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Healthcare costs

Why the United States spends more on health care than comparable countries, and whether government should limit what hospitals and doctors charge.

Last reviewed October 11, 2026

Know

Facts that are not in dispute. Guess first, then see the figure and where it comes from.

This page is about what care costs, most of which goes to hospitals and doctors. Drug prices are on the Prescription drugs page, and who pays is on the Health coverage page. Figures for other countries use World Health Organization definitions, which differ slightly from the US government's.

  1. Of every 100 dollars the US economy produces, about how many are spent on health care?

    Slide to make your guess

    About 18 of every 100 dollars the US economy produces are spent on health care.

    Health spending reached $5.3 trillion in 2024, or 18.0% of the economy, up from 17.7% the year before.

    Source: Centers for Medicare & Medicaid Services, National Health Expenditures 2024 Highlights

  2. About how many thousand dollars per person did the United States spend on health care in 2024?

    Slide to make your guess

    The United States spent about $15,500 per person on health care in 2024.

    The exact figure was $15,474 for every person living in the country, counting what governments, employers and households all paid.

    Source: Centers for Medicare & Medicaid Services, National Health Expenditures 2024 infographic

  3. Of every 100 dollars spent on health care in the United States, about how many go to hospitals?

    Slide to make your guess

    About 31 of every 100 health care dollars go to hospitals.

    Doctors and clinics receive 21, so the two together take more than half. Prescription drugs bought at pharmacies take 9.

    Source: Centers for Medicare & Medicaid Services, National Health Expenditures 2024 Highlights

  4. For hospital care that Medicare pays 100 dollars for, about how much do private insurers pay?

    Slide to make your guess

    For hospital care that Medicare pays 100 dollars for, private insurers pay about 254 dollars.

    This is from a study of claims at more than 4,000 hospitals in 2022, paid for by employers and a foundation. The hospital industry's trade association rejects its method. It argues that Medicare's rates are too low to be a fair yardstick and that the claims studied were not a representative sample. Prices ran below 200 dollars in some states and above 300 in others. The study found that the differences were explained more by how much competition a hospital faces than by how many Medicare or Medicaid patients it treats. Medicare's advisory commission reports that Medicare pays hospitals about 12% less than it costs them to treat its patients, and that hospitals earned 6.5% overall in 2024 once private payments are counted.

    Source: RAND Corporation, Prices Paid to Hospitals by Private Health Plans (round 5.1 of an employer-led study); HealthExec, report of the American Hospital Association's response to the RAND hospital price study; Medicare Payment Advisory Commission, March 2026 Report to the Congress, executive summary

  5. Of every 100 dollars spent on health care, about how many go to private insurers' overhead and profit?

    Slide to make your guess

    About 6 of every 100 health care dollars go to private insurers' overhead and profit.

    This is federal data for 2023. The figure, which the government calls the net cost of health insurance, was $303 billion. Running government health programs took about 1 more dollar in every 100. Federal law limits what insurers may keep for overhead and profit to 15% to 20% of premiums, and they must refund the excess. Hospitals, by Medicare's advisory commission's count, earned a margin of 6.5% across all their patients in 2024.

    Source: American Medical Association, National Health Expenditures, 2023 (summary of federal CMS data); HealthCare.gov, Rate review and the 80/20 rule; Medicare Payment Advisory Commission, March 2026 Report to the Congress, executive summary

  6. Of every 100 dollars spent on health care, about how many go to malpractice insurance, settlements and court awards?

    Slide to make your guess

    About 2 of every 100 health care dollars go to malpractice insurance, settlements and court awards.

    That is the Congressional Budget Office's estimate, made in 2009. It also estimated what national limits on lawsuits would save, using a package that caps awards for pain and suffering at $250,000, caps punitive damages and lawyers' fees, and shortens the time allowed to sue. The limits would trim malpractice costs by about a tenth and reduce tests ordered as protection against lawsuits, for a total saving of about half a dollar in every 100. Federal deficits would fall by about $62 billion over ten years. Malpractice law is set by each state, so a national limit would need an act of Congress that overrides state law.

    Source: Congressional Budget Office, Analysis of the Effects of Proposals to Limit Costs Related to Medical Malpractice (letter to Senator Hatch); Congressional Budget Office, Limit Medical Malpractice Claims (budget option)

  7. The United States spends a larger share of its economy on health than six other large wealthy countries.

    By World Health Organization definitions the United States spent 16.7% of its economy on health in 2023, against 12.8% across the OECD, a group of 38 mostly wealthy countries. Germany, Switzerland, France, Canada, Britain and Japan each spent between 10.7% and 11.7%.

    Source: World Bank, Current health expenditure (% of GDP), from World Health Organization data

  8. The United States has fewer hospital beds than most comparable countries and a similar number of doctors.

    It had 2.7 hospital beds for every 1,000 people in 2022, against 7.6 in Germany and 5.7 in France. It had 3.7 doctors per 1,000, against 4.5 in Germany and 3.3 in France. That points to higher prices more than to a larger amount of care. The Congressional Budget Office found that the main reason private insurance spending has grown is rising prices paid to hospitals and doctors, and that prices are highest where hospitals and doctors' groups face little competition.

    Source: World Bank, Hospital beds (per 1,000 people); World Bank, Physicians (per 1,000 people); Congressional Budget Office, The Prices That Commercial Health Insurers and Medicare Pay for Hospitals' and Physicians' Services

Health spending as a share of the economy, 2023

World Health Organization definitions, so the US figure differs slightly from the 18 above. The OECD is a group of 38 mostly wealthy countries that includes the United States.

  • United States 16.7%
  • All OECD countries combined 12.8%
  • Germany 11.7%
  • Switzerland 11.7%
  • France 11.5%
  • Canada 11.2%
  • Britain 11%
  • Japan 10.7%

Source: World Bank, Current health expenditure (% of GDP), from World Health Organization data

Where each US health care dollar goes, 2024

Share of $5.3 trillion in national health spending.

  • Hospitals 31%
  • Doctors and clinics 21%
  • Prescription drugs from pharmacies 9%
  • Everything else 39%

Source: Centers for Medicare & Medicaid Services, National Health Expenditures 2024 Highlights

Hospital beds for every 1,000 people, 2022

The OECD is a group of 38 mostly wealthy countries that includes the United States.

  • Japan 12.6
  • Germany 7.6
  • France 5.7
  • All OECD countries combined 4.6
  • Switzerland 4.4
  • United States 2.7
  • Canada 2.5
  • Britain 2.4

Source: World Bank, Hospital beds (per 1,000 people)

Charts appear here once you have answered or skipped the questions above.

Debate

Questions the facts cannot settle, with the strongest case for each side.

Should government limit what hospitals and doctors can charge?

Yes, limit prices

Hospitals and doctors receive 52 of every 100 health care dollars, and the prices they charge depend on who is paying. For care that Medicare pays 100 dollars for, private insurers pay about 254 dollars at the same hospitals, according to an employer-backed study. The study that found this, and the Congressional Budget Office, both trace the gap to hospitals that face little competition, not to the cost of treating Medicare patients. The country has fewer hospital beds than most comparable ones, so the bill reflects price more than quantity. Medicare's advisory commission finds that doctors accept Medicare patients about as readily as privately insured ones, and that efficient hospitals come close to breaking even on Medicare's rates.

No, rely on competition

Medicare's own advisory commission reports that Medicare pays hospitals about 12% less than it costs to treat its patients. Hospitals earned 6.5% overall in 2024 only because private insurers pay more. Opponents of limits argue that setting private prices near Medicare's would push many hospitals into loss and close some of them. The Congressional Budget Office found that when payment rates are cut, demand for care outruns supply, with more delays and more care forgone. If high prices come from too little competition, as the same office finds, the remedy is more competition, through antitrust enforcement and published prices, and not a price set in Washington.

Underneath is a disagreement about whether health care prices are better disciplined by government rules or by competition among hospitals and doctors, and about how much risk to the supply of care is acceptable in exchange for lower bills.

Should federal law limit malpractice lawsuits?

Yes, set national limits

The Congressional Budget Office estimates that capping awards for pain and suffering at $250,000, limiting punitive damages and lawyers' fees, and shortening the time to sue would reduce total health spending by about 0.5% and federal deficits by about $62 billion over ten years. It lists further gains. Lower insurance costs could bring more specialists, such as obstetricians, to places where premiums are highest. Limits could reduce tests and procedures ordered mainly as protection against lawsuits, and could discourage suits where no negligence occurred. Rules now differ from state to state, and one national standard would treat doctors and patients alike wherever they live.

No, leave it to the states

By the Congressional Budget Office's own estimate the saving is about 0.5% of health spending, which leaves 99.5% untouched. The same analysis lists the costs. Limits could make it harder for patients injured by negligence to be fully compensated, and smaller awards could make hospitals and doctors less careful, leading to more injuries. It describes the research on how such limits affect patients' health as mixed. A federal cap would also override the choices states have made, many of which have set their own limits or decided against them (the cost of defensive medicine is disputed).

Underneath is a disagreement about how to weigh an injured patient's right to full compensation against the cost and availability of care for everyone, and about whether this is a matter for states or for Congress.

Wording

Terms that frame the argument before it starts. Who uses each one, and what can be checked.

Uncertain

Questions that have a factual answer in principle, where the evidence is still contested.
Does the United States get less for what it spends?
Life expectancy in the United States was 78.9 years in 2024, against 80.4 across the OECD, a group of mostly wealthy countries, even though the United States spends more. It also has fewer hospital beds than most of those countries. Those who say the country gets poor value cite both. Others answer that life expectancy reflects diet, drug overdoses, violence and accidents as well as medical care, and that patients here get new drugs sooner. There is no agreed single measure of how good a health system is. Sources: World Bank, Life expectancy at birth, total (years); World Bank, Current health expenditure (% of GDP), from World Health Organization data; World Bank, Hospital beds (per 1,000 people); RAND Corporation for the US Department of Health and Human Services, Comparing New Prescription Drug Availability and Launch Timing in the United States and Other OECD Countries
How much does fear of lawsuits add to costs?
Doctors may order extra tests and procedures to protect themselves, which is called defensive medicine. The Congressional Budget Office's estimate of a 0.5% saving from national limits includes this effect, which it put at 0.3%. It called the evidence on how much doctors change their practice mixed. It describes the research on how such limits affect patients' health as mixed. Supporters of limits argue that the true cost of defensive medicine is larger than the estimate. Opponents point to the estimate itself, which puts the saving at half of one percent. Sources: Congressional Budget Office, Limit Medical Malpractice Claims (budget option); Congressional Budget Office, Analysis of the Effects of Proposals to Limit Costs Related to Medical Malpractice (letter to Senator Hatch)

Sources