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For-Profit System Driving Up Health Costs for US, While Outcomes Remain Poor: Study

Spending more money on everything from administrative costs to doctors' salaries, the U.S. has ended up with worse healthcare outcomes than other high-income nations

A patient is treated for the flu in Louisiana. Healthcare costs in the U.S. were found to be twice as high as those in ten other developed countries because of high prices across the healthcare industry—from doctor's salaries to prescription drugs. (Photo: Mario Villafuerte/Getty Images)

Yet another report shows how relying on a for-profit, private-insurance based healthcare model is driving up costs for people living in the U.S. while delivering poor outcomes.

New research shows that high healthcare spending in the U.S. stems not just from elevated prescription drug costs or its fee-for-service model—but from high costs across the American healthcare industry.

Researchers from Harvard University's T.H. Chan School of Public Health compared healthcare costs and outcomes in the U.S. to those in ten other developed countries, including the U.K, Canada, Japan, and France.

The U.S. spends two times as much as the other high-income nations included in the study, paying its doctors far more and allowing its drug prices to skyrocket well beyond those of its counterparts.

Doctors in the U.S. are paid an average of about $218,000, compared with physicians in other countries who earn between $86,000 and $154,000 per year. Per capita spending for prescription drugs is also about $500 to $900 higher in the U.S. than it is in the 10 other countries studied.

Several of the countries the U.S. was compared to have government-run universal healthcare systems, while some including Switzerland and the Netherlands subsidize healthcare costs for many citizens. 

"Only the United States has a voluntary, private employer-based, and individual-based system," noted the study. "The majority of the countries do not have private insurance as the primary form of insurance."

"Most countries get to lower prices one of two ways: they either have a very strong price setter, usually a government agency, or more efficient markets," Dr. Ashish Jha, co-author of the study, which was published in the Journal of the American Medical Association, told the Guardian. "The U.S. has figured out how to do the worst of both."

While the U.S. spends far more on its doctors, medications, and administrative healthcare costs, it has much worse outcomes than countries that ensure every citizen has free or affordable healthcare.

Life expectancy in the U.S. was the lowest of the 11 countries surveyed, and its rates of maternal and infant mortality were the highest.

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