It’s the prices, stupid: Americans spend a lot on health care, but get less care

Anderson and his colleagues noticed one big difference between 2003 and 2016: a widening of the gap between what public insurers and private insurers pay for the same health care services. In order to lower per capita health care spending, the authors recommend that the U.S. should focus on what private insurers and self-insured corporations pay, since they pay significantly more than public insurers.

The researchers also found that health spending in the U.S. has been growing faster than the other OECD countries in spite of efforts to control spending in the U.S. Overall U.S. health spending increased at an average rate of 2.8 percent annually between 2000 and 2016, which is greater than the OECD median annual increase of 2.6 percent. Per capita, inflation-adjusted spending on pharmaceuticals also increased much more quickly in the U.S.—at a rate of 3.8 percent per year, compared to just 1.1 percent for the OECD median.

During the same period, U.S. gross domestic product (GDP) per capita increased by only 0.9 percent annually, which means that health care continues to represent a larger share of GDP. U.S. health care spending in 2016 totaled 17.2 percent of GDP, compared to just 8.9 percent for the OECD median.

Not only does the U.S outspend other OECD countries, on the whole it has less access to many health care resources. The researchers found that in 2015, the most recent year for which data were available in the U.S., there were only 7.9 practicing nurses and 2.6 practicing physicians per 1,000 population, compared to the OECD medians of 9.9 nurses and 3.2 physicians.

Similarly, the U.S. in 2015 had only 7.5 new medical school graduates per 100,000 population, compared to the OECD median of 12.1, and just 2.5 acute care hospital beds per 1,000 population compared to the OECD median of 3.4.

Although the U.S. ranked second in the numbers of MRI machines per capita and third in the numbers of CT scanners per capita—implying a relatively high use of these expensive resources—Japan ranked first in both categories, yet was among the lowest overall health care spenders in the OECD in 2016.

“It’s not that we’re getting more; it’s that we’re paying much more,” Anderson says.

“It’s Still The Prices, Stupid: Why The US Spends So Much On Health Care, And A Tribute To Uwe Reinhardt,” was written by Gerard Anderson, Peter Hussey and Varduhi Petrosyan.

— Read more in Gerard F. Anderson et al., “It’s Still the Prices, Stupid: Why the U.S. Spends So Much on Health Care, and a Tribute to Uwe Reinhardt,” Health Affairs 38, no. 1 (2019) (DOI: 10.1377/hlthaff.2018.05144)