High Cost Health Care: US Spending 'Dwarfs' Other Countries

A new study released today by the Commonwealth Fund reveals the US spends far more on health care than 12 other 'industrialized countries'; however, the US does not provide 'superior' care in any way. Rather, the high spending is attributed to steep prices in medication, health services, and hospitals stays, as well as skyrocketing rates of obesity and diabetes.

"It is a common assumption that Americans get more health care services than people in other countries, but in fact we do not go to the doctor or the hospital as often," says study author David Squires. "The higher prices we pay for health care and perhaps our greater use of expensive technology are the more likely explanations for high health spending in the U.S. Unfortunately, we do not seem to get better quality for this higher spending."

For example, prescription drug prices were a third higher in the U.S. compared to Canada and Germany, and more than double the prices in Australia, France, the Netherlands, New Zealand, and the United Kingdom, according to the Commonwealth report.

In comparison, Japan managed the lowest medical spending of the 13 countries through strong price regulation.

"Japan offers an interesting model for controlling costs...Japan operates a fee-for-service system, while offering unrestricted access to specialists and hospitals and a large supply of MRI and CT scanners. Rather than containing costs by restricting access, Japan instead sets health care prices to keep total health spending within a budget allotted by the government."

Spending in Japan increased by only 2 percentage points in two decades; by comparison spending in the US increased by 8 percentage points in the same time.

All of the countries in the study, except for the U.S., provide universal health care.

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The Commonwealth Fund: U.S. Spends Far More for Health Care Than 12 Industrialized Nations, but Quality Varies

Higher prices and greater use of technology appear to be the main factors driving the high rates of U.S. spending, rather than greater use of physician and hospital services, finds study author David Squires, senior research associate at The Commonwealth Fund. His report, Explaining High Health Care Spending in the United States: An International Comparison of Supply, Utilization, Prices, and Quality, presents analysis of prices and health care spending in 13 industrialized countries.

U.S. health care spending amounted to more than 17 percent of gross domestic product (GDP) in 2009, compared with 12 percent or less in other study countries. Japan's spending, which was the lowest, amounted to less than 9 percent of GDP. [...]

High U.S. spending on health care does not seem to be explained by either greater supply or higher utilization of health care services. There were 2.4 physicians per 100,000 population in the U.S. in 2009, fewer than in all the countries in the study except Japan. The U.S. also had the fewest doctor consultations (3.9 per capita) of any country except Sweden. Relative to the other countries in the study, the U.S also had few hospital beds, short lengths of stay for acute care, and few hospital discharges per 1,000 population. On the other hand, U.S. hospital stays were far more expensive than those in other countries--more than $18,000 per discharge. By comparison, the cost per discharge in Canada was about $13,000, while in Sweden, Australia, New Zealand, France, and Germany it was less than $10,000. [...]

All of the countries in the study, except for the U.S., provide universal health care, and all struggle with rising health costs. The level of health care spending in the U.S., however, stands apart. If the U.S. were to spend the same share of its GDP on health care as the Netherlands--the country spending the next-largest share of GDP--the savings would have been $750 billion in 2009.

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Politico: U.S. health care spending 'dwarfs' that of other countries

The U.S. spent nearly $8,000 per person for health care services in 2009, the study found, confirming that "health care spending in the U.S. dwarfs that found in any other industrialized country." [...]

So what's causing the U.S.'s cost problem? The Commonwealth Fund points to high prices for medication and medical services, as well as a good deal of use of expensive technology, such as MRIs and CT scans. And at least a third of the American population is obese, a condition that drives up health spending.

The high rate of spending in the U.S. doesn't necessarily make for a high standard of care, however.

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