Countries spending the most on health care

Sam Stebbins and Thomas C. Frohlich, 24/7 Wall St.

Globally, health care spending has increased dramatically since 1980. However, while health care spending increased faster than the economic growth in the late 1990s and early 2000s, it slowed with the onset of the recession in 2009. Based on a recent report, the countries spending the most on health care today allocate between 8.9% and 16.4% of their total gross domestic product (GDP) to health care costs.

Based on "Health at a Glance 2015" from the Organization for Economic Co-operation and Development (OECD), 24/7 Wall St. reviewed annual per capita health care expenditures in countries around the world. The United States spends about $8,713 per person on health care annually, by far the most of any country in the world. By contrast, many countries, including Turkey and India, spend less than $1,000 on health care per person annually.

Health care expenditures cover a wide range of areas, from medical practitioner salaries and costly medical procedures, to pharmaceutical products and hospital administration. Each of these areas also call for varying amounts of resources. Pharmaceutical costs are a major component of overall spending. According to the report, OECD nations spent a combined $800 billion on pharmaceuticals alone in 2013, or about 20% of all health spending.

The number of doctors and nurses grew since 2000 in nearly all OECD countries, but the countries adding these medial positions the fastest were not necessarily the biggest spenders. Only one of the top 10 countries for health spending added these jobs significantly faster than the OECD average.

This is likely because the countries spending the most on health care have had large numbers of doctors and nurses for some time. The concentration of practising nurses exceeded the OECD average in all of the 10 countries spending the most on health except for Austria — one of the countries adding medical professionals the fastest. In Switzerland, there are over 17 nurses per 1,000 citizens, the most worldwide.

All of the 10 countries on the list spend at least 8.9% of their total GDP on health care. The difference, however, between the No. 1 spender, the United States, and the No. 10 spender, Canada, is quite large. Canada spent 10.2% of its GDP on health care in 2013, which amounted to $4,351 per person, while the United States spent 16.4% of its GDP that year, amounting to $8,713 per person.

According to Francesca Colombo, head of the health division at the OECD, "Higher health sector prices explain much of the difference between the U.S. and other high-spending countries." She added that the health care system in the United States is also fragmented and overly complex, with a larger share of uninsured individuals than is common among developed countries. While every country on the list has near universal health care coverage, only 88.5% of Americans are insured. However, under the Affordable Care Act, the U.S. uninsured rate is on the decline.

People living in the countries with the highest health spending also tend to have better health outcomes. For example, of the 10 countries spending the most on health care, seven have a lower infant mortality rate than the OECD average. Similarly, all but two countries on the list have a higher life expectancy than the OECD average of 80.5 years.

However, the relationship between spending and outcomes, and what causes good health is far from straightforward. A number of behavioral and lifestyle factors have a major influence on health outcomes. Colombo explained that "factors outside the health sector," including nutrition, alcohol consumption, and smoking "are important determinants of health outcomes."

Though the United States spends far more on health care than any other nation, life expectancy of the average American is only 78.8 years, lower than the OECD average and the lowest among the top spending nations. Lifestyle choices in the country may be partially to blame. Slightly more than 35% of American adults are obese, a higher share than in any of the 43 countries the OECD reviewed.

To identify the countries spending the most on health care, 24/7 Wall St. reviewed 2013 health expenditures per capita in 43 nations from the OECD's "Health at a Glance 2015" report. The report compared the health status and health systems in OECD countries and a number of non-OECD countries, including China, Russia, and Brazil. Yearly health care spending data from 1980, life expectancy, infant mortality, smoking rates, alcohol and fruit and vegetable consumption, as well as obesity rates all came from the report. Medical practitioners such as doctors and nurses, as well as the number of hospital beds and average duration of hospital visits, also came from the OECD. GDP figures came from the International Monetary Fund (IMF).

These are the countries spending the most on health.

1. United States

> Health expenditure per capita: $8,713
> Expenditure as a pct. of GDP: 16.4%
> Obesity rate: 35.3%
> Life expectancy: 78.8

While higher health care spending generally leads to better health outcomes, this is famously not the case in the United States. The country, which is one of the world's wealthiest, spends by far the most on health care. The United States spends around $8,700 per capita each year on health care, more than double the OECD average and well more than second place Switzerland.

Despite the high spending, Americans are not anywhere near the world's healthiest. More than 35% of Americans are obese, one of the highest rate in the world, and exceptionally high compared with other countries spending the most on health. The United States is also the only top 10 country for health spending where the life expectancy does not exceed 80 years. Also, perhaps as a consequence of poor economic and social factors as well as the inefficient spending, adverse health outcomes such as infant mortality have increased in the United States. While in 2000, the incidence of infant mortality in the United States was lower than the OECD average, today it is higher.

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2. Switzerland

> Health expenditure per capita: $6,325
> Expenditure as a pct. of GDP: 11.1%
> Obesity rate: 10.3%
> Life expectancy: 82.9

With universal health care for every citizen, Switzerland spends more on health care per capita than every country except for the United States. Higher spending in Switzerland is accompanied by better health outcomes. The national obesity rate of 10.3% is one of the lowest worldwide. A relatively low obesity rate likely contributes to the Swiss' perception of their own health. Nearly 81% of Swiss adults report being in good or very good health, a higher share than in all but six of the countries reviewed.

With more than 17 nurses for every 1,000 citizens, no country in the world is home to a larger concentration of practicing nurses than Switzerland. Switzerland also has a relatively high doctor to patient ratio with about four practicing doctors for every 1,000 residents. With a low obesity rate and plenty of health care providers, people in Switzerland can expect to live to be about 83, a higher life expectancy than in all but two of the 43 countries examined by the OECD.

3. Norway

> Health expenditure per capita: $5,862
> Expenditure as a pct. of GDP: 8.9%
> Obesity rate: 10.0%
> Life expectancy: 81.8

As in a number of other European nations, health care is universal in Norway. Through an agreement with the European Union (EU), all EU citizens are covered by the system, and undocumented immigrants are permitted free emergency treatment only. Due largely to Norway's centralized medical system, $4,981 of the $5,862 total per capita annual health spending comes from public sources — the highest public contribution of all OECD nations. The high health care spending in Norway means more health practitioners. There are approximately four doctors and 17 nurses per 1,000 Norwegians, the fourth and second highest concentrations among countries reviewed.

As in other prosperous nations, Norway has a relatively high incidence of cancer at 318 cases per 100,000 people each year. However, this is largely due to the long life expectancy. Norway has one of the longest life expectancies in the world, at 81.8 years. Despite the high incidence, Norwegian cancer patients have relatively high survival rates.

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4. Netherlands

> Health expenditure per capita: $5,131
> Expenditure as a pct. of GDP: 11.1%
> Obesity rate: 11.1%
> Life expectancy: 81.4

Residents of the Netherlands, except for conscientious objectors and members of the military, are required to purchase health care by a government mandate implemented in 2006. Only around 1% of country residents do not have insurance. The country's health care expenditure, which at $5,131 per capita trails only three other OECD nations, amounts to 11.1% of GDP, the second largest share after the United States. While residents are required to purchase health insurance, the cost is mostly covered by the government. Out-of-pocket expenses account for just 5.2% of the overall cost, the lowest such share among countries reviewed by the OECD.

Like most other prosperous nations spending the most on health care, people in the Netherlands — even the elderly — have a relatively positive perception of their own health. Nearly 60% of country residents 65 and over believe they are in good health, considerably higher than the OECD average proportion of 43.4%.

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5. Sweden

> Health expenditure per capita: $4,904
> Expenditure as a pct. of GDP: 11.0%
> Obesity rate: 11.7%
> Life expectancy: 82.0

OECD nations spend an average of $3,453 per capita on health care annually. Sweden spends roughly $1,500 more than the average, the fifth largest sum among OECD nations. In 1970, Swedish citizens had a life expectancy of about 75 years, longer than citizens of any other country at that time. Although life expectancy in the Scandinaviancountry has increased since then to 82 years, Sweden now has only the ninth longest life expectancy as life expectancy globally has been on the rise over the past several decades.

Despite universal health insurance coverage, Swedes visit the doctor relatively infrequently. With an average of 2.9 physician consultations per person per year, people in Sweden see a doctor less often than people in most other countries reviewed. More than 81% of Swedish citizens report being in good or very good health, a larger share than in all but five nations examined by the OECD. This may partially explain the infrequent doctor visits in Sweden.

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