Health systems: how they are funded and what they deliver

A resident of the United States spends 14,885 dollars a year on health, against an OECD average of 5,967 dollars: two and a half times less (2024 spending, adjusted for purchasing power). Yet American life expectancy stood at 78.4 years in 2023, 2.7 years below the average of those same countries, which reached 81.1 years. It recovered to 79.0 years in 2024 without closing the gap. Spending more does not mechanically buy better health. Understanding why means understanding how a health system is built: who pays, who pools the money, and who decides what gets bought.

Why the bill tells you nothing about health

A health system is the set of rules that organise the financing and delivery of care in a country. It is not just a network of hospitals: it is first a machine that collects money, pools it, then spends it. Three functions, identified by the World Health Organization, underpin every existing model: revenue collection, risk pooling, and the purchasing of care.

Those three functions explain most of the gaps we observe. A country can collect a great deal of money and purchase badly. Another can collect little and still get good outcomes because it concentrates its resources on primary care. Total spending measures an effort, never a result.

In 2024, OECD countries devoted an average of 9.3% of their gross domestic product to health. Behind that average, the spread is wide: 17.2% of GDP in the United States (18.0% under American national accounting, which also counts investment), 12.3% in Germany, 11.5% in France, 11.1% in the United Kingdom, 10.6% in Japan, 8.4% in South Korea, under 6% in Mexico, and 3.8% in India (2021-22 financial year). These numbers describe social choices, not levels of medical technology.