The Commonwealth Fund on Causes of High Spending

It is a common complaint about the US health system that it spends more for care without getting better quality.  Yet another analysis about why we have relatively high health spending is found in a new Commonwealth Fund report, which looks at 13 industrialized nations and analyses reasons for variation.   (Comm. Fund Report)   Using OECD data and other sources, the authors looked at spending, supply, utilization, prices and quality.  Some other developed countries spend only a third or two-thirds as much as the US on a per capita basis, but these figures are unadjusted for health status, sociodemographic and other factors.   The US spends about 17.5% of GDP on health care, the next highest country is at only 12%, but this is partly a matter of choice by individual consumers in the US.  The higher spending is unlikely to be related to an aging population, as several other countries have a higher average age, and the US has fewer smokers than other countries, so that is not a source of more spending.  (Actually smokers probably have lower lifetime health costs since they don’t live as long, so that may help keep spending down.)  But the US has far higher rates of obesity, which does seem linked to more health spending.  And contrary to popular impressions, the US does not have excess health care resource supply or utilization, with very low relative numbers of physicians and per capita physician visits and fewer hospital beds and hospital stays.  On the other hand, the average cost of a hospital stay in the US is much higher, $18,000 compared to less than $10,000 in several countries.  Branded drug prices are much higher in America, although generic prices are lower on average, while charges for physician visits and procedures are significantly higher, and physicians, particularly specialists, have much higher incomes.  Technology may also play a role in the higher US spending, but generally higher unit prices are undoubtedly the primary factor.  And for our extra spending, our comparative quality is not significantly better, often worse, but those analyses often do not account for socio-demographic and health status.