Why Does the US Spend So Much on Healthcare? Are People in the US Healthier?

A good portion of US citizens are worried about their healthcare costs, prompting many to delay or skip tests, treatments and medications. Since we know how high our own medical bills are, it’s not surprising to learn that in 2016 the US spent nearly twice as much on healthcare as 10 other high-income countries. Why does the US spend so much on healthcare? Is it making US citizens healthier?

Latest research findings are not what you might expect.

Many theories have suggested the US spends too much money on healthcare, including doctor, specialists, hospitalizations, and procedures, and we spend too little on social services that could mitigate healthcare needs. However, this latest research found that this line of thinking could be wrong.

Instead, they found that prices of labor and goods, including pharmaceuticals and devices, and high administrative costs seem to be the main reasons the US spends so much on healthcare.

What other countries were evaluated?

The other 10 high-income countries evaluated for this research are: United Kingdom, Canada, Germany, Australia, Japan, Sweden, France, the Netherlands, Switzerland, and Denmark

How much is the US spending on healthcare?

The median per capita spending in the U.S. was $9,403. Of the other 10 countries, Sweden had the second-highest rate at $6,808. The United Kingdom had the lowest spending at $3,377.

In 2016, the US spent 17.8% of its gross domestic product on health care. The percent of GDP spent by the other countries ranged from 9.6% in Australia to 12.4% in Switzerland.

Do patients in the US have more hospitalizations, tests and procedures?

Below are some interesting statistics on consumption of healthcare services in the US, as compared to other countries:

• The US had the fewest hospital beds (2.8 per 1000). Japan had 13.2 per 1000 and Germany had 8.2 per 1000.
• The US had relatively fewer days in the hospital for 3 different length-of-stay measures
• Patients in the US used healthcare services at a similar rate as other countries
• However, patients in the US had more imaging than other countries
  • MRI scans – US had the second highest rate
  • CT scans – US had the highest rate
• The US had slightly higher levels of some common surgical procedures, but for a few procedures, the US had comparable or lower rates

Does all this spending make US citizens healthier?

Sadly no. Here’s what the researchers found about the health of US citizens:

• Life expectancy in the US was the lowest of the 11 countries at 78.8 years (other countries ranged between 80.7 – 83.9 years).
• Population health outcomes were consistently the worst in the US as compared to the other 10 countries
• The US had the lowest percentage of the population older than 65 years (14.5% compared with a mean of 18.2%).
• Infant mortality in the US was the highest (5.8 deaths per 1000 live births in the US; compared to 3.6 deaths per 1000 for all 11 countries).

And Americans are worried about this. A recent survey found that 85% of patients in the US feel care quality has not improved even though they are personally spending more on healthcare.

Some good news and bad news:

It’s positive that the US ranked second lowest in the number of smokers, with 11.4% of the US population ≥15 years old smoking daily. The mean rate for all 11 countries combined is 16.6%.

Unfortunately, the US had the highest percentage of adults who were overweight or obese with 70.1% in those categories. The range for other countries was 23.8% – 63.4%; the mean of all 11 countries was 55.6%.

What about the US workforce of doctors?

The number of doctors and nurses in the US is similar to, but slightly lower than, the other countries. The US has 2.6 doctors per 1000 people compared to a mean of 3.3 per 1000. The percent of primary care doctors was similar for all countries (43%).

However, the salaries of doctors were higher in the US. For example, generalist doctors’ salaries were $218,173 in the US, compared with a range of $86,607 – $154,126 in the other countries.

Spending on pharmaceuticals is high in the US.

The US spent $1443 per capita on pharmaceuticals, more than any other country; the spending in other countries ranged from $466 to $939 per capita. For 4 pharmaceuticals used for common conditions (Crestor, Lantus, Advair, and Humira), the US had higher prices than all other countries; for 3 of these medications, the US price was more than double the next highest price.

The US spends a lot on administrative tasks.

Administrative costs of care (activities relating to planning, regulating, and managing health systems and services) accounted for 8% in the US vs a range of 1% to 3% in the other countries.

Wrapping it all up.

The US spent approximately twice as much as other high-income countries on medical care, yet utilization rates in the US were largely similar to those in other nations. Prices of labor and goods, including pharmaceuticals and administrative costs, seemed to be the major cause of the higher spending.

Unfortunately, there is little evidence that efforts to reform US healthcare have meaningfully controlled healthcare spending and costs. Clearly the US needs to work harder to reduce prices and administration costs.

For more information…

Although we spend too much on healthcare in the US, there are things you can do to save money on your own healthcare bills. Read these posts for tips:

• Reduce your Healthcare Expenses.
• How to Save Money on Prescription Medications.
• Can You Comparison Shop for Healthcare Prices? Yes, and You Should!
• How to Shop Around for Healthcare Pricing.
• Reduce Your Healthcare Expenses?
• The Impact of the High Cost of Healthcare
• Tips for Handling Medical Bills.