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U.S. health care spending is way higher than other countries

"It's not that we're getting more; it's that we're paying much more."

The United States spends much more per person on health care than other developed countries. But it’s largely because prices are higher, not because Americans get more care, according to a new study.

Among other factors, the researchers found that higher drug prices, higher salaries for doctors and nurses, higher hospital administration costs, and higher prices for many medical services are reasons for the large disparity.

“It’s not that we’re getting more; it’s that we’re paying much more,” says Gerard F. Anderson, professor of health policy and management at Johns Hopkins University’s Bloomberg School of Public Health.

It’s still the prices

The study findings, which appear in Health Affairs, show per capita health care spending in the US was $9,892 in 2016, about 25 percent higher than second-place Switzerland’s $7,919.

US spending was 108 percent higher than neighboring Canada’s $4,753, and 145 percent higher than the Organization for Economic Cooperation and Development median of $4,033. It was more than double the $4,559 the United States spent per capita on health care in 2000.

The researchers came to the same conclusion as they had their 2003 study of the 2000 data, titled, “It’s the prices, stupid: Why the United States is so different from other countries.” The new analysis is in part a tribute to well-known Princeton University health care economist Uwe Reinhardt, who worked on the earlier study and died in 2017.

“In spite of all the efforts in the US to control health spending over the past 25 years, the story remains the same—the US remains the most expensive because of the prices the US pays for health services,” says Anderson, the new study’s lead author.

Out-of-control spending

Researchers based both studies on an analysis of health care use and spending in America and other industrialized countries that are members of the Organisation for Economic Co-operation and Development (OECD).

Anderson and colleagues noticed one big difference between 2003 and 2016: a widening of the gap between what public and private insurers pay for the same health care services.

To reduce per capita health care spending, the United States should focus on what private insurers and self-insured corporations pay, which is significantly more than public insurers like Medicare and Medicaid, the authors recommend.

The researchers also found that health spending has grown faster in the United States than in the other OECD countries, in spite of efforts to control it. Overall, US health spending increased at an average annual rate of 2.8 percent between 2000 and 2016, faster than the OECD median annual increase of 2.6 percent. Per capita, inflation-adjusted US spending on pharmaceuticals increased by 3.8 percent per year, compared to just 1.1 percent for the OECD median.

Fewer doctors and nurses

During the same period, US gross domestic product per capita increased by only 0.9 percent annually, which means that health care represents an increasing share of GDP. US health care spending in 2016 totaled 17.2 percent of GDP, compared to just 8.9 percent for the OECD median.

The United States not only outspends other OECD countries on a per-person basis, but it also provides less access to many health care resources. In 2015, the most recent year for which data were available, there were only 7.9 practicing nurses and 2.6 practicing physicians per 1,000 Americans, below the OECD medians of 9.9 nurses and 3.2 physicians.

Similarly, the United States in 2015 had only 7.5 new medical school graduates per 100,000 people, compared with the OECD median of 12.1, and just 2.5 acute care hospital beds per 1,000, compared with the OECD median of 3.4.

Although the United States ranked second in the number of MRI machines per capita and third in CT scanners per capita—implying a relatively high use of these expensive resources—Japan ranked first in both categories, yet was among the lowest overall health care spenders in the OECD in 2016.

Additional coauthors are from the RAND Corp. and the American University of Armenia.

Source: Johns Hopkins University

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