Health care finance in the United States

Health care spending in the United States is characterized as the most costly compared to all OECD (developed) countries, measured both per person and as a share of GDP. Despite this spending, the quality of health care overall is low by some measures.

The Centers for Medicare and Medicaid reported in 2014 that U.S. healthcare costs were 17.4% GDP in 2013, similar to 2009-2012 but up from 13.4% GDP in 2000. Healthcare costs per capita have risen steadily from $4,881 in 2000 to $9,255 in 2013, a 5% average annual increase. The annual rate of increase in total healthcare costs has been declining, falling steadily from a 9.6% increase in 2002 to 3.8% for 2009 and has been steady since, to a 3.6% increase in 2013.

The Congressional Budget Office reported in January 2015 that Medicare costs were 3.5% GDP in 2014, steady from 2009 but up from 2.1% GDP in 2000. Medicaid costs were 1.7% GDP in 2014, steady from 2009 but up from 1.2% GDP in 2000. CBO projected in June 2015 that federal spending on healthcare programs will rise from 5.2% GDP in 2015 to 8.0% GDP by 2040. This would be driven by a significant increase in the number of program beneficiaries due to the retirement of the Baby Boomers and expanded coverage under the Affordable Care Act, along with healthcare cost inflation.

According to the World Health Organization (WHO), total health care spending in the U.S. was 17% of its GDP in 2012, the highest in the world. The Health and Human Services Department expects that the health share of GDP will continue its historical upward trend, reaching 19.6% of GDP by 2024. Of each dollar spent on health care in the United States, 31% goes to hospital care, 21% goes to physician/clinical services, 10% to pharmaceuticals, 4% to dental, 6% to nursing homes and 3% to home health care, 3% for other retail products, 3% for government public health activities, 7% to administrative costs, 7% to investment, and 6% to other professional services (physical therapists, optometrists, etc.). The Commonwealth Fund ranked the United States last in the quality of health care among similar countries, and notes U.S. care costs the most.

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