The US Spends More On Health Care Than Wealthy Nations But Its People Are In Worse Health

American is spending more on health care than any other high-income countries, a new analysis has revealed. The reason? Costly branded medicine and expensive diagnostic procedures, among other things.  ( Joe Raedle | Getty Images )

The United States burns a lot of cash for healthcare — more than the world’s other wealthy countries, in fact — but Americans aren’t any healthier. Why?

America spends 17.8 percent of its gross domestic product on healthcare — nearly 55 percent more than a group of rich countries, as revealed by a new study, which looked at 10 other countries with high incomes, high healthcare spending, and “populations with similar demographic characteristics that have similar burdens of illness.”

Despite the country’s massive spending for healthcare, life expectancy for U.S. residents is shorter, obesity rates are higher, and maternal and infant death rates are also higher. What’s more, fewer people are covered compared to other countries.

The results, published in The Journal of the American Medical Association, dive deeper into how the country spends money for healthcare, and some of the findings are startling.

Healthcare Spending In The US

Harvard University researchers compared the healthcare spending of different first-world countries, including the United States. One of the main reasons why healthcare cost is high in the United States is brand name prescription drugs.

On average, an individual from the other countries spent $749 on pharmaceutical drugs. In the United States, a person spent a whopping $1,443, nearly double than the average of first-world neighbors.

U.S. drugs are expensive compared to other countries. Diabetes insulin, for starters, costs $186 in the United States but costs much, much lower in Canada. Crestor, a common type of medicine that lowers cholesterol, costs $86 in the United States but is priced less than half in Germany.

Analysis reveals that the spending on generic drugs in the United States is less than 30 percent on the total spending on pharmaceuticals, which supports the idea that massive spending is due in part to branded medicine purchases.

Healthcare Coverage

Only 90 percent of Americans were covered under healthcare coverage in 2016, yet the United States alloted 18 percent of its GDP on healthcare spending. By contrast, other countries spent much less — Australia just took 9 percent, while Switzerland just took 12 percent — even though their population had higher healthcare coverage.

Testing Expenses

Aside from expensive medicine, the United States also has startlingly expensive costs for different tests, at least compared with the cost of the same examinations in other countries. For example, a CT Scan in the United States is 10 times more costly than in The Netherlands. A cesarean birth delivery is seven times more expensive on average, too.

“We actually seem to have about the same number of tests and visits as other countries do. It’s not necessarily that a lot of it is unnecessary, because our volume is similar. It appears we are spending more for the same stuff,” according to study coauthor Liana Woskie, assistant director of the Harvard Global Health Institute’s strategic initiative on quality.

Doctors and nurses are also paid more generously than on other countries. A U.S. general physician earns, on average, $218,173, much steeper than other countries, which average between $86,607 and $154,126.

The study is “ambitious and comprehensive,” according to Katherine Baicker, the dean at University of Chicago’s Harris School of Public Policy. However, she also warned that the study cannot provide an entirely accurate comparative picture of different healthcare systems because of the variations in the way healthcare is provided. She also warned against making policies willy-nilly based on the research alone.

“[O]ne should have a note of caution in observing those differences and jumping immediately to a policy prescription, because policy prescriptions are going to require much more information about what’s under the hood,” she said.

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