The cost and quality of the US healthcare system is one of the most important issues facing everyday Americans. It is a major political concern for voters, a key indicator of economic efficiency, and a significant driver of national debt. The recent release of the Organization for Economic Co-operation and Development (OECD) Health Statistics 2023, a comprehensive source of comparable statistics on health systems in OECD member countries, provides policymakers and the public with some insight into how the system American healthcare compares to others.
The United States spends more on health care per capita than other rich countries
The amount of resources a country allocates to health care varies as each country has its own political, economic, and social attributes that help determine how much it will spend. In general, richer countries like the United States will spend more on health care than less wealthy countries. As such, it helps compare health care spending in the United States with spending in other relatively wealthy countries those with gross domestic product (GDP) and per capita GDP above the median, relative to all OECD countries.
In 2022, the United States spent about $12,555 per person on health care, the highest per capita health care costs in OECD countries. For comparison, Switzerland was the second-highest spending country with around $8,049 in health care costs per person, while the average for rich OECD countries excluding the United States was just $6,414 per person. Such comparisons indicate that the United States spends a disproportionate amount on health care.
Why does the US spend more on health care?
Healthcare spending is driven by usage (the number of services used) and price (the amount charged per service). An increase in any of these factors can lead to higher health care costs. Although per capita spending on health care is almost double, utilization rates in the United States do not differ significantly from other rich OECD countries. Prices, therefore, appear to be the main driver of the cost difference between the United States and other rich countries. In fact, prices in the US tend to be higher regardless of usage rates. For example, the Peterson-Kaiser Health System Tracker notes that the US has shorter hospital stays, fewer angioplasty surgeries, and more knee replacements than comparable countries, but prices for each are higher in the US.
There are many possible factors why healthcare prices in the US are higher than in other countries, ranging from hospital consolidations that lead to a lack of competition to administrative inefficiencies and waste that result from the complexity of the US healthcare system. In fact, the United States spends over $900 per person on administrative costs, four times as much as the average in other wealthy countries and about the same amount we spend on preventive or long-term health care.
Does this higher expense lead to better results?
Higher healthcare spending can be beneficial if it translates into better healthcare outcomes. However, despite higher health care spending, the Americas’ health outcomes are no better than those of other developed countries. The US actually performs worse in some common health metrics like life expectancy, infant mortality, and unmanaged diabetes.
A high-cost, underperforming healthcare system undermines our economy and threatens our long-term fiscal and economic well-being. Fortunately, there are opportunities to transform our healthcare system into one that produces higher quality care at a lower cost. For more information on potential reforms, visit our solutions page and the Peterson Center on Healthcare.
Related: Healthcare costs for Americans are expected to grow at an alarming rate
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