US health spending: A closer look

OECD Directorate for Employment, Labour and Social Affairs

The United States spent 16% of its national income (GDP) on health in 2007. This is by far the highest share in the OECD and more than seven percentage points higher than the average of 8.9% in OECD countries. Even France, Switzerland and Germany, the countries which, apart from the United States, spend the greatest proportion of national income on health, spent over 5 percentage points of GDP less: respectively 11.0%, 10.8% and 10.4% of their GDP.

However, almost all OECD countries, with the exception of the US and the middle-income countries, Mexico and Turkey, have full insurance coverage of their population. Americans consumed $7,290 of health services per person in 2007, almost two-and- a-half times more than the OECD average of just under $3,000 (adjusted for the differences in price levels in different countries). Norway and Switzerland spent around $4,500 per person. Americans spend more than twice as much as relatively rich European countries such as France, Germany and the United Kingdom.

One factor which cannot explain why the US spends more than other countries is population aging. Many European countries and Japan have been aging much more rapidly than the United States. Similarly, Americans are not any more likely to be sick than Europeans or Japanese people, though the very high rates of overweight and obesity are already costly and will drive health spending higher in the coming decades. Americans have had much lower rates of smoking than most other OECD countries since 1980, and so this should be contributing to better health outcomes. Health expenditure can be broken down into different categories of spending:

• In-patient spending is higher than in other OECD countries, but not by as much as might be expected, given differences in GDP.

• Out-patient care spending is also highest in the United States, being more than three-times greater than in France, Germany and Japan, and growing very rapidly indeed. The growth rate is high in other countries as well, but from a lower basis.

• Administrative costs are high.

• Pharmaceutical spending is higher in the US than in any other country, but it accounts for a smaller share of total health spending than in other countries.

• Long-term care spending is a little higher than in other countries, but proportionally accounts for less spending than elsewhere.

The stand-out difference in spending in the United States compared with other OECD countries is in elective interventions on a same-day basis. These accounted for a quarter of the growth in US health spending between 2003 and 2006, compared with just 4% of the growth in Canadian spending. Such services are an important innovation in healthcare delivery, often being preferred, when possible, by patients to staying overnight in a hospital.

Remuneration of US GPs exceeds those of doctors in other countries (being $25,000 to $40,000 more than in UK, Germany and Canada, and $60,000 more than in France, though the data is old, coming from 2003- 05). The gap was even larger for specialists. Income levels reflect both fees and activity–physicians are often remunerated on a fee-for service basis, so the high rates of income of US doctors might reflect both higher fees and higher activity than in other countries. On balance, however, it seems likely that at least some part of the high rates of remuneration are due to high prices rather than to high volume of activity.

Another component of out-patient care costs that has grown rapidly in the United States in recent years is the cost related to diagnostic tests, such as medical resonance imaging (MRI) scans and computed tomography (CT) scans. Billions of dollars are now spent each year on such tests in the United States.

Some studies have attempted to assess the medical benefits of the substantial increase in MRI and CT exams in the United States but found no conclusive evidence.

This is an extract from a written statement submitted by Mark Pearson to the US Senate’s Special Committee on Aging in September 2009. The full 2,500 word statement is available online at and at 

©OECD Observer No 276-277 December 2009-January 2010

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

OECD Observer Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Subscribe now

<b>Subscribe now!</b>

To order your own paper editions,email

Online edition
Previous editions

Don't miss

  • MCM logo
  • The following communiqué and Chair’s statement were issued at the close of the OECD Council Meeting at Ministerial level, this year presided by the Slovak Republic.
  • Food production will suffer some of the most immediate and brutal effects of climate change, with some regions of the world suffering far more than others. Only through unhindered global trade can we ensure that high-quality, nutritious food reaches those who need it most, Angel Gurría, Secretary-General of the OECD, and José Graziano da Silva, Director-General of the United Nations Food and Agriculture Organization, write in their latest Project Syndicate article. Read the article here.
  • Globalisation will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.
  • OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.
  • The new OECD Observer Crossword, with Myles Mellor. Try it online!
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2019