. According to a recent study published in JAMA, these expenditures, as well as significantly higher pricing for medical services and medications and far higher pay for physicians and nurses, were the main reasons the United States spent a higher share of GDP on healthcare in 2016 than ten other wealthy nations.
The authors claimed that the significant spending gap17.8% of GDP in the United States versus an average of 10.8% in the other ten countrieswas not caused primarily by the variables that are frequently blamed. Excessive use induced by the U.S. fee-for-service payment system, defensive medicine triggered by liability concerns, underinvestment in social programs, and a poor mix of primary care to specialty care are all often cited culprits.
The findings of the JAMA study cast doubt on whether the current American policy slogan of changing from fee-for-service to value-based payment, as well as the adoption of high-deductible health plans to eliminate unneeded care, will be the silver bullet for reducing spending. Instead, the authors advocate for policies geared specifically at lowering drug and medical service prices.
“We certainly have some overutilization, and value-based programs can assist,” said Dr. Ashish Jha, a Harvard professor of global health and a co-author of the study, which was based on OECD data. “We have a serious price problem. MRIs are twice as expensive in Kansas as they are in London, which makes no sense.”
“We don’t want to deal with the issue of prices, so we defer the conversation to things we think we can deal with,” said Gerard Anderson, a Johns Hopkins University health policy expert who has researched foreign systems.
Where does the United States stand in terms of healthcare around the world?
The following three countries in the ranking, the United Kingdom, Germany, and New Zealand, all perform similarly (Exhibit 2). The United States is ranked 11th last. Exhibit 2 demonstrates how far the United States is an outlier: its performance is far below the average of the other countries, as well as the two countries directly above it, Switzerland and Canada. In fact, because the United States is such an outlier, we estimated the average performance based on the other ten countries, eliminating the United States (see How We Measured Performance). The United States ranks worst in all performance domains except care process, where it ranks second.
What is the problem with American healthcare?
Is the US healthcare system expensive, difficult, dysfunctional, or broken? This is an issue that has been on my mind, and probably yours as well. To all of these questions, the simple response is yes. Here are some of the most compelling reasons I’ve heard for a comprehensive revamp of our system. This is only the top of the iceberg. Remember that in the United States, an entire industry has sprung up to assist people in navigating the perplexingly complex chore of selecting a health insurance plan.
The cost is enormous
- The price is high, but the quality isn’t. Despite spending significantly more on healthcare than other high-income countries, the United States ranks low on a number of key health indicators, including life expectancy, avoidable hospital admissions, suicide, and maternal mortality. Despite the high cost, satisfaction with the current healthcare system in the United States is low.
- monetary constraint Because of the exorbitant prices and the large number of people who are underinsured or uninsured, many people are at risk of going bankrupt if they get sick. Prices vary greatly, making it difficult to compare the quality or cost of your healthcare alternatives or even to estimate how much you’ll be charged. Even if you ask a lot of questions ahead of time and stick with doctors in your health insurance network who are recommended to you, you may still get a surprise fee. After knee surgery, my neighbor discovered that, while the hospital and surgeon were in his insurance network, the anesthesiologist was not.
Access is uneven
- Health insurance is linked to a person’s job. Healthcare was offered as a strategy to recruit workers during World War II since firms had few other options. Few individuals had private insurance back then, but now a layoff might put your health care at risk.
- Disparities in healthcare. The existing healthcare system in the United States has a harsh tendency to postpone or deny high-quality care to those who are most in need but cannot pay it. This contributes to unnecessary inequities in healthcare for persons of color and other marginalized groups.
- To keep expenses low, health insurance may discourage care. Many health insurance companies limit access to pricey medications, tests, and other treatments by refusing to fund them until documents are completed to explain the service to the insurance company. True, this can save the healthcare system as well as the insurance company money. It does, however, dissuade you from seeking treatment that your doctor deems necessary.
This can lead to opportunistic decisions. When drugs for rheumatoid arthritis are prescribed, for example, coverage may be rejected unless a less expensive medication is prescribed, even though it has a low likelihood of functioning. According to a survey (note: automated download), 78 percent of physicians believe this has led to people abandoning recommended therapies, and 92 percent believe it has contributed to care delays. And, while the costly drug may prevent future knee or hip replacements, delaying treatment may end up costing insurance companies and patients more money and causing more agony.
Investments in healthcare seem misdirected
- Technology and specialized care are highlighted. Rather than preventive care, our system concentrates on sickness, specialty care, and technology. I received little training in diet, exercise, mental health, or primary care throughout my medical education, but I spent a lot of time in inpatient care, intensive care units, and subspecialties like cardiology and gastrointestinal. Doctors who work in specialties with a lot of technology (such as anesthesiology, cardiology, or surgery) often earn a lot more money than those who work in primary care.
- Procedures and medications are being overemphasized. As an example, consider the following: Health insurance usually covers a cortisone injection for tendonitis in the ankle. A shoe insert that appears to operate equally as well may not actually work.
- Innovation is stifled. Payment mechanisms for private or government-sponsored health insurance can hinder new approaches to healthcare. Patients may find that home-based treatments, such as some geriatric and cancer care, are more cost-effective and preferred. However, because present payment systems do not usually cover this type of care, these novel techniques may never catch on. Before the pandemic, telehealth, which could offer medical care to millions with limited access, was very uncommon, partially due to a lack of insurance coverage. Despite this, telehealth has grown in popularity as a result of necessity, indicating its effectiveness.
- Care that is disjointed. People in the United States tend to receive care in a number of locations that may or may not be connected to one another. This can result in duplication of care, poor service coordination, and greater expenses. A doctor may give a medication that interacts dangerously with other medications the patient is taking. Medicine prescribed years ago by a doctor who no longer cares for a patient may be kept indefinitely because other doctors are unsure why it was begun. Because the findings of earlier tests are not readily available, doctors frequently repeat blood tests already performed elsewhere.
- It’s called defensive medicine. Medical care provided simply to avoid being sued raises expenses, gives little or no value, and may even lower the quality of care. In the United States, malpractice lawsuits are so widespread that it’s not a question of if, but when doctors in particular specialities will be sued. Though it’s difficult to quantify the impact of defensive medication, at least one study suggests it’s not insignificant.
No simple solution
Even insured Americans pay more for healthcare out of pocket than people in most other wealthy countries. Some people buy drugs from other countries because they are cheaper. The status quo may be acceptable to health insurers, pharmaceutical firms, and certain well-paid healthcare providers, but our current healthcare system is unsustainable (note: automatic download).
Other countries have taken a different approach to healthcare, with single-payer, government-run systems or a combination of private and public options. Some of the most successful may be able to serve as an example for us. But, with so much at stake and well-funded lobbying groups representing different interests ready to fight, it’s unclear whether healthcare reform will materialize anytime soon.
I have yet to meet a patient who believes our existing healthcare system is excellent. In reality, except from those who profit from it, I don’t know anyone who would create the system we currently have.
The question now is whether there will be enough faith, will, and vision to construct something better in the future. It won’t be easy, but the alternative whining while waiting for the system to collapse is unacceptably bad.
What is the GDP of healthcare?
- Between 2009 and 2014, personal health care spending in the United States increased by 3.9 percent each year on average, with North Dakota spending growing the quickest (6.7 percent) and Rhode Island spending growing the slowest (2.5 percent).
- California spent the most on personal health care in 2014 ($295.0 billion), accounting for 11.5 percent of total personal health care spending in the United States. When comparing past state rankings from 2000 to 2014, California continually has the greatest overall personal health care spending as well as the nation’s largest total population. Other large states, such as New York, Texas, Florida, and Pennsylvania, were also among the top spenders on personal health care.
- Wyoming’s personal health care spending was the lowest in the country (as it has been in the past), accounting for only 0.2 percent of total personal health care spending in the United States in 2014. In 2014 and historically, Vermont, Alaska, North Dakota, and South Dakota were among the states with the lowest personal health care spending. These are all states with smaller populations.
- The value of goods and services produced in each state is measured by Gross Domestic Product (GDP). The importance of the health care industry in a state’s economy is demonstrated by health spending as a percentage of GDP. Maine had the largest GDP share (22.3 percent) and Wyoming had the lowest (9.3 percent) in 2014.
See the downloads below for further information on health expenditures by state of provider.