How does the US compare to the rest of the world on hospital costs and medical care?
The US is often the butt of the joke internationally for its seemingly outrageous hospital costs. For example, the US spent $3.8 trillion on healthcare goods and services in 2019 or $11,582 per person, according to the U.S. Centers for Medicare & Medicaid Services. That figure was projected to increase to $4.22 trillion in 2021 –and that estimate doesn’t include the effects of the COVID-19 pandemic (more on this later).
All told, healthcare costs are estimated to grow at an annual rate of 5.4% until 2028, when it’s expected to hit an average $6.19 trillion.
While these amounts admittedly sound outlandish, Finder thought it’d be interesting to see how they compare to other nations. We looked at not only medical costs around the world but also how much it’d cost your average Jane or Joe to spend the night in a hospital.
How does the US compare on a night in the hospital?
Before we dive into messy healthcare expenditures (hint: the US is the biggest spender by far), it might shock you to hear when it comes to the cost of a night in the hospital, the US isn’t the most expensive. That title goes to Monaco, where you’ll pay an average $4,765 a night in the hospital.
The US lands at No. 17, where the cost of a nightly bed is (ahem) only $888.
Other notably expensive countries to spend the night at a hospital include Luxembourg at $2,509, Norway at $1,858, Qatar at $1,810 and Switzerland at $1,221.
To see how a night in the hospital compares to the cost of a five-star hotel, as well as a travel insurance policy, read our list of the most expensive countries for hospitalization.
How does the US compare on healthcare expenditure?
Quite simply, it doesn’t. While the US ranks 17th for the cost of spending the night in hospital, it’s top of the charts for healthcare costs.
The US spent $11,072 per capita on healthcare in 2019, according to OECD, which ranks the country highest among the 184 countries and territories included in the comparison. To put this in perspective, America spends almost 43% more per capita than its closest competitor, Switzerland, which spends $7,732 per capita.
When you compare the US’s per capita spending to the average of OECD member countries, the US spends 165.04% more.
GDP per capita vs. health expenditure per capita
If we look at healthcare spending across OECD nations, a general trend appears: The higher the per capita GDP of a country, the higher the per capita healthcare expenditure. In fact, there’s a strong linear relationship between GDP per capita and health spending per capita.
Two major outliers are the US, whose per capita healthcare expenditure far exceeds that of nations with a similar per capita GDP, and Luxembourg, whose per capita healthcare expenditure is close to that of nations with a per capita GDP of half the size.
In the US, healthcare spending makes up a fair chunk of the GDP, and is steadily increasing. Way back in 1960, US healthcare expenditures made up around 5% of GDP versus 17.80% in 2019. And spending doesn’t look like it’s slowing down, with healthcare goods and services expected to reach 19.7% of the GDP in 2028.
Health expenditure as a percent of US GDP over time
Switching positions from last year, the majority of America’s healthcare spending was paid for by the federal government (29.0%), followed closely by households (28.4%) in 2019.
And the federal government continues to take on a larger share of health spending rising from 16.8% of total healthcare expenditure in 1987 to 29.0% in 2019. Combined with state and local spending, more than 45% of healthcare expenditures are footed by the government.
Share of total health expenditure by type of sponsor
It’s difficult to project just how much of an impact COVID-19 will have on the $4.01 trillion projected for 2020 before the pandemic. Although official annual National Health Expenditure Accounts estimates by the the Centers for Medicare and Medicaid Services’ (CMS) for 2020 will not be available until the end of 2021, estimates by a study published in the journal Business Economics found that national health spending began to decline in March of 2020, fell to more than 20% below the previous year’s level in April, and then began to recover by August 2020. So even though there have been over 33.4M cases of COVID and over 600K deaths in the US, overall, healthcare spending decreased dramatically in 2020.
These large drops can be mostly attributed to the limited access to healthcare for nonessential / nonemergency treatments during the early stages of the pandemic in the summer of 2020. For instance, comparing April 2019 to April 2020, spending on physician and clinical services was 34.4% below the previous year, according to the same study. Similarly, spending on home health care dropped by 12.8% and spending on dental care decreased by more than a whopping 60%.
Health care spending annual growth for selected personal health care categories
Another study published in the Journal of the American Medical Association estimated that the coronavirus pandemic will end up costing Americans $16 trillion, with an additional $2.6 trillion in estimated long-term additional costs from people who survive COVID-19 but have resulting long-term health damage. They also estimate that mental health costs because of the pandemic will rise by $1.6 trillion.
Methodology
We sourced data on health expenditures per capita by country from both the World Health Organization Global Health Expenditure database and OECD Health Statistics, using data from 2019 or the most recently available year.
PPP refers to purchasing power parities, a rate of currency conversion that attempts to equalize the purchasing power of different currencies by eliminating the differences in price levels among countries, measured in terms of national currency per US dollar. USD, PPP refers to currency in US dollars adjusted for PPP.
The cost of a hospital stay around the world uses data from the World Health Organization’s health service delivery costs database adjusted for inflation.
Sources:
“National Health Expenditures,” last updated by the U.S. Centers for Medicare & Medicaid Services on December 16, 2020
Richard Laycock is Finder’s NYC-based senior content marketing manager & insights editor, spending the last decade data diving, writing and editing articles about all things personal finance. His musings can be found across the web including on NASDAQ, MoneyMag, Yahoo Finance and Travel Weekly. Richard studied Media at Macquarie University, including a semester abroad at The Missouri School of Journalism (MIZZOU).
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