In 2022, U.S. national health expenditure as a share of its gross domestic product (GDP) reached 17.3 percent, this was a decrease on the previous year. The United States has the highest health spending based on GDP share among developed countries. Both public and private health spending in the U.S. is much higher than other developed countries. Why the U.S. pays so much moreWhile private health spending in Canada stays at around three percent and in Germany under two percent of the gross domestic product, it is nearly nine percent in the United States. Another reason for high costs can be found in physicians’ salaries, which are much higher in the U.S. than in other wealthy countries. A general practitioner in the U.S. earns nearly twice as much as the average physician in other high-income countries. Additionally, medicine spending per capita is also significantly higher in the United States. Finally, inflated health care administration costs are another of the predominant factors which make health care spending in the U.S. out of proportion. It is important to state that Americans do not pay more because they have a higher health care utilization, but mainly because of higher prices. Expected developmentsBy 2031, it is expected that health care spending in the U.S. will reach nearly one fifth of the nation’s gross domestic product. Or in dollar-terms, health care expenditures will accumulate to about seven trillion U.S. dollars in total.

The United States has the highest expenditure on health care per capita globally. However, the U.S. has an unique way of paying for their health care where a majority of the expenditure falls upon private insurances. In FY 2023, around one third of all health expenditure is paid by private insurance. Public insurance programs Medicare and Medicaid accounted for 22 and 18 percent, respectively, of health expenditure during that same year.

U.S. health care system

Globally health spending has been increasing among most countries. However, the U.S. has the highest public and private per capita health expenditure among all countries globally, followed by Switzerland. As of 2020, annual health care costs per capita in the United States totaled to over 12 thousand U.S. dollars, a significant amount considering the average U.S. personal income is around 54 thousand dollars.

Out of pocket costs in the U.S.

Aside from overall high health care costs for U.S. residents, the total out-of-pocket costs for health care have been on the rise. In recent years, the average per capita out-of-pocket health care payments have exceeded one thousand dollars. Physician services, dental services and prescription drugs account for the largest proportion of out-of-pocket expenditures for U.S. residents.

Among OECD member countries, the United States had the highest percentage of gross domestic product spent on health care as of 2023. The U.S. spent nearly 16 percent of its GDP on health care services. Germany, France and Japan followed the U.S. with distinctly smaller percentages. The United States had both significantly higher private and public spending on health compared with other developed countries. Why compare OECD countries?OECD stands for Organization for Economic Co-operation and Development. It is an economic organization consisting of 38 members, mostly high-income countries and committed to democratic principles and market economy. This makes OECD statistics more comparable than statistics of developed and undeveloped countries. Health economics is an important matter for the OECD, even more since increasing health costs and an aging population have become an issue for many developed countries. Health costs in the U.S.  A higher GDP share spent on health care does not automatically lead to a better functioning health system. In the case of the U.S., high spending is mainly because of higher costs and prices, not due to higher utilization. For example, physicians’ salaries are much higher in the U.S. than in other comparable countries. A doctor in the U.S. earns almost twice as much as the average physician in Germany. Pharmaceutical spending per capita is also distinctly higher in the United States. Furthermore, the U.S. also spends more on health administrative costs compare to other wealthy countries.

In 2023, India's healthcare sector was valued at roughly 372 billion U.S. dollars. It was an increase in comparison to 2020, showcasing significant growth. The sector is one of the largest contributors in terms of revenue and employment in the country. Healthcare in India The country has seen a steady increase in healthcare expenditure, both from the government and private sector. With a growing population and an expanding middle class, there is a rising demand for quality healthcare services in the country. Notably, there has been a substantial reduction in out-of-pocket healthcare expenses over the years, largely due to government-led initiatives like the Ayushman Bharat scheme and increased investments in public healthcare infrastructure. Pharmaceutical sector The pharmaceutical sector plays a vital role in enhancing healthcare affordability, not just domestically but also across multiple international markets. Known for its generic drug manufacturing capabilities and robust pharmaceutical supply chain, this sector makes a substantial contribution to the nation's economy through extensive pharmaceutical exports.