International Comparison of Health Systems

Wealthy countries, including the U.S., tend to spend more per person on health care and related expenses than lower-income countries. However, even among higher-income countries, the U.S. spends far more per person on health.

Spending Growth

Over the past five decades, the health spending gap between the U.S. and peer nations has widened. In 1970, the U.S. spent about 7% of its GDP on health, similar to spending in several comparable countries (the average of comparably wealthy countries was about 5% of GDP in 1970). The U.S. was relatively on pace with other countries until the 1980s, when health spending in the U.S. grew at a significantly faster rate relative to its GDP. 

The COVID-19 pandemic led to both an increase in health spending and an economic downturn resulting in higher health spending as a share of the GDP in the U.S. and every comparable country between 2019 and 2020. In 2020, the U.S. spent 19.7% of its GDP on health consumption (up from 17.6% in 2019). In 2021, health spending as a share of GDP declined to 18.3% in the U.S.—but remains substantially higher than in peer countries.

Drivers of Health Spending

The largest category of health spending in both the U.S. and comparable countries is spending on inpatient and outpatient care, including payments to hospitals, clinics, and physicians for services and fees such as primary care or specialist visits, surgical care, provider-administered medications, and facility fees. Americans spent $7,500 per person on inpatient and outpatient care, compared to $3,851 in peer countries, on average. The U.S.’s higher spending on providers is driven more by higher prices than higher utilization of care. Patients in the U.S. have shorter average hospital stays and fewer physician visits per capita, while many hospital procedures have been shown to have higher prices in the U.S.­ Higher spending on inpatient and outpatient care drives most of the difference in health spending between the U.S. and its peers. In fact, the U.S. spends more on inpatient and outpatient care than most peer nations spend on their entire health systems (including long-term care, prescription drugs, administration, prevention, and other services).

Prescription drugs are another factor partially explaining the U.S.’s higher health spending. Many prescription drugs cost more in the U.S. than the same drugs do in other comparable nations. In 2021, the U.S. spent $1,635 per capita on prescription drugs and other medical goods (including over-the-counter and clinically delivered pharmaceuticals as­ well as durable and non-durable medical equipment). However, because prescription drugs represent a relatively small share of total health spending, even if per capita prescription drug spending in the U.S. was lowered to be closer to that of comparable countries, that would make only a small dent in the overall difference in health spending.

Spending on health administration is similarly much higher in the U.S. than in comparable countries: $925 per capita. Administrative costs include spending on running governmental health programs and overhead from insurers, but exclude administrative expenditures from health care providers. This includes administrative spending for private health insurance, governmental health programs (such as Medicaid and Medicare) as well as other third-party payers and programs.

The U.S. also spends more on preventive care than peer nations. Activities captured in this spending category vary amongst countries, but in the U.S., it generally consists of public health activities, including preventive health programs and education for immunizations, disease detection, emergency preparedness, and more. The growth in preventive care spending between 2019 and 2021 is notable, considering the 2020 emergence of the COVID-19 pandemic. In the U.S., preventive care spending more than doubled between 2019 and 2020, from $343 to $741 per capita, but subsequently declined to $589 in 2021.

Meanwhile, the only category of spending in which the U.S. spends less than most comparable countries on a per-person basis is long-term care. Long-term care spending includes health and social services provided in long-term care institutions such as nursing homes as well as home- and community-based settings. After an increase from 2019 to 2020 at the onset of the COVID-19 pandemic, U.S. spending on long-term care declined by 4.9% between 2020 and 2021. Long-term care spending was already lower in the U.S. than in peer countries before the pandemic.