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Differences in Health Care Spending and Status Across Countries

By May 10, 2012Commentary

Here is a shock:  the United States spends far more per person on health care than other developed countries, but our health status and outcomes are often worse.  This point is usually emphasized by those pushing for a radical reform of our system.  The Commonwealth Fund issues the latest such report, comparing the US, Japan, Australia, New Zealand and several European countries.   (Commonwealth Report)  According to the report, in 2009 the US spent about $8000 per capita on health; the next largest spender was Norway at a little over $5000.   In looking at potential explanations, the authors note that the US actually has a younger average population than most of these countries and fewer smokers than all but Sweden.  We do, however, have a massive problem with obesity, a condition which leads to significantly higher health spending.  As we have pointed out before, the report confirms that the US has fewer per capita resources, such as physicians and hospital beds, so that higher utilization is not likely the cause of our higher spending, although the US does have and use more expensive resources like scanning equipment and surgical robots.

The cause of our higher spending has always been apparent to any close analysis–we have higher prices for the same service.  Prices for brand-name drugs are a third to twice as high as the prices in other countries, although our generic drugs tend to be cheaper.  Physicians, especially specialty doctors, generally make much more than comparable doctors in the other developed countries, sometimes twice as much, and hospital stays cost over 50% more.   As has often been stated, by some measures, such as mortality, quality is lower in the US, but in some areas, clearly superior, such as cancer care.  The major problem we always have with these reports is that they place no value on individual freedom to choose how one gets health care or on relatively comprehensive access to leading edge diagnostics and treatments, which may not always add value, but do in many cases.  At least this report emphasizes that the major cost difference in the United States is due to greater incomes for physicians, other providers and administrators, resulting in higher unit prices for services.  If these providers had the same income as similar professionals and administrators in other countries, our total spending would be more comparable.

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