Americans are spending significantly more on healthcare compared to citizens of other developed nations, yet paradoxically, they are not receiving a greater level of care. A groundbreaking study spearheaded by researchers at the Johns Hopkins Bloomberg School of Public Health sheds light on this disparity, pinpointing the primary culprit: inflated prices, not increased utilization of healthcare services. This research, published in Health Affairs, underscores a persistent challenge within the U.S. healthcare system.
The investigation definitively concludes that the exorbitant healthcare expenditure in the United States is primarily driven by elevated prices across the board. This encompasses higher costs for pharmaceuticals, inflated salaries for medical professionals including doctors and nurses, greater hospital administrative expenses, and increased prices for a wide spectrum of medical services. The findings emphasize that the US stands as an anomaly in per capita healthcare spending, reaching $9,892 in 2016. This figure surpasses the second highest spender, Switzerland, by approximately 25%, and dwarfs countries like Canada (108% higher) and the median of OECD nations (145% higher). Alarmingly, this spending is more than double the $4,559 per capita the U.S. allocated to healthcare in 2000, the baseline year for a prior study conducted by the same research team in 2003.
Echoing their seminal 2003 publication, “It’s the prices, stupid: why the United States is so different from other countries,” the researchers, in collaboration with the late Princeton health economist Uwe Reinhardt, who passed away in 2017, reaffirm their initial conclusions. This updated analysis serves partly as a tribute to Reinhardt’s enduring contributions to the field. Gerard F. Anderson, PhD, the lead author and a professor at the Johns Hopkins Bloomberg School’s Department of Health Policy and Management, emphasizes the continued relevance of their findings. “Despite decades of efforts to control health spending in the U.S., the core issue remains unchanged – the U.S. remains the most expensive due to the elevated prices it pays for health services,” he states.
Both the original 2003 study and this updated research are rooted in a comparative analysis of healthcare utilization and spending within the U.S. and other industrialized OECD member countries. Peter Hussey, PhD, vice president of the RAND Corporation, and Dean Varduhi Petrosyan, PhD, from the American University of Armenia, co-authored the recent study. A significant shift observed between the 2003 and 2016 data sets is the widening gulf between payments made by public and private insurers for identical healthcare services. The researchers advocate for focusing on the payment structures of private insurers and self-insured corporations as a key strategy to curtail per capita healthcare spending, given their significantly higher reimbursement rates compared to public insurers.
Furthermore, the study reveals that healthcare expenditure in the U.S. has outpaced the growth in other OECD nations, despite numerous domestic initiatives aimed at cost containment. Overall U.S. health spending surged at an average annual rate of 2.8% between 2000 and 2016, exceeding the OECD median annual increase of 2.6%. Per capita spending on pharmaceuticals, adjusted for inflation, also escalated at a much faster pace in the U.S. – 3.8% per year, compared to a mere 1.1% for the OECD median. Concurrently, the U.S. Gross Domestic Product (GDP) per capita only grew by 0.9% annually during the same period, indicating that healthcare is consuming an ever-increasing proportion of the nation’s economic output. In 2016, U.S. healthcare spending reached a staggering 17.2% of GDP, nearly double the OECD median of 8.9%.
Adding to the concerning picture, the U.S. not only spends more but also exhibits diminished access to certain crucial healthcare resources. Data from 2015, the latest year available for this metric, reveals that the U.S. had only 7.9 practicing nurses and 2.6 practicing physicians per 1,000 individuals, falling short of the OECD medians of 9.9 nurses and 3.2 physicians. Similarly, the U.S. recorded a lower rate of new medical school graduates (7.5 per 100,000 population) compared to the OECD median (12.1), and fewer acute care hospital beds (2.5 per 1,000 population) versus the OECD median (3.4).
Interestingly, while the U.S. ranks high in the availability of advanced medical imaging technology, such as MRI machines and CT scanners, this does not translate to better overall healthcare value. Japan, for instance, leads in the number of both MRI and CT scanners per capita yet maintains some of the lowest overall healthcare spending within the OECD. As Anderson succinctly concludes, “It’s not that we’re getting more; it’s that we’re paying much more.” The study, titled “It’s Still The Prices, Stupid: Why The US Spends So Much On Health Care, And A Tribute To Uwe Reinhardt,” underscores the urgent need to address pricing mechanisms within the U.S. healthcare system to achieve cost-effectiveness and equitable access to care, drawing attention once again to critical research originating from institutions like Johns Hopkins.
