NCPA - National Center for Policy Analysis

Is U.S. Health Spending on Another Planet?

February 15, 2012

Because of a thriving economy and a multitude of job opportunities, Americans enjoy an income that far exceeds that of all other nations.  However, Americans also spend a disproportionately large share of their income on health care, far exceeding allocations by all other countries, says Christopher J. Conover, a research scholar at Duke University's Center for Health Policy and Inequalities Research and an adjunct scholar at the American Enterprise Institute.

  • The U.S. health system as a whole is massive, accounting for more than one-third of an estimated $6.4 trillion in health expenditures across the world in 2009.
  • As such, the system is equivalent to the fifth-largest economy in the world.
  • The United States' share of world expenditures on health care is greater than its share of global income and far exceeds its share of the world's population.

Comparison with other countries' health care expenditures is difficult, largely because prices and currency are difficult to hold constant across economies.  However, through the use of purchasing-power-parity, studies are able to assess the cost of an identical basket of goods (doctors' visits, hospital stays, prescription drugs, etc.) between nations.

  • On average, global per capita income is only about 22 percent of the U.S. average; in contrast, global per capita health spending amounts to only 13 percent of the average American's.
  • More than 70 percent of the world's population currently lives in nations with health spending per capita that is below 10 percent of U.S. levels in 2009
  • Less than one-tenth of the world's population has a level of health spending that exceeds half of what the average American spends on health care.

In assessing this spending differential, it is important to mention that health care prices in America are on average 25 percent higher than other OECD countries.

It bears mention that, despite these trends, Americans' share of global health care spending is shrinking. 

  • In 1995, the percentage of global health spending accounted for by the United States was nearly 40 percent; by 2009, this share had declined by nearly one-tenth.
  • Meanwhile, the so-called "BRIC" countries (Brazil, Russian Federation, India, and China) saw their share of world health resources increase by nearly one half since 1995.
  • On the whole, the health care gap between rich and poor nations is narrowing.

Source: Christopher J. Conover, "Is U.S. Health Spending on Another Planet?" The American, February 13, 2012.

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