Healthcare in U.S. costs 2x as much as other rich nations

Kenny Tucker
March 15, 2018

A new study analyzed why this happens, and what can be done to improve it.

Healthcare in the United States is far from an under-discussed topic. Image credits: Papanicolas et al, 2018 / JAMA.

Evidence: The primary care versus specialist mix in the U.S.is roughly the same as that of the average of other countries.

Fewer people in the United States are insured - 90 percent, compared to other countries which ranged from 99-100 percent.

Per capita spending for pharmaceuticals was also higher in the United States - about $1,443 compared with a range of $466 to $939 in other nations. For other countries, the average infant mortality rate was 3.6 fatalities for every 1,000 live births.

Of course, much ink has been spilled over health care in the past decades, and the causes are complex and hard to thoroughly assess. According to this study, the salaries of nurses and physicians, pharmaceuticals, faculty administration and the medical devices are the reasons behind the whooping cost of healthcare in the United States.

Despite this, the country had significantly poorer health outcomes in many areas.

While it's been said that Americans use more medical services than peer countries, leading to higher costs, the study found salaries of physicians, as well as higher pharmaceutical prices play a significant roles in health care costs. The median per capita spending in the USA was $9,403.

For example, administrative costs related to planning, regulating, and managing accounted for eight percent of total U.S. healthcare costs, compared with a range of one to three percent for other countries. Underinvestment in social services didn't appear to explain the difference, either.

Non-specialist doctors in the United States, for example, are paid on average $220,000 per year - double the average salary in the other countries.

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The good news is that despite poor overall outcomes, when people are sick, the quality of delivered healthcare is quite high.

Researchers also pointed out many myths regarding why United States health care is so pricey. The finding doesn't mean Americans aren't overusing health care - it just means that we aren't alone in doing so. Instead, an effort to reduce prices and administrative costs is needed.

The new study, published in the Journal of the American Medical Association, suggests instead that Americans are using health care at similar rates to other rich countries, and the real difference is the prices of procedures and treatments.

"Most countries get to lower prices one of two ways: they either have a very strong price setter, usually a government agency, or more efficient markets", said Dr Ashish Jha, co-author of the study by researchers at Harvard's TH Chan School of Public Health.

"We have done, through the Affordable Care Act and other policy efforts, nearly nothing about prices". The Germans, the Dutch and all the other countries spend about $5,000. This expense didn't lead to higher health outcomes, as the US performed poorer on several population health outcomes than the other countries, the authors found. For example, researchers found the US appears to have the best outcomes for those who have heart attacks or strokes, but is below average for avoidable hospitalizations for patients with diabetes and asthma.

For years, it has been clear that Americans are not getting a good bang for their buck on health care.

The researchers conclude that it all comes down to prices.

The study, conducted by researchers at Harvard University, debunks numerous common beliefs people have about why the U.S. spend so much money on healthcare.

"As the U.S. continues to struggle with high healthcare spending, it is critical that we make progress on curtailing these costs", said first author Irene Papanicolas, visiting assistant professor in the Department of Health Policy and Management at Harvard.

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