How Much More Do Americans Pay for Health Care?

It is well established that the United States spends more for health care than any other economy at a similar level of development.  The most recent reports state that 17 percent of our gross domestic product (GDP) is spent on health care.  How much more do we pay than others?

There are several studies that compare health care spending and outcomes in the United States to those of other members of the Organization of Economically Developed Countries (OECD). The OECD includes, among others, Australia, Canada,  Denmark, France, Germany, Ireland,  Italy, Japan, the Netherlands,  New Zealand, Norway,  Sweden, Switzerland  and  the United Kingdom. On average, Americans spend fewer days in the hospital than people in other countries, but pay more for each discharge. We use more prescription drugs, and we pay more for them. We don’t go to the doctor as often, but we pay our doctors much more than other countries.

How much more do we spend? According to a Commonwealth Fund report released last month, in 2009, per capita spending on health care in the United States was $7,960. Of the countries mentioned above, the next highest spender was Norway at $5,352 — about 2/3 of the U.S.  If health care spending is measured as a percentage of GDP, other countries, we spend far more than others 17.4 percent. The Netherlands spent the next highest percentage of GDP at 12.0 percent.  Norway, which spent more than most other countries, spent9.6 percent of its GDP on health care.

What do we spend our health care dollars on? A 2008 study that broke down spending by category compared the U.S. utilization with 12 countries — all those mentioned above except Italy and Japan. The U.S. had 130 hospital discharges per 1,000 population; the median among 12 OECD countries was 161.  We spent much more per discharge, however —   $16,708. The OECD median was $5,949.  Canada, the second-highest spender, paid $12,669 per discharge, about 75 percent of U.S. spending.

We take more prescription drugs than people in the other countries studied.  In 2008, about 61 percent of U.S. adults took at least one prescription drug regularly, and 25 percent took four or more.  In most of the other countries, more than half of adults took at least one drug regularly. France and Switzerland relied on drugs the least, with 45 percent and 40 percent, respectively. In no other country did as many as 20 percent of adults take four or more drugs regularly.

We spent far more than other countries on prescription drugs — $897 in 2008. One might think that we pay more because many of the latest drugs are available here first. But we paid more for the30 most commonly prescribed drugs than any of eight other countries.  Canadians and Germans spent more than 75 percent of the U.S. prices. Five of the eight other countries paid half or less of U.S. prices.

Physicians also are paid more in the U.S. than in other countries. A recent study compared 2008 U.S. payments for primary care by both public and private payers to those of Australia, Canada, France, Germany and the United Kingdom. Only in the U.K. were prices comparable to the U.S.  Public payers here paid an average of $60 for a primary care visit, $66 in the U.K. The gap between public and private payments was the highest as well. The primary care visit cost a private payer $129 in the U.K.,  $133 in the U.S.  Only in Germany was the public/private gap as large ($46 vs. $104.) A primary care doctor in Canada was paid about the same as a publicly paid doctor in the U.S., $59.

Physicians in the U.S., particularly specialists, are paid much more here than in other countries.  The average primary care physician in the US. earned about $187,000 in 2008, compared to a low of $93,000 in Australia and the high, $160,000, in the U.K.  In contrast, orthopedic surgeons made about $442,000 in the U.S., compared to a low of $154,000 in France and a high of  $324,000 in the U.K.  It should be noted that U.S. medical students pay far more for their education than in other countries, where the costs are lower or even free.

Another major component of health care spending in the U.S. is diagnostic imaging, which is much more common here and also much more expensive. Roemer’s law seems to apply: If you install the equipment, it will be used– at least up to a point.  Compared to the five other OECD countries for which the information was available, we undergo far more magnetic resonance imaging (MRI) tests.  When one considers the ratio of MRI machines to population, the lowest usage is in Australia, with 5.9 MRI machines and 233 tests per per one million people, In France,  there are more than twice as many tests (552) with 6.4 machines. In the U.S., there are 25.9 machines per million people, and 912 exams.  Perhaps more machines have been bought than actually are needed.  As we discussed last time,diagnostic imaging services are highly susceptible to overuse.  An NPR story compared MRI prices in the U.S. to the prices in Japan. The exam in the U.S. cost $1,700. In Japan, $160. The most expensive, state-of-the-art machine in Japan cost $2,000. They are at least twice as expensive here.  We have different machines,. perhaps with more bells and whistles.Then again, the machine that creates spa-like conditions doesn’t sell in Japan, where there are price controls.

Next time–Are We Getting the Health Care We Pay for?

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