The United States, on a per capita basis, spends much more on healthcare than other developed countries; the chief reason is not greater healthcare utilization, but higher prices, according to a study from a team led by a Johns Hopkins Bloomberg School of Public Health (JHSPH) researcher.
The researchers determined that the higher overall healthcare spending in the United States was due mainly to higher prices—including higher drug prices, higher salaries for doctors and nurses, higher hospital administration costs, and higher prices for many medical services.
The paper finds that the United States remains an outlier in terms of per capita healthcare spending, which was $9,892 in 2016. That amount was about 25 percent higher than second-place Switzerland’s $7,919. It was also 108 percent higher than Canada’s $4,753 and 145 percent higher than the Organization for Economic Cooperation and Development (OECD) median of $4,033. And it was more than double what the United States spent per capita on healthcare in 2000—the year whose data the researchers analyzed for a 2003 study.
The researchers, along with the late Princeton healthcare economist Uwe Reinhardt, came to the same conclusion in their well-known 2003 study, “It’s The Prices, Stupid: Why The United States Is So Different From Other Countries.”
“In spite of all the efforts in the U.S. to control health spending over the past 25 years, the story remains the same—the U.S. remains the most expensive because of the prices the U.S pays for health services,” said lead author Gerard F. Anderson, PhD, a professor in the Bloomberg School’s Department of Health Policy and Management.
Anderson and his colleagues noticed one big difference between 2003 and 2016: a widening of the gap between what public insurers and private insurers pay for the same healthcare services. To lower per capita healthcare spending, the authors recommend focusing on what private insurers and self-insured corporations pay, since they pay significantly more than public insurers.
The researchers also found that U.S. health spending has been growing faster than the other OECD countries in spite of efforts to control it. Overall U.S. health spending increased at an average rate of 2.8 percent annually between 2000 and 2016, which is greater than the OECD median annual increase of 2.6 percent..
During the same period, U.S. gross domestic product (GDP) per capita increased by only 0.9 percent annually, which means that healthcare continues to represent a larger share of GDP. U.S. healthcare spending in 2016 totaled 17.2 percent of GDP compared to just 8.9 percent for the OECD median.
Not only does the United States outspend other OECD countries, on the whole it has less access to many healthcare resources. The researchers found that in 2015, the most recent year for which data were available in the United States, there were only 7.9 practicing nurses and 2.6 practicing physicians per 1,000 population compared to 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 population compared to the OECD median of 12.1, and just 2.5 acute care hospital beds per 1,000 population compared to the OECD median of 3.4. Although the United States ranked second in the numbers of MRI machines per capita and third in the numbers of 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 healthcare spenders in the OECD in 2016. “It’s not that we’re getting more; it’s that we’re paying much more,” Anderson said.
This article was adapted from information provided by JHSPH.