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BACKGROUND REPORT AUGUST 21, 2009
Health Care Expenditures: An International Comparison
Amid the debate over health care reform, the issue of costs and spending -- how much is too much and how much is not enough -- is paramount.
Right now, health care costs account for about 16 percent of the U.S. GDP. The chart below illustrates where that money goes -- and how the breakdown of health care spending in the U.S. compares to that of other countries.
These data are part of an annual report compiled by the Organization for Economic Cooperation and Development. OECD staff send a yearly questionnaire to the statistical offices or health ministries of each member country. The survey breaks down the percentage of national health spending that goes to hospital care, other physician care, medical goods (including medicine), nursing homes, and public health, as well as administrative costs.
The chart below shows the breakdown of health care expenditures in 2007 for six countries.
The countries are stacked in order of their World Health Organizations overall health ranking (a combination of population health and health system efficiency). The height of each bar represents the percentage of that country's GDP spent on health care.
Nearly seven and half percent of the money spent on health care in the United States goes to administrative costs, according to the OECD. France spends a similar percentage, but in Finland, the figure is only 1.3 percent.
Analysts at OECD can pull out some trends in the data.
"You tend to get a higher proportion going to administration where there's a social security system rather than centrally managed health services like a national health service" says David Morgan, of the OECD health policy unit. So countries like France and Germany, with social security systems, spend more on administrative costs than countries like Portugal, which have centrally administered systems.
Category Definitions:
Hospitalization: In most countries, this just means care that takes place in a hospital. The US is in outlier, in this case, though. Here, doctors might be employed by a hospital, or they might contract with one. In the latter case, a doctor would use hospital facilities but be paid by patients (or insurers). OECD counts this as ambulatory care.
Ambulatory care: Care that happens outside of hospitals, which may include general out-patient services, specialist practices and private clinics.
Public health: Efforts, usually on the part of governments, to manage the well-being of a population, for example vaccination campaigns, education and disease response.
Pharmacies and medical goods: Drugs, syringes, stents, wheelchairs and other purchased goods related to health care.
Administration: The overhead costs of health care, from billing to building maintenance, essentially everything not related to patient care in a system. In the U.S., "administrative costs" includes the cost of managing public programs such as Medicaid and Medicare, as well as the administrative costs of the private health insurance industry.
Data Sources: OECD Health Data 2009, World Health Organization World Health Report 2000.
By Lea Winerman, Chris Amico and Vanessa Dennis, Online NewsHour
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