Americans Pay More for Health Care but Receive Less in Return

Americans spend considerably more money on health care services than any other industrialized nation, but the increased expenditure does not buy more care, according to a study by researchers at the Johns Hopkins Bloomberg School of Public Health. They found that the United States spent 44 percent more on health care than Switzerland, the nation with the next highest per capita health care costs, in the year 2000. At the same time, Americans had fewer physician visits, and hospital stays were shorter compared with most other industrialized nations. The study suggests that the difference in spending is caused mostly by higher prices for health care goods and services in the United States. The results are published in the May/June 2003 edition of Health Affairs.

“As a country, we need to ask whether increased spending means more resources for patients or simply higher incomes for health care providers,” said Gerard Anderson, PhD, lead study author and professor of in the School’s departments of Health Policy and Management and International Health. “Policymakers should assess exactly what Americans are getting for their greater health care spending. In economics, these are known as opportunity costs because you can spend the money in different ways,” said Dr. Anderson.

For the study, Dr. Anderson and his colleagues compared health systems data of the 30 industrialized countries in the Organization for Economic Cooperation and Development (OECD) from the year 2000, which are the most recent data available. The authors examined the factors contributing to higher health care prices in the United States. They also compared pharmaceutical spending, health system capacity, and use of medical services.

According to the study, U.S. per capita health spending rose to $4,631 in 2000, which was an increase of 6.3 percent over the previous year. The U.S. level was 83 percent higher than Canada and 134 percent higher than the median of $1,983 in the other OECD member nations.

The researchers found that the health care spending gap between the United States and other industrialized countries widened between 1990 and 2000, despite efforts to control spending with managed care.

The study also found that the United States spent 13 percent of the nation’s gross domestic product (GNP) on health care in 2000, which was considerably higher than other nations. In contrast, Switzerland spent 10.7 percent of its GNP on health care, while Canada spent 9.1 percent. The median spending level for the OECD nations was 8 percent. American private spending per capita on health care was $2,580, which was more than five times the OECD median of $451. In addition, the United States financed 56 percent of its health care from private sources, which was the greatest amount of the OECD countries.

According to the study, public financing of health care from sources like Medicare and Medicaid accounted for 5.8 percent of U.S. GDP in 2000, which is similar to the OECD median of 5.9 percent. However, the United States spent $2,051 of public funds per person, which was much more than the OECD median of $1,502. In most of the other OECD countries the public health care expenditures cover everyone, unlike the United States.

“It’s the Price, Stupid: Why the United States Is so Different from Other Countries,” was written by Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey, and Varduhi Petrosyan.