United States Health Care Spending

It is relatively well known that the United States spends significantly more on health care compared to other high-income countries; however, the explanation of this discrepancy is poorly understood. Reasons elucidating these differences in expenditure include the fee-for-service system, higher costs for pharmaceuticals and diagnostic testing, clinician remuneration, and underinvestment in social services and preventative medicine programs.1 Despite some of these identified factors, it has been a challenge for policy makers to pinpoint specific deficiencies and effect significant change to reduce health care costs and increase efficiency. Using data from the Organisation for Economic Co-operation and Development, a recent comparison of the US health care system with 10 other high-income countries was undertaken to help determine differences that may reveal why our country spends more per capita than other nations.2 Data collected between 2013 and 2016, from 10 different countries representing diverse geographic and health care structures, were analyzed across 7 major domains: general spending, population health, structural capacity, utilization, pharmaceuticals, access and quality of care, and equity. These comparisons revealed several expected and surprising results. The United States spends per capita (mean $9403), almost double compared to the 10 other countries (mean $5419), despite faring worse on population health outcomes (e.g., life expectancy and infant mortality). Although there is a smaller physician work force in the United States (2.6/1000 population vs 3.3/1000 population), remuneration for generalists is nearly double compared to the mean ($218 173 vs $133 723), with similar findings among nurses. Utilization of diagnostic services, such as magnetic resonance imaging and computed tomography scans, was second highest and highest, respectively, compared to the other countries. In addition, utilization of common surgical procedures was also high, although length of stay was shorter than in other countries. Along these lines, the United States spends per capita the most on pharmaceuticals compared to the mean ($1443 vs $749). Lastly, the data suggest that while underinvestment in social programs does not drive up health care costs, administrative costs are significantly higher in the United States. These data from the study conducted by Papanicolas et al2 reveal some important points regarding targets for reducing US health care costs. Factors driving our spending may be related to pricing – such as for pharmaceuticals and diagnostic testing – not utilization, as often assumed. The amount of administration necessary to implement care in the United States, which often are costs absorbed by health care entities, may also be a “hidden factor” in how prices are determined. If future policy intends to reduce spending, careful attention to pricing over utilization and converting administrative burden to administrative efficiency will be paramount. Disclosure The authors have no personal, financial, or institutional interest in any of the drugs, materials, or devices described in this article.