Mar 13, 2018, 5:16 PM ET

Why the US spends more on health care than other countries, but doesn't fare better: Study


Americans pay more for health care and get fewer results, according to a new analysis.

The U.S. spends more money than any other country on health care, yet life expectancy is shorter, obesity is higher, and the rate of maternal and infant death is higher as well. The study published in JAMA on Tuesday takes a closer look at how health dollars are spent, and some of the findings might be surprising.

Where is the health care money going?

Researchers at Harvard University analyzed data from international organizations on types of spending and performance outcomes between the U.S. and other high-income countries: Canada, Germany, Australia, Japan, Sweden, France, Denmark, The Netherlands and Switzerland.

By comparison, one of the main drivers of the high health care costs in the U.S.: brand name prescription drugs.

In the U.S. people spend, per person, nearly double the on pharmaceutical drugs -- $1,443 -- compared to the average of other countries, $749.

For example, long-acting insulin for diabetes has a monthly cost of $186 in the U.S., but costs a third of that in Canada. Crestor, a common cholesterol-lowering medication, will cost patients $86 in the U.S., but less than half in Germany.

Authors found the total spending on generic drugs in the U.S. is less than 30 percent of the total dollars spent on pharmaceuticals, suggesting that brand name medications are a major driver of costs for the U.S. health care system.

The U.S. spends more, but fewer people are covered

In 2016, while only about 90 percent of the population had health care coverage, the U.S. spent about 18 percent of its GDP on health care. Other countries spent much less of their GDP on health care, ranging from 9 percent in Australia to 12 percent in Switzerland -- while they had more than 99 percent of the populations with health care coverage.

Contrary to popular belief, health care utilization, or how many go to the doctor, and social spending, or how much government spent to improve health, did not differ in the U.S. compared to these countries.

Two-thirds of the difference in health care costs between the U.S. and other countries were rolled up into medication costs, expensive tests and procedures and administrative costs.

“As the U.S. continues to struggle with high health care spending, it is critical that we make progress on curtailing these costs. International comparisons are very valuable — they allow for reflection on national performance and serve to promote accountability,” said first author Irene Papanicolas, visiting assistant professor in the Department of Health Policy and Management at Harvard Chan School.

The U.S. suffers from high prices and the same time it also deals with high volumes.

When it comes to testing, the U.S. performs more CT scans than any other country -- 1.3 million per year. Each scan costs 10 times more than in The Netherlands, for example. Even procedures like a cesarean delivery cost, on average, seven times more in U.S. than in The Netherlands.

PHOTO: A doctor speaks to a patient in an undated stock photo. STOCK/Getty Images
A doctor speaks to a patient in an undated stock photo.

Many have questioned: Are physician salaries also to blame? Yes and no. Salaries paid to doctors and nurses in the U.S. were more than twice as much as other countries. However, researchers say "the number of physicians in the U.S. is comparatively low, offsetting the effect of high salaries."

For example, despite Germany having almost twice as many doctors as in the United States -- 4.1 doctors per 1,000 people, versus 2.6 in the U.S. -- the amount spent on their salaries is essentially the same.

Dr. Hector M. Florimon is a third-year resident in pediatrics at New York Presbyterian-Columbia University Medical Center, working in the ABC News Medical Unit.

News - Why the US spends more on health care than other countries, but doesn't fare better: Study

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  • murray

    US has the best health care if you are rich, smart, and lucky.

  • Emma Lou #2

    america unable to graduate doctors. shame.

  • Geckotan

    I think that there are tons of people that go to the hospitals for the dumbest reasons. Eyelash in the eye, very minor cuts, sore feet (from wearing shoes too small), name it, people have gone to the hospital for the most trivial things. Which in turn takes away doctors time and attention from more serious concerns. Which in turn might skewer the results of how much is spent on healthcare. "There was a guy who came to the ER because his iPhone app told him his sleep was poor quality." "A guy came in the ER and was blue all over his body. He was freaking
    out and trashing the place in pure panic. Turned out he had bought new,
    blue bed sheets and they colored him blue." "Vaginal discharge... Did the pelvic exam, white/clearish
    discharge, I looked at the sample under the microscope & see sperm
    swimming around. Asked her when last she had sex, she says last night..
    Which is when the symptoms started. These are real quotes from doctors.

  • Dicazi

    I bet our doctors have higher school bills to pay off. They can't do that on lower salaries.

  • Dicazi

    They need to compare lawsuits filed in other countries versus the US. If your child has any kind of birth defect, there's a lawyer waiting to file a suit against your OB.
    We have very high rates of C-sections because of the threat of lawsuit if anything goes a bit wrong.
    C-sections cost more and can cause problems for the mother.
    And I know many people who won't even consider generic drugs. Not even for Tylenol or Advil.

  • whitepine

    Maybe if the pharmaceutical companies didn't write their own bills for Congress? Lobbyists in the health care business have written and influenced our Congressmen.

  • bloggette

    The politicians in other countries are not in bed with the drug companies.As long as politicians accept large campaign contributions from the pharmaceuticals they will be beholding to them rather than the people they are supposed to represent. In addition, there used to be an unwritten rule that it was unethical for medical professionals and lawyers to advertise for patients and clientele. If you were well respected you built your practice by word of mouth referrals. Now you can't turn on a TV, read a paper or drive down the road without being bombarded by commercials, ads or billboards. Instead of doctors prescribing what is medically necessary, drug company advertising has conditioned people to request name brand drugs that they may not need or that are no more effective than generic brands, and they pay physicians to push them. Lawsuits also have a negative impact on health care costs. Every birth is not perfect and all operations are not successful, but lawyers will make the case that if there is a problem that someone must be liable. There is no single reason why our health care ranks below other developed countries, yet it costs more. There is so much wrong with our system, but those in a position to something about it are in denial.

  • Colinalcarz

    If our Social Security dollars are invested in big pharma which is what I have heard, then we have a vested interest in guaranteeing the large profits for these companies since it results in providing money to fund social security. If this link is real, it needs to be broken soon. What do seniors do with a disproportionate amount of their social security dollars? Spend them on pharmaceuticals that aren't covered by other programs. End this cycle.

  • Onetaxpayer

    New or deferent does not mean better or more effective. If a new drug or piece of equipment is claimed to be better than it must be proven with certified evidence. This should keep prices down when a drug or manufacturing company claims new is better and increases price. Drug companies should be penalized if they keep drugs that are protected from being manufactured as generic. Drug cost in the US should not cost more than what a basket of representative countries pay for the same drugs they use. We use 40% of the drugs in the world but provide 60 % of the profits for the drug companies. Administrative cost are higher in the US because of the middle man cost of insurance companies. A major review is needed to determine how these cost can be reduced or eliminated. Other countries appear to have better methods in health care. We should not exclude these better practices they have not been invented in the US. Since other advance countries spend less than we do on health care than we do, I do believe we can use the same plan or a better plan. They are not smarter than we are. We need to get past all the special interest groups that want to maintain the status Quo and profits.

  • Chronic

    In Sweden the maximum anyone pays per 12-month period for prescription drugs is 2250 SEK, which is roughly 275 USD. For doctor/hospital visits it is half that. Once you reach the maximum, you get free meds and free doctor’s visits for the rest of the 12-month period.

  • Andy Prokhorov

    So we have twice as little doctors as other developed countries. That explains.

  • weallhaveone

    Silly, everyone knows that it is the profit driven outlook that keeps all prices higher.

  • Banned Squirrel

    The cost of pharmaceuticals and hospital services are outrageous, unfortunately a single payer won't fix the issue with how our government is so dependent on lobbyists. Mandated price controls from an independent board of experts who are beholden ed to strict scrutiny may be required. At the same time however, we may need to look into tort reform to reduce the amount someone can sue for having a side effect to medication or damage/death caused by an accident in the ER.

  • Sarah Levine

    Unfortunately neither Trump nor the Republican party are inclined to fixing our broken healthcare system. Why should they? IT's not like American voters have held them accountable.

  • DeleteMeNot

    The US needs to quit being the only nation paying for research into new drugs. Only in the US are big pharma allowed to charge more than double anywhere else on the planet for brand name, never mind emerging pharma.