US Spending More on Health Care Than Other Nations

May 6, 2003 (PLANSPONSOR.com) - Health care spending per person in the United States increased by 6.3% from 1999 to 2000, a spike that only widened the gap between US health care spending and that of other industrialized countries in the Organization for Economic Cooperation and Development (OECD).

The rise in health care spending in 2000 brought health care spending per person in the US to $4,631, 134% more than the median of $1,983 for 30 industrialized countries in the OECD. This means that the US now spends more on health care than any other industrialized country, but does not provide more health care services, according to a study conducted by the quarterly journal Health Affairs.

Looking at the other 30 nations studied, US spending on health care per person was 83% higher than its northern neighbor, Canada, and 44% higher than Switzerland, the OECD country that ranked second to the United States in per person annual health care expenditures. Health care spending per person was the lowest in our southern neighbor Mexico at $490, followed by Slovakia ($690), Hungary ($841) and Korea ($893).

GDP Spending

Measured in terms of Gross Domestic Product (GDP), the US spent 13% on health care in 2000, compared to 10.7% in Switzerland and 9.1% in Canada. The OECD median was 8% and Mexico, Slovakia, Hungary and Korea; those nations at the low-end of the scale were at 5.4%, 5.9%, 6.8% and 5.9% respectively.

Private spending per person on health care was $2,580, more than five times the OECD median of $451. Public programs spent $2,051 per person on health care in 2000. The OECD median was $1,502.

Pharmaceutical Spending

In 2000, per person spending on pharmaceuticals ranged from $556 in the United States to $93 in Mexico. “In spite of having the highest per capita spending, the United States is closer to other countries on pharmaceutical spending than spending for other health services and goods,” the study said.

Average annual growth in real per capita spending on pharmaceuticals during the 10-year period between 1990 and 2000 increased at an annual compound rate of 4.5% in the median OECD country. The US increase of 6% placed it toward the top of the list, trailing only Australia (6.9%), Norway (7.4%) and Sweden (6.8%).

Cost Differentials

The higher domestic costs were attributed to a number of plausible explanations:

  • US health care workers’ salaries likely were higher
  • medical equipment, pharmaceuticals, and other supplies probably were more expensive
  • average US hospital stay could be more service intensive than elsewhere
  • US health care system – particularly the payment system – could be less efficient than in other countries.

One other major driving factor was the availability of advanced medical technology. The US has 8.1 magnetic resonance imaging (MRI) scanners per million people, 13.6 computer tomography (CT) scanners per million people, 388.1 coronary angioplasties per 100,000 people, and 86.5 patients undergoing dialysis per 100,000 people. Comparatively, the OECD median is 4.7, 12.2, not available due to lack of representation, and 39.8, respectively. Canada by comparison had 2.5, 8.2, 80.8 and 45.7, respectively and the US’s other neighbor, Mexico, had 0.3, 2, 1.8, and 32.5, respectively.

The study, titled: “It’s the Prices, Stupid: Why the United States is So Different From Other Countries,” can be found at www.healthaffairs.org .