Gratzer's father is a professor of mathematics at the University of Manitoba who emigrated from Hungary to the United States in 1963 and to Canada in 1966. Gratzer's older brother earned his medical degree and now practices in the United States.

Gratzer earned a B.Sc. at the University of Manitoba in 1996, was president of the University of Manitoba Students' Union (UMSU) during his final undergraduate year 1995—1996, and was appointed by the Lieutenant Governor of Manitoba to the University of Manitoba Board of Governors for four successive years from 1994—1998.

In his early years, Gratzer wasn’t particularly interested in health policy issues. As he noted later:

When I grew up in Canada, I was interested in getting into medical school. If you had stopped me on the street when I was 16 or 17 and asked me about the Medical College Admission Test, I could have given you a variety of very satisfying, unique statistics on admission rates and so on. I didn't give a lot of thought to health policy. When HillaryCare was debated in the United States, I remember vaguely thinking there was something good about the idea: After all, government should be involved in health care. I had never even been to Washington, D.C.

Gratzer attended medical school at the University of Manitoba from 1996—2000 and earned an M.D. in 2000. On November 15, 1996, during his first year of medical school, the Canadian Medical Association Journal (CMAJ) published a letter to the editor from Gratzer criticizing a June 15, 1996 CMAJ report comparing reserve funds held by the Canadian Medical Protective Association (CMPA) to those held by medical malpractice insurers in the United States.

While in medical school, Gratzer was a regular contributor of opinion columns to National Post, wrote a weekly opinion column for the London Free Press and the Halifax Sunday Herald, and wrote columns on health care that appeared in several major newspapers and magazines, including the Toronto Star and Ottawa Citizen and Calgary Herald. A 1997 Gratzer column "Being a young conservative is nothing to apologize for" said "I am a conservative. This is somewhat unfortunate, as people don't seem to understand how anyone under 40 can be right-wing." A 1999 Gratzer column "Raising the minimum wage hurts the poor it hopes to help" lamented that even "two of Canada's three right-leaning governments have chosen to hike their minimum wages" and that "minimum wage earners are not underpaid but underproductive." Gratzer won $250 as fourth place runner-up in 1998—1999 and won $2,500 as first prize in the 1999—2000 Felix Morley Journalism Competition of the Institute for Humane Studies at George Mason University for his newspaper columns.

During his second year of medical school, Gratzer began writing a book about problems with the Canadian health care system but couldn't get anyone interested. Rejection letters piled up after he completed the book and he had doubts about his ability to get taken seriously until his third year of medical school, when Robert Lecker, professor of English at McGill University and co-founder of ECW Press agreed to publish his book. In August 1999, during his fourth year of medical school, ECW Press published the 24-year-old Gratzer's first book, Code Blue: Reviving Canada's Health Care System

Gratzer wrote about deficiencies in Canadian health care and argued that they were the direct result of the system's design, and thus not amendable to simple reforms.

The magicians believe that, with just the right combination of government regulations, medicare will magically work.  The spendthrifts argue that more government spending would solve every problem — from the attitude of the grumpiest hospital orderly to the lengthiest waiting list for radiation therapy  On the surface, they seem have little in common.  Both magicians and spendthrifts, however, believe in a government-run health care system.  And while they don’t agree on the best way to reform medicare, they basically agree that government action will provide the solution.

Gratzer called for market-based reforms. He won praise from a former Member of Parliament who wrote: ““Gratzer proposes a workable solution for the biggest public policy problem of the coming generation — government-controlled health care monopoly Canada needs Gratzer’s solution.” Stephen Harper is now Prime Minister of Canada.

On May 4, 2000, Gratzer was awarded $25,000 by the Donner Canadian Foundation as winner of its second annual Donner Prize for best public policy book of 1999 for Code Blue. The book beat out works by Prof. Stéphane Dion, Member of Parliament and the previous Leader of Her Majesty’s Loyal Opposition, and Bob Rae, former Premier of Ontario and the Opposition Critic for Foreign Affairs.

In his acknowledgment, Gratzer said his book "wouldn't have been possible without the encouragement and patience" of David Frum, a National Post columnist and senior fellow at the Manhattan Institute (who introduced him to Manhattan Institute president Larry Mone...who hired Gratzer as a Manhattan Institute senior fellow in 2002) and Adrienne Snow, director of programs for the Donner Canadian Foundation.

In June 2000, Gratzer graduated from medical school and in July 2000 began a five-year psychiatry residency program at the University of Toronto. During his psychiatry residency, Gratzer continued to write newspaper opinion columns. A 2001 Gratzer column "Make room for prescription drug ads on television" advocated allowing direct-to-consumer advertising of prescription drugs on television in Canada(the United States and New Zealand are the only countries that allow direct-to-consumer advertising of prescription drugs).

In April 2002, ECW Press published Better Medicine: Reforming Canadian Health Care a book of essays edited by Gratzer. The collection of essays had 17 contributors from 3 countries and 2 continents. Essayists included historian Michael Bliss and columnist Margaret Wente. Dr. Victor Dirnfeld, a physician and former president of the Canadian Medical Association, wrote the introduction. Gratzer co-wrote an essay on market reforms seen in various European countries, and also wrote the concluding essay on medical savings accounts.

The July 23, 2002 issue of CMAJ highlighted Medical Savings Accounts (MSAs) with: a commentary by Gratzer in favor of MSAs as a counterpoint to a commentary opposing MSAs, a peer-reviewed research article opposing MSAs, a peer-reviewed review article opposing MSAs,and a book review by a University of Toronto medical student of Gratzer's Better Medicine: Reforming Canadian Health Care.

In September 2002, Gratzer was one of 25 Canadians under age 30 featured in a Maclean's "Leaders of Tomorrow" cover story. In 2002, while still a psychiatry resident, Gratzer joined the Manhattan Institute as a senior fellow.

In 2004, Gratzer was first author of a peer-reviewed brief report "Lifetime rates of alcoholism in adults with anxiety, depression, or co-morbid depression/anxiety: a community survey of Ontario" published in the Journal of Affective Disorders.

On June 28, 2005, Gratzer testified in support of H.R. 2355, the Health Care Choice Act of 2005, at a hearing of the U.S. House of Representatives Subcommittee on Health of the Committee on Energy and Commerce.

On June 30, 2005, Gratzer completed his University of Toronto psychiatry residency and became registered for independent practice of medicine in Ontario. In April 2006, Gratzer became licensed to practice medicine in Pennsylvania. In May 2006, Gratzer became board-certified in psychiatry.

In October 2006, Roger Kimball's Encounter Books published Gratzer's book, The Cure: How Capitalism Can Save American Health Care, about problems with the United States health care system.

The problem and the predicament of American health care can be stated in a single, paradoxical sentence: Everyone agrees that it’s the best in the world, but nobody really likes it. On the one hand, we are so blessed with medical breakthroughs that we take them virtually for granted. Cardiac care has been revolutionized in only a few short years; death due to cardiac disease has fallen by nearly two-thirds in the past five decades. Polio is confined to the history books. Childhood leukemia, once a death sentence, is almost always curable Yet while the quality of American medicine has never been better, angst over American health care has never been greater. The state of Medicare, the cost of prescription drugs, and the numbers of uninsured are all considered crises.

He proposed various solutions:

1. Health insurance portability: end the tax exemption of employer-provided health insurance and remove government regulations mandating what conditions and whom and at what rates private health insurance companies must provide coverage;
2. Medicare financing: privatize Medicare using individual private accounts in the same way it has been proposed to privatize Social Security using individual private accounts, replace the current Medicare program with competing private health insurance plans modeled on the current Federal Employees Health Benefits Program (FEHBP) and free of state health insurance regulations, and raise the Medicare eligibility age to 70;
3. Medical innovation: end the FDA's 1962 Kefauver Harris Amendment mandate requiring pre-marketing demonstration of efficacy by medical device manufacturers and by pharmaceutical companies prior to new drug approval, and return to only requiring pre-marketing demonstration of safety.

For the uninsured and those on Medicaid, Gratzer proposed turning over all current federal funding for their care to state government in the form of block grants to experiment with voucher systems allowing recipients to purchase private health insurance and health savings accounts (HSAs), tightening Medicaid eligibility for long-term care and encouraging the purchase of private long term care insurance.

The Foreword was written by Nobel Laureate Milton Friedman. He wrote: "David Gratzer is a practicing psychiatrist who combines firsthand knowledge of medical practice in both his native Canada and the U.S. with an independent point of view and a rare capacity for lucid exposition of complex technical material. . . If you want a well-written, interesting yet authoritative and thorough account of what is wrong with medicine today and how to cure American health care, this is the book for you."

The Cure was named a "Top Ten Reading Selection for 2007" by the National Chamber Foundation.

On July 30, 2007, Rudy Giuliani's 2008 presidential campaign named Gratzer as one of his five key health care policy advisors, along with: Hoover Institution senior fellow Dan Kessler, Hoover Institution senior fellow Scott Atlas, Pacific Research Institute president and CEO Sally Pipes, and The Moran Company founder and president Donald Moran.

On July 31, 2007, one day after naming his health care advisors, Giuliani, the 2008 Republican presidential front-runner, unveiled his health care plan in Rochester, New Hampshire, attacked the plans of Democratic presidential candidates as socialized medicine that was European and socialist, and said his chances of surviving prostate cancer had been 82% in the United States, but would have only been 44% in England under socialized medicine Giuliani repeated his claims in campaign speeches before making them in a radio advertisement.

After the radio ad began running on October 29, 2007, FactCheck.org, The Washington Post, and PolitiFact.com consulted leading prostate cancer experts and cancer statisticians who found Giuliani's cancer "survival rates" to be false and misleading; Gratzer responded by defending his "snapshot" method of calculating "survival rates" from cancer mortality and incidence statistics as the method also used by economist John Goodman, co-founder and president of the National Center for Policy Analysis (NCPA), by economist June O'Neill, and by U.S. Constitutional historian and health policy expert Betsy McCaughey, a former John M. Olin fellow at the Manhattan Institute. Gratzer said his "survival rates" drew from Goodman's 2004 book Lives at Risk (Gratzer is noted in the book's acknowledgement as one of its four reviewers...from four conservative think tanks co-founded, like Goodman's NCPA, by Antony Fisher) and duplicated in Gratzer's 2006 book The Cure.

Gratzer cited McCaughey's October 2007 NCPA Brief Analysis giving her analysis of a September 2007 O'Neill NBER Working Paper (calculating "survival rates" from cancer mortality and incidence statistics) and McCaughey's analysis of a September 2007 Lancet Oncology article ...in men, over half of the difference [in 5-year relative survival for all cancers combined] between Europe and the USA can be attributed to prostate cancer. For women, the 5-year survival for all cancers combined in the USA was comparable with that in some of the wealthiest European countries. comparing five-year relative survival rate estimates for sixteen types of cancer diagnosed from 2000—2002 in nine European countries, parts of nine other European countries, and parts of the United States.14% of the United States (SEER-13) For 14 of 16 types of cancer, a European country had the highest survival rate; for 2 of 16 types of cancer: colorectal cancer and prostate cancer, the U.S. had the highest survival rate. The Lancet Oncology article said: "That we found a 5-year relative survival for prostate cancer as high as 99.3% in the USA suggests that the increase in survival is largely an artefact from the introduction of screening of prostate-specific antigen...although, we cannot establish the effect that this artefact will have on mortality."

Cancer experts disputed Gratzer's response, though some acknowledged significant difference in cancer outcomes between the United States and Britain. Peter Albertsen, professor and chief of urology at the University of Connecticut Health Center called calculations of "survival rates" from cancer mortality and incidence statistics such as those by Gratzer, Goodman, O'Neill, and McCaughey "complete nonsense" and a "very dangerous thing to do."

In a June 2009 U.S. Congressional hearing on the issue of single-payer health care, Gratzer and U.S. Rep. Dennis Kucinich (D-OH) clashed over Canadian healthcare statistics.

According to a June 29, 2009 front-page article in Canada's National Post, "armed with a stack of statistics about patient wait lists in Canada, and a fusillade of dire warnings about the life-threatening consequences of government-managed care," Gratzer "has emerged as the go-to expert witness for GOP lawmakers hoping to sow doubt in Congress about the wisdom of embracing Mr. Obama's call for a public health insurance option to compete with private insurers." The article notes that arguments like Gratzer's "played a key role in the defeat 15 years ago of former president Bill Clinton's plan to reform U. S. health care."

In July 2009, he appeared on 20/20 to discuss health care.

In November 2009, Encounter Books published a short book of his criticism of the White House plans, How Obama’s Government Takeover of Health Care Will Be a Disaster.

Gratzer continues to comment and debate on health-care issues. He is founding contributor to FrumForum (formerly NewMajority).

With former Senate Majority Leader Bill Frist, he'll speak at the upcoming Munk Debate.