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Comparing US Health Prices to Those in Other Countries

By May 15, 2018Commentary

We know that the US spends more per capita on health care than most developed countries.  This could be higher prices, more utilization or a combination.  Consistent with other research, another Kaiser/Peterson Health System Tracker analysis attributes the difference largely to prices.   (KFF Article)   The analysis starts by comparing utilization measures.  Citizens in the US go to see the doctor less than in most comparable nations.  The average is 7.6 visits a year, in the US it is 3.9, while in Japan it is 12.7.  We also have fewer physicians per capita, at 2.6 per thousand residents, compared to the international average of 3.4.  This isn’t a recent phenomenon; since 2000 the US has had a consistently lower rate of consultations, about 46% fewer visits.  Our hospital patients have shorter stays, the comparable international average is about 10 days per stay, the US is at 6.1.  This is particularly impressive since the US has worked very hard to treat all but the most difficult cases outside the inpatient hospital setting.  And again, this gap in stay length has been fairly consistent over time.  But our average nightly hospital price is higher than average, in fact the highest among developed countries, at $5220 on average, compared to the next highest $4781 in Switzerland, and the low of $765 in Australia.  Angioplasty and bypass surgery  are two common treatments for severe heart disease.  The international average is 215 angioplasties per 100,000 people; the US does 118; and the average is 46 bypass surgeries and the US is at 50.  But our prices are much higher; for angioplasty it is 183% higher than the next highest nation and for bypass 129% more.  For imaging, as represented by MRIs, our use is above average, but our prices are far above average.  And drugs really show a difference, with prices in the US often 100% of more higher than in other countries.

Let me just say again that these international comparisons are really misleading.  Some health demand is caused by underlying social and demographic factors.  Bad health behaviors cause a lot of health spending.  That may be a public health issue, but it doesn’t tell you anything about the performance of a health system in terms of treating disease, for whatever reason it arises.  The US has more bad health behaviors than most countries, so it spends more.  We do a pretty good job at treating disease effectively.  And spending a lot of national income on a particular activity isn’t necessarily bad either.  If people want to spend money on their health, nothing inherently wrong with that.  Health care provides a lot of well-paying jobs in the US.  Many European countries devote absurd amounts of their GDP to welfare payments that allow large segments of their populations to sit around and lead lives devoid of any meaning or significance–is that a better use of national wealth?  And if things like knee replacements are denied in other countries to people who could benefit from the enhanced functionality, is that a sign of a good national health system?  I don’t think so.  We definitely can improve how health care is delivered and paid for in the United States, but other systems, however much cheaper, aren’t really any better.

And, the most important takeaway from the KFF/Peterson studies is that once again international comparisons suggest that PRICE is the biggest issue in US health spending.  Tomorrow we will look at one reason we have those higher prices.

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