What Countries Pay for Healthcare and What It Costs

Healthcare spending varies enormously around the world, from less than 6% of national income in countries like Mexico and Türkiye to over 17% in the United States. In 2024, the average across wealthy nations was roughly 9.3% of GDP, a figure that has drifted upward since the pandemic and remains well above pre-2020 levels.¹ But what countries spend tells only part of the story. How they pay, who bears the cost, and what they get for their money diverge in ways that shape whether a hospital bill is a minor inconvenience or a financial catastrophe.

The Spending Gap Between Countries

The United States is the clear outlier. At an estimated 17.2% of GDP in 2024, it spends far more than any other high-income country. Germany comes next at about 12.3%, followed by a cluster of roughly fifteen nations allocating between 10% and 12% of GDP to healthcare. Central and Eastern European members of the OECD, along with newer Latin American members, fall in the 6–9% range.¹ These gaps are not small rounding differences; the United States dedicates nearly three times the share of its economy to health that Mexico does.

Across the broader world, the pattern is simpler than it might seem: richer countries spend more, both in absolute terms and as a share of GDP. A global analysis of 167 countries found that healthcare functions as a necessity rather than a luxury at the worldwide level, meaning spending grows roughly in proportion to income rather than faster than it. But that finding masks an important split. Poorer countries show a much steeper response to income growth, so that a small rise in national income produces a proportionally larger jump in health spending, while in wealthy countries the relationship is flatter.² In practical terms, a low-income country that sees its economy grow by 1% might boost health spending by 9%, whereas a high-income country experiencing the same growth might raise spending by only about 3%.³

That pattern has held for decades. Research going back to the early 1990s confirmed that GDP is the single most powerful predictor of how much a developed country spends on healthcare, though OECD countries are not all alike even after accounting for income differences.⁴ Policy choices, institutional design, and demographic pressures all layer on top of the basic income-spending link.

How Countries Pay the Bill

The way money flows from people to providers varies sharply. Most high-income countries rely on some form of compulsory, prepaid system, whether funded through general taxation, payroll-based social insurance, or a hybrid of both. National health insurance programs trace back to Germany’s social insurance laws of the 1880s. Over the following century, compulsory schemes expanded to cover broader segments of the population, eventually becoming the dominant financing model in most wealthy nations. Common features across national health insurance designs include universal or near-universal coverage, pooling of funds, and a single purchasing mechanism that negotiates with providers on behalf of the insured population.⁵

Private health insurance tells a different story depending on where you look. Across all income groups globally, prepaid private spending remains quite low relative to public spending.⁶ In the developing world, private insurance involving risk-pooling and prepayment plays a marginal role, though it is growing in many countries as dissatisfaction with public services rises, markets liberalize, and incomes climb.⁷ The United States is the conspicuous exception among rich countries, relying heavily on employer-sponsored private insurance alongside public programs for the elderly, the poor, and veterans.

A persistent debate in health policy is whether single-payer systems or multipayer systems deliver better value. A systematic review of the literature found that multipayer arrangements carry higher administrative costs.⁸ A separate review of economic analyses of hypothetical single-payer models in the U.S. found that the vast majority predicted net savings, with the largest source of savings coming from simplified payment administration.⁹ Whether those modeled savings would materialize in practice is a different question, but the administrative overhead of managing multiple insurers, each with its own billing rules and claims processes, is a real and measurable cost.

What People Pay Out of Their Own Pockets

Even in countries with broad public coverage, individuals often bear a share of costs directly. Out-of-pocket payments include copays at the doctor’s office, deductibles before insurance kicks in, and the full price of services not covered by a plan. In well-insured populations, these payments are a manageable friction. In poorly insured ones, they can be devastating.

The term researchers use for the worst-case scenario is “catastrophic health expenditure,” which generally means healthcare costs exceeding 10% of a household’s total spending. Rates vary wildly between countries. A Lancet analysis found that catastrophic spending rates were highest in some transitional economies and in parts of Latin America, driven by three factors: services that require payment, households with low ability to pay, and the absence of prepayment or insurance.¹⁰ In Bangladesh, roughly 14% of households faced catastrophic health costs, and out-of-pocket payments pushed about 5 million additional people below the poverty line.¹¹ A study in rural southwestern Ethiopia found that about 17% of surveyed households experienced catastrophic spending, with out-of-pocket payment during health visits being the strongest predictor.¹²

In wealthier countries, the concern is subtler but still real. Cost-sharing mechanisms like deductibles are designed to discourage unnecessary use of services, and research confirms that people use less care when they face higher out-of-pocket costs. A review of deductible studies found reduced visits to general practitioners and specialists, lower use of diagnostic imaging, and slight drops in medication use.¹³ A U.S. study found that members switched to a high-deductible plan cut office visits by about 9% compared with controls, including visits for chronic conditions.¹⁴ The trouble is that cost-sharing does not help people distinguish between care they need and care they do not. A systematic review found that higher cost-sharing tended to decrease outpatient visits while increasing inpatient use, suggesting that people skip cheaper preventive or routine care and then end up in the hospital when problems worsen.¹⁵

Why the United States Costs So Much More

The spending gap between the U.S. and other high-income countries has drawn decades of scrutiny, and the answer keeps coming back to the same handful of factors. A widely cited comparison found that in 2016, the U.S. spent nearly twice as much as ten peer nations on medical care yet performed worse on many population health measures. Utilization of services and social spending were not dramatically different. Instead, prices of labor and goods, including drugs and devices, along with administrative costs, appeared to be the main drivers.¹⁶

Drug prices illustrate the divide sharply. A RAND analysis using 2022 data found that U.S. gross prices for brand-name drugs were more than four times those in comparison countries. Even after adjusting for manufacturer rebates, net U.S. brand-name prices remained over three times as high. The U.S. did have lower prices for unbranded generics than most countries, but its generic market was not large enough to offset the brand-name premium.¹⁷ Within Europe, generic drug prices and market shares vary widely too. Manufacturer prices in Switzerland averaged more than six times those in the United Kingdom, while the share of prescriptions filled with generics ranged from 17% in Switzerland to 83% in the UK.¹⁸

Physician pay follows a similar pattern. A six-country comparison found that private insurers in the U.S. paid about 70% more for primary care office visits and roughly 120% more for hip replacements than private payers in Australia, Canada, France, Germany, and the UK. U.S. primary care physicians earned about $187,000 per year net of practice costs; orthopedic surgeons earned about $442,000. Higher fees, not higher practice costs or tuition debt, were the main driver of the spending difference.¹⁹

Does Spending More Buy Better Health?

Not automatically. The U.S. is the clearest case: it spends more than any other country and yet has shorter life expectancy, higher infant mortality, and worse chronic disease outcomes than most peer nations. One analysis noted that while the U.S. spends the largest share of GDP on healthcare, it does not stand out when you combine healthcare and social service spending together. What distinguishes the U.S. is the lowest ratio of social spending to health spending in the OECD, and countries with lower ratios tend to have worse health outcomes.²⁰ In other words, pouring money into hospitals and clinics while underinvesting in housing, nutrition, and other social determinants of health produces diminishing returns.

A 140-country study tried to measure how efficiently countries convert healthcare spending into life expectancy. Among the most educated countries, basic sanitation was a strong predictor of efficiency: each additional percentage point of the population using basic sanitation narrowed the gap between a country’s actual life expectancy and the best achievable life expectancy at its spending level by about 0.15 years. Among less educated countries, unemployment and income inequality were the factors that dragged efficiency down.²¹ The broader takeaway is that the relationship between spending and outcomes is heavily mediated by non-medical factors, so no country can simply buy its way to good population health.

Tools Countries Use to Control Costs

Countries that spend less than the U.S. are not just lucky or poor. Many use deliberate policy tools to hold down prices. One of the most widespread is health technology assessment, or HTA, a formal process for evaluating whether a new drug or device offers enough clinical benefit to justify its price. All six countries examined in a recent international comparison use HTA frameworks to assess new medicines, though the role these assessments play in final pricing and coverage decisions varies.²² The United States has historically resisted using cost-effectiveness analysis in public programs, though some experts have argued that the government should adopt HTA best practices for its new drug price negotiation authority.²³

Another approach is global budgeting, which sets a fixed annual spending cap for hospitals rather than paying them per service. The idea is to remove the incentive to perform more procedures than necessary. Maryland has used a version of this model in the U.S., and the concept has attracted attention as a way for states to constrain hospital expenditure growth across all payers.²⁴ Global budgets do have a track record of holding down total spending, but the evidence is not uniformly positive. A study of Taiwan’s experience found that after global budgets were implemented, some hospitals actually increased their treatment intensity for cardiovascular patients without improving mortality rates, suggesting a waste of resources under certain conditions. Aggregate spending caps may need to be paired with other measures to prevent providers from gaming the system.²⁵

Primary care investment is often proposed as a way to reduce overall system costs by catching problems early and keeping people out of expensive hospital care. The evidence here is more nuanced than advocates would like. A cross-country analysis found that greater investment in primary care did not reduce preventable hospital admissions, though it did modestly improve screening rates for breast and cervical cancer. The researchers concluded that simply spending more on primary care is not enough; institutional arrangements and how funding connects to specific goals matter at least as much.²⁶

The Growing Pressure from Aging and Chronic Disease

Nearly every country faces rising healthcare costs driven by aging populations and the growing burden of chronic conditions. The two forces are related but distinct. Population aging has a moderate effect on spending for acute hospital care and a much stronger effect on long-term care, which includes nursing homes, home aides, and other ongoing support.²⁷ One reason the hospital impact is smaller than expected is the “time-to-death” effect: healthcare costs spike in the final year or two of life regardless of when that final year arrives, so it is proximity to death rather than age itself that drives the hospital bill.²⁸

Aging also squeezes the revenue side. As the working-age share of a population shrinks, tax revenue and insurance premium contributions decline while demand for services grows. The result is a fiscal double bind: more spending on care, less money coming in to pay for it.²⁹

Chronic diseases compound the problem across countries at every income level. The global cost of chronic disease has been projected to reach $47 trillion by 2030.³⁰ In the European Union alone, the four major noncommunicable diseases (cardiovascular disease, cancer, chronic respiratory disease, and diabetes) account for at least a quarter of total healthcare spending and impose economic losses equivalent to roughly 2% of GDP.³¹ In low- and middle-income countries, the burden falls disproportionately on the poorest households, which face the highest rates of catastrophic health spending when chronic conditions require sustained treatment.³²

When Healthcare Costs Push Families Into Debt

Healthcare expenses are one of the most common triggers of household financial distress, though the mechanisms differ by country. In the U.S., where insurance gaps and high deductibles leave many exposed, research has found a direct link between coverage and personal bankruptcy. A study using state-level variation in Medicaid expansions found that a ten-percentage-point increase in Medicaid eligibility reduced personal bankruptcies by about 8%, with no comparable effect on business bankruptcies, isolating the medical spending channel.³³

In rural China, the dynamics are different but the outcome is similar. A study of inpatients found that high hospitalization costs, low reimbursement ratios from insurance schemes, and non-direct medical costs like transportation and lodging all increased medical debt, while financial help from family members reduced it.³⁴ The common thread across very different health systems is that when prepayment mechanisms fail to cover the real costs people face, the bill lands on households least able to absorb it.

Medical Tourism and Cross-Border Care

The price differences between countries have given rise to a growing medical tourism industry. Patients from the United States and other high-cost countries travel to destinations like India, Thailand, Mexico, Costa Rica, and Singapore for procedures that cost a fraction of the domestic price. Companies market “sun and surgery” packages, and international hospitals use low labor costs to compete for foreign patients in much the same way that manufacturing jobs moved offshore in previous decades.³⁵

Medical tourism is not only a rich-country-to-poor-country phenomenon. Within southern Africa, patients from neighboring countries travel to South Africa for care, sometimes for specialized procedures unavailable at home, sometimes simply because basic healthcare is inaccessible in their own country. Much of this movement is informal, driven by individual decisions rather than referral systems.³⁶

For receiving countries, the economics of medical tourism are complicated. An analysis of three developing nations argued that promoting cross-border care to boost economic growth tends to come at the expense of the domestic healthcare system. Resources, staff, and infrastructure get diverted toward higher-paying foreign patients, working against the cost containment strategies that these countries need for their own populations.³⁷ The result is a paradox: the very price gap that makes a country attractive to medical tourists can widen when the best facilities tilt toward serving wealthier outsiders rather than local needs.