The United States spends significantly more on healthcare per person compared to other high-income countries. In 2020, the US spent 19.5% of its GDP on healthcare, which is substantially higher than other peer countries. This gap has been widening over the past five decades, with the US spending about 7% of its GDP on healthcare in 1970, similar to other comparable countries. The main drivers of high healthcare spending in the US are inpatient and outpatient care, prescription drugs, and administrative costs.

The US spends more on inpatient and outpatient care, with Americans spending $8,353 per person on these services, compared to $3,636 in peer countries. This is driven more by higher prices rather than higher utilization of care. The cost of prescription drugs is also higher in the US, with the country spending $1,765 per capita on prescription drugs and other medical goods. Additionally, administrative costs are much higher in the US, with the country spending $1,078.44 per capita on administrative expenses.

The US also spends more on preventive care, with spending in this category more than doubling between 2019 and 2020. However, the only area where the US spends less than peer countries is on long-term care, with spending in this category declining by 4.9% between 2020 and 2021.

The high healthcare spending in the US is not necessarily translating to better health outcomes. The country’s healthcare system is complex and multifaceted, with many factors contributing to its high costs. To reduce healthcare spending, policymakers may need to address issues such as high prices, administrative inefficiencies, and the cost of prescription drugs. By understanding the drivers of high healthcare spending, policymakers can develop targeted solutions to reduce costs and improve the overall efficiency of the healthcare system.

It’s worth noting that the US healthcare system is unique compared to other countries, with a mix of private and public payers, and a complex network of providers and insurers. This complexity can contribute to higher administrative costs and inefficiencies in the system. However, by learning from other countries and implementing policies to reduce costs and improve efficiency, the US can work towards a more sustainable and effective healthcare system.