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U.S. still top spender on health care

The United States continues to outspend other developed nations on health care, according to data released Thursday. Yet Americans continue to lag in certain key indicators of health.
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The United States continues to far outspend other developed nations on health care, according to data released Thursday. Americans’ health costs now account for 13.9 percent of gross domestic product, or $4,887 per person. Yet Americans continue to lag in certain key indicators of health.

That per-capita spending more than doubles the average of $2,117 among the 30 member nations of the Organization for Economic Cooperation and Development, which released the statistics. The next-highest spender on health is Switzerland, at $3,248 per person or 10.9 percent of its GDP.

By comparison, Germany came in at about $2,800 a year (10.7 percent of GDP) and the United Kingdom, which has a public health system, spent just under $2,000 (7.6 percent) per person for 2001, the most recent date for the comparative data.

“Given how much the United States is spending, are they getting good value for the money?” asks Elizabeth Docteur, principal policy analyst for health at the OECD. “This is clearly a very expensive way to go.”

Not only are Americans spending more on health, but the growth in spending is at a faster rate — 4.4 percent, versus a 4 percent average for developed nations. While lower than a rapid 5.1 percent annual growth in the 1980s, it’s a quickening from the 3.3 percent annual growth in the 1990s. Americans have been outpacing other nations in health expenses since at least 1990.

At the same time, U.S. life expectancy lags other nations: 76.8 years in 2000, versus an average of 77.2 years. Residents in countries such as Japan, Iceland, Sweden and Canada all were living longer. And Americans remained fatter than other countries, though obesity rates are rising in all developed nations. (Twenty-two percent of Britons were considered obese, though just 9 percent in continental Europe were fat.)

Fewer doctors, higher costs
U.S. patients also had fewer doctors to see than those in other countries — with 2.7 practicing physicians per 1,000 people, slightly lower than the average of 2.9 among developed nations. Despite fears of a nursing shortage, the United States had as many nurses as other nations: 8.1 per 1,000 people. U.S. patients usually have shorter hospital stays than in other nations, just two days after childbirth and 5.7 days after a heart attack. The shorter stays are a sign of efficiency, though they tend to raise costs.

U.S. hospitals, meantime, have 2.9 beds per 1,000 people — below the average for developed nations.

The primary cause for Americans’ spiraling health costs are private health insurance and facilities; public health payments account for just 44 percent of overall spending, compared to 72 percent in other developed nations, the OECD data show. Some 35 percent of U.S. health spending is covered by private insurance, more than any other country studied. And of course, the United States outspends other developed nations on pharmaceuticals, at $605 per person per year.

'Prices are ... camouflaged'
According to Princeton University health economist Uwe Reinhardt, those costs come from certain fundamental imbalances in the health care system between providers and patients. “We have a carefully structured health care system where the demand side has almost no power,” he says. “The supply side has been unbelievably clever always to make sure that the demand side is weak.”

Reinhardt notes the proliferation of insurance companies and health plans force doctors and hospitals to spend heavily on administrative costs that most other nations don’t have. In countries such as Canada, the government’s buying power as a sole purchaser drives down prices.

By contrast, U.S. providers can negotiate different charges depending on who’s paying, which weakens patients’ bargaining power. “It is a system where prices are very carefully camouflaged. They don’t really exist,” Reinhardt says.

The higher U.S. costs do offer some benefits: more technical innovations and intensive levels of acute care, which contribute to excellent outcomes for those who need serious treatment. And the lower numbers of doctors may underscore the efficiencies of a privatized system. But disparities in care levels appear to remain profound among Americans, especially for the uninsured. “There’s different ways of rationing care,” Docteur says. “The U.S. is one that, in some ways, rations by willingness to pay.”