It’s The Prices, Stupid: Why The United States Is So Different From Other Countries

Abstract

This paper uses the latest data from the Organization for Economic Cooperation and Development (OECD) to compare the health systems of the thirty member countries in 2000. Total health spending--the distribution of public and private health spending in the OECD countries--is presented and discussed. U.S. public spending as a percentage of GDP (5.8 percent) is virtually identical to public spending in the United Kingdom, Italy, and Japan (5.9 percent each) and not much smaller than in Canada (6.5 percent). The paper also compares pharmaceutical spending, health system capacity, and use of medical services. The data show that the United States spends more on health care than any other country. However, on most measures of health services use, the United States is below the OECD median. These facts suggest that the difference in spending is caused mostly by higher prices for health care goods and services in the United States.

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“…9 In many cases, particularly in the United States, it is high prices, even more than excessive service volume, that really drive massive U.S. health care spending. [10][11][12] But even if we choose to address volume rather than prices and other systematic drivers, cost-sharing ignores the fact that a large amount of overuse is only slightly (and indirectly) driven by patients. After all, patients cannot order their own tests, including costly advanced imaging, or most any therapy, nor have themselves admitted for a massively expensive hospital stay, without at least the agreement of the person most responsible for such decisions -a physician.…”

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