The US spends more on social services than its health care-loving neighbor Canada

July 25, 2013
July 25, 2013

America spends a bigger share of its national paycheck on social services than its health care-providing neighbor to the north.

New numbers published by the Organization for Economic Cooperation and Development (OECD) show that public “social expenditures” in the US have overtaken those of Canada. The report defines “social expenditures” as essentially spending by public institutions aimed at households or people to support their welfare, such as jobless aid, healthcare and pension benefits. US social spending as a share of GDP hit 19.7% in 2012, compared to Canada’s 18.3%. In 2013, the US is expected to spend about 20%, compared to 18.3% for Canada.

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This shouldn’t be a big surprise to anyone who follows the US budget travails. US budgetary woes are driven by health care and old age pensions. Pension spending has long taken a bigger chunk of US national income than that of Canada, though it has picked up markedly in recent years, driven in part by the shrinking economy. Here’s a look at the most recent data, which goes up to 2009.

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But what’s interesting is that US health care spending as a share of GDP has overtaken Canada’s in recent years. Here’s a look at that OECD data up until 2009.

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Granted, neither the US nor Canada are big social spenders when compared to countries in Europe. The largest spender is France where the social-spending-to-GDP ratio is a hefty 33%. Welfare states in Belgium, Denmark and Finland have a social-spending-to-GDP ration of 30%. The OECD average is estimated to be about 22% in 2013.

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