Why Does America Spend More on Health Care?

Modesto Morganelli
Marzo 14, 2018

The US spends nearly twice as much as other high-income countries on health care, and yet has consistently poorer results in many areas, with the lowest life expectancy and highest infant mortality rate of all developed countries.

Though utilization in many areas mirrored other nations, administrative costs in the US system dwarfed other countries.

"As the USA continues to struggle with high healthcare spending, it is critical that we make progress on curtailing these costs".

It's not news that the US health care system fails to deliver substantially better care, or "health outcomes", for its higher cost.

"These findings indicate that efforts targeting utilization alone are unlikely to reduce the gap in spending between the United States and other high-income countries, and a more concerted effort to reduce prices and administrative costs is likely needed", the authors write.

"The reasons for these substantially higher costs have been misunderstood", said senior author Ashish Jha, professor of global health at the T.H. Harvard Chan School of Public Health at Harvard University. "In addition, the reasons for these substantially higher costs have been misunderstood: These data suggest that numerous policy efforts in the USA have not been truly evidence-based".

To find more about the study Woskie with her team worked on the data comparing U.S. healthcare with the 10 leading countries which include, Canada, United Kingdom, Germany, Australia, Japan, Sweden, France, Switzerland, the Netherlands, and Denmark. However, on a per capita basis, the USA spends much more than any other country: $9451 in 2015, compared to Germany's $5267. For example, in 2016, the US spent 17.8% of its gross domestic product on healthcare, while other countries ranged from 9.6% (Australia) to 12.4% (Switzerland). He notes, for example, that while USA doctors make high salaries, there are fewer doctors per capita than in other countries, so the total cost of paying doctors isn't far out of line with countries like Germany or The Netherlands. For example, America had the lowest life expectancy and the highest infant mortality when compared to the other countries.

'Our findings illustrate the important differences in the prices and quality of healthcare services across countries, ' Dr Jha said.

The U.S. had a lower percentage of its population covered by health insurance (90 percent) than those other rich countries, where 99.8 percent to 100 percent were covered. Yet, we found that the U.S. has comparable rates of utilization overall, with lower numbers of physician visits and hospitalizations, ' Dr Jha said. "At least compared to peers, we have a pretty similar mix of primary care to specialists", Woskie said.

Belief: The U.S. provides too much inpatient hospital care.

Australia spent 9.6% of GDP on healthcare and Switzerland spent 12.4%.

But overall spending is far higher.

Other countries' life expectancy ranged from 80.7-83.9.

Belief: The quality of healthcare is much lower in the USA than in other countries.

Infant mortality was higher in the USA than the other countries, with 5.8 deaths per 1,000 live births in the US and 3.6 deaths per 1,000 live births in all 11 countries. For example, the US appears to have the best outcomes for those who have heart attacks or strokes, but is below average for avoidable hospitalizations for patients with diabetes and asthma. "It appears we are spending more for the same stuff", Woskie said. Other nations spend between 1%-3% to administer their health plans.

For example, administrative costs related to planning, regulating, and managing accounted for 8% of total United States healthcare costs, compared with a range of 1% to 3% for other countries. For several commonly used brand-name pharmaceuticals, the US had substantially higher prices than other countries, often double the next highest price. Medical procedures were similarly overpriced in the USA, and American medical professionals also make significantly more money than their peers in other countries, according to the paper.

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