The United States spent $4.5 trillion on healthcare in 2022, more than 6 European countries combined

The United States has the highest costs of healthcare in the world. In 2021, the country spent $4.3 trillion on healthcare, translating to an average of around $12,900 per person. But the situation is not getting any better. In 2022, the United States spent a staggering $4.5 trillion on healthcare, surpassing the combined health expenses of six European nations.

Despite advances in healthcare technology, US healthcare spending saw a 4% overall growth from the previous year, making up 17.3% of the gross domestic product. In contrast, other affluent nations have an average healthcare cost per person that is only about half as much.

This massive healthcare spending raises many questions: Why does the U.S. invest so much more in healthcare compared to other developed countries? Are Americans getting sicker than people in other countries? Could the increase in our healthcare expenses be linked to inefficiencies and bureaucracy within our healthcare system? And what implications does this have for the future of health and wellness in America?

According to the recent annual report from the Centers for Medicare and Medicaid Services, American taxpayers covered a hefty $1.8 trillion in federal and state healthcare expenditures in 2022, representing about 41% of the total $4.5 trillion spent on healthcare in the U.S. last year, StatNews reported.

In addition to this $1.8 trillion, third-party programs—often government-funded—and public health initiatives contributed an additional $600 billion to the overall spending.

To put this in perspective, the U.S. government’s healthcare spending last year exceeded the combined spending by the governments of Germany, the U.K., Italy, Spain, Austria, and France, all of which provide universal healthcare coverage to a population comparable in size to the U.S.

Breaking it down, Germany spent approximately $380 billion, France and the U.K. each spent around $300 billion, Italy spent $147 billion, Spain spent $105 billion, and Austria spent $43 billion, totaling $1.2 trillion—roughly two-thirds of what the U.S. government spent without offering universal coverage to its citizens.

This ongoing trend of higher taxpayer dollars going towards healthcare in the U.S. compared to taxpayer-funded health systems in other countries is a key argument presented by economists Amy Finkelstein and Liran Einav in their recent book, “We’ve Got You Covered: Rebooting American Health Care.”

Finkelstein emphasized at the STAT Summit in October that the U.S. is essentially already paying for universal basic automatic coverage as taxpayers and suggested formalizing and funding that commitment upfront. The CMS report’s figures support this perspective, indicating that the U.S. wouldn’t necessarily need to raise taxes to provide basic universal coverage, as it’s already shouldering a significant portion of the expenses.

“We’re already paying as taxpayers for universal basic automatic coverage, we’re just not getting it,” Finkelstein said. “We might as well formalize and fund that commitment upfront.” The numbers in this CMS report illustrate their point: The U.S. would not need to raise taxes in order to provide basic universal coverage, since it’s already responsible for picking up a relative majority of the expenses.

Moreover, offering universal coverage could lead to reduced healthcare costs for individuals. Finkelstein and Einav argue that people could choose not to purchase additional private health insurance, avoiding deductions from their paychecks and out-of-pocket charges. The latest CMS data reveals that Americans spent $471 billion on out-of-pocket health expenses in 2022, in addition to their healthcare coverage costs.

Below is a summary fact sheet from the Centers for Medicare and Medicaid Services

Historical NHE, 2022:

• NHE grew 4.1% to $4.5 trillion in 2022, or $13,493 per person, and accounted for 17.3% of Gross Domestic Product (GDP).
• Medicare spending grew 5.9% to $944.3 billion in 2022, or 21 percent of total NHE.
• Medicaid spending grew 9.6% to $805.7 billion in 2022, or 18 percent of total NHE.
• Private health insurance spending grew 5.9% to $1,289.8 billion in 2022, or 29 percent of total NHE.
• Out of pocket spending grew 6.6% to $471.4 billion in 2022, or 11 percent of total NHE.
• Other Third Party Payers and Programs and Public Health Activity spending declined 10.2% in 2022 to $564.0 billion, or 13 percent of total NHE.
• Hospital expenditures grew 2.2% to $1,355.0 billion in 2022, slower than the 4.5% growth in 2021.
• Physician and clinical services expenditures grew 2.7% to $884.9 billion in 2022, slower growth than the 5.3% in 2021.
• Prescription drug spending increased 8.4% to $405.9 billion in 2022, faster than the 6.8% growth in 2021.
• The largest shares of total health spending were sponsored by the federal government (33 percent) and the households (28 percent).   The private business share of health spending accounted for 18 percent of total health care spending, state and local governments accounted for 15 percent, and other private revenues accounted for 7 percent.

For further detail see NHE Tables in downloads below.

Projected NHE, 2022-2031:

• Over 2022-2031 average growth in NHE (5.4 percent) is projected to outpace that of average GDP growth (4.6 percent) resulting in an increase in the health spending share of GDP from 18.3 percent in 2021 to 19.6 percent in 2031.
• The insured share of the population is projected to have been 92.3 percent in 2022 (an historic high) related to high Medicaid enrollment and gains in Marketplace enrollment and remain at that rate through 2023. 
• Medicaid enrollment is projected to decline from its 2022 peak of 90.4M to 81.1M by 2025 as states disenroll beneficiaries no longer eligible for coverage. By 2031 the insured share of the population is projected to be 90.5%.
• The Inflation Reduction Act is projected to result in lower OOP spending on prescription drugs for 2024 and beyond as Medicare beneficiaries incur savings associated with several provisions from the legislation including the $2,000 annual OOP spending cap and lower gross prices resulting from negotiations with manufacturers.