Identifying the key drivers of high U.S. healthcare spending

— Belief: The U.S. uses more healthcare services than peer countries, thus leading to higher costs.Evidence: The U.S. has lower rates of physician visits and days spent in the hospital than other nations.

— Belief: The U.S. has too many specialists and not enough primary care physicians.Evidence: The primary care versus specialist mix in the U.S. is roughly the same as that of the average of other countries.

— Belief: The U.S. provides too much inpatient hospital care.Evidence: Only 19 percent of total healthcare spending in the U.S. is spent on inpatient services—among the lowest proportion of similar countries.

— Belief: The U.S. spends too little on social services and this may contribute to higher healthcare costs among certain populations.Evidence: The U.S. does spend a bit less on social services than other countries but is not an outlier.

— Belief: The quality of healthcare is much lower in the U.S. than in other countries.Evidence: Overall, quality of care in the U.S. isn’t markedly different from that of other countries, and in fact excels in many areas. For example, the U.S. appears to have the best outcomes for those who have heart attacks or strokes, but is below average for avoidable hospitalizations for patients with diabetes and asthma.

What does explain higher spending in the United States is administrative complexity and high prices across a wide range of healthcare services. For example, the findings showed that:

— Administrative costs of care—activities related to planning, regulating, and managing health systems and services—accounted for 8 percent of total healthcare costs, compared with a range of 1 percent-3 percent for other countries.

— Per capita spending for pharmaceuticals was $1,443 in the U.S., compared with a range of $466 to $939 in other nations. For several commonly used brand-name pharmaceuticals, the U.S. had substantially higher prices than other countries, often double the next highest price.

— The average salary for a general practice physician in the U.S. was $218,173, while in other countries the salary range was $86,607-$154,126.

“As the United States continues to struggle with high healthcare spending, it is critical that we make progress on curtailing these costs. International comparisons are very valuable—they allow for reflection on national performance and serve to promote accountability,” said first author Irene Papanicolas, visiting assistant professor in the Department of Health Policy and Management at Harvard Chan School.

Liana Woskie, assistant director of the Harvard Global Health Institute’s strategic initiative on quality, was a co-author of the study.

— Read more in Irene Papanicolas et al., “Health Care Spending in the United States and Other High-Income Countries,” JAMA (13 March 2018): 1024-39 (DOI: 10.1001/jama.2018.1150)