Financing Healthcare

Source: Esteban Ortiz-Ospina and Max Roser, Our World in Data, 2016

Health is a fundamental driver of our overall quality of life. In this entry we focus on healthcare – one of the most important inputs to produce health. There are many other factors affecting health, and you can read more about some of them in our entries about health.

Publicly funded healthcare is a legacy of the Age of Enlightenment. The first examples of legislation on health insurance date back to the late 19th century. Data from these early systems shows that healthcare expenditure only began rising several years after the expansion of insurance coverage, with the discovery of powerful new treatments.

The impact that scientific developments had on healthcare expenditure is epitomized in the U.S. experience: in recent decades, as treatment possibilities expanded rapidly, expenditure on healthcare increased (private and public, both per capita and as a share of gross domestic product); and this occurred without major changes in insurance coverage. This had two important consequences: (i) the U.S. currently spends more government money per person on healthcare than many countries that fund universal programs, and (ii) spending is so concentrated that the top 1% of spenders account for more than 20% of total healthcare expenditure.