The Real Reason US Health Care Costs So Much

Healthcare in US costs 2x as much as other rich nations

Healthcare in US costs 2x as much as other rich nations

At roughly 10%, the USA also has the highest percentage of residents without coverage for basic health care services, even after accounting for insurance gains seen since the implementation of the Affordable Care Act. Administrative costs are 8% of total health spending in the US. As an oft-cited 2003 study put it, "It's the prices, stupid".

The new findings, from Harvard T.H. Chan School of Public Health, the Harvard Global Health Institute, and the London School of Economics, suggest that common explanations as to why healthcare costs are so high-such as the notions that the US has too many doctor visits, hospitalizations, procedures, and specialists, and spends too little on social services that could mitigate healthcare needs-may be wrong.

Despite efforts to control healthcare costs, the still spending about twice as much as other high-income countries on medical care, according to a new JAMA report.

In the study, America was compared to 10 other countries: the United Kingdom, Canada, Germany, Australia, Japan, Sweden, France, Denmark, the Netherlands and Switzerland.

Americans spend almost twice as much on health care than other high-income countries, yet they have the lowest life expectancy, a new study reveals.

One positive - the US ranked second lowest for smokers - was offset by the country having the highest percentage of adults who were either overweight or obese, the lowest life expectancy and highest infant mortality.

However, the US had higher utilization of magnetic resonance imaging and CT scans compared to the others. However, on a per capita basis, the USA spends much more than any other country: $9451 in 2015, compared to Germany's $5267. For several commonly used brand-name pharmaceuticals, the USA had substantially higher prices than other countries, often double the next highest price. But Americans also had access to 111 new drugs, compared with 26 in Switzerland and 11 in France. Health care accounts for nearly 18% of the U.S.'s GDP, compared to 9.6% to 12.4% in the other developed countries, the paper says.

Doctors and nurses made more money in the USA than in the other countries, with nonspecialist physicians getting salaries of about $218,000, compared to an average of about $123,000 for eight other countries in the study.

The US spends nearly twice as much as other high-income countries on health care, and yet has consistently poorer results in many areas, with the lowest life expectancy and highest infant mortality rate of all developed countries.

The main problem, researchers say, is that most policies regarding health care have focused on utilization. In an editorial accompanying the new study, Katherine Baicker and Amitabh Chandra of the University of Chicago and Harvard note that the latest analysis doesn't delve into the qualitative details of health care treatments Americans get compared to people in other countries.

The study also updated the reason behind these data.

"It is not possible to conclude that individuals in the United States pay higher prices for these services just by observing that they spend more but have the same number of visits for cancer care, receive different medications, or use the same number of stents without having granular data about the exact type of services and products being used", they write. During their study, it was found that the United States is spending twice the amount of its wealth on its health care. He notes, for example, that while US doctors make high salaries, there are fewer doctors per capita than in other countries, so the total cost of paying doctors isn't far out of line with countries like Germany or The Netherlands.