USA Health Expenditure Costs So Much For So Little

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Main Category: Public Health
Also Included In: Health Insurance / Medical Insurance
Article Date: 23 Nov 2011 - 12:00 PST

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The United States spends 17.4% of its GDP (gross domestic product) on health care, compared to 9.6% among the rest of the OECD countries, a new OECD report announced today. OECD (Organisation for Economic Co-operation and Development) consists of 34 countries, nearly all of which are the richest countries in the world (with the exception of Mexico and Turkey). The authors explained that America is more effective at delivering high costs in health care than quality care.

Not only does the USA spend more per head on healthcare - $7,900 per per person per year - it is also amongst the industrialized countries with the highest number of people with no healthcare cover or inadequate healthcare cover.

The report, called "Health at a Glance" reveals that the USA performs extremely well in cancer care. America outperforms the majority of its rivals in cancer screening rates as well as cancer survival rates. However, as far as preventing expensive hospital admissions for chronic diseases and conditions, it is a long way behind most other OECD countries. The reason is that in the other countries, a much higher percentage of such chronic diseases are managed through proper primary care.

Below are some cancer statistics showing how the USA fares in comparison to other industrialized countries:

• Percentage of eligible women screened for breast cancer (2009)
  USA - 81%, OECD average - 62%
• Percentage of eligible females screened for cervical cancer (2009)
  USA - 86%, OECD average 61%
• Breast cancer 5-year survival rate (2004-2009)
  USA - 89%, OECD average - 84%
• Cervical cancer 5-year survival rate (2004-2009)
  USA - 64%, OECD average 66%
• Colorectal cancer 5-year survival rate (2004-2009)
  USA - females 65%, males 64%, OECD average - females 62%, males 60%

Figures for avoidable hospitalizations for COPD (chronic obstructive pulmonary disease) and asthma complications are:

• Asthma hospital admissions (2009)
  USA - 121 per 100,000 adults, OECD average 52 per 100,000 adults
• COPD hospital admissions (2009)
  USA - 230 per 100,000 adults, OECD average - 198 per 100,000 adults

Total health expenditure (2009)

• USA - 17.4%
• OECD average - 9.6%
• The Netherlands - 12% (the second highest)
• France - 11.8% (the third highest)
• Germany - 11.6% (the fourth highest)
• UK - 9.6%% (thirteenth place). The UK manages to provide free universal healthcare.

In the USA, per capita (per head) spending on health care in 2009 stood at $7,950, compared to the OECD average of 3,233. The second highest spender per capita, Norway, at $5,144 is well below that of the USA.

Why is US healthcare spending so high?

According to the OECD report, there are several reasons.

• Ambulatory care provider spending - this means care provided on an outpatient basis. Spending on doctors, specialists and dentists is nearly two-and-a-half times higher than the OECD average. Same-day surgery has grown significantly in America. Patients prefer them, rather than having to be hospitalized, and hospitals have more free beds. According to the Mickinsey Global Institute (2008), this area of healthcare in America has undergone the fastest growth.
• Medications and medical goods expenditure - medications cost more in the USA than in any other country in the OECD. Ironically, this expenditure represents a smaller percentage of total healthcare spending compared to the other countries (because the USA spends a much higher percentage of GDP on healthcare).
  
  
  The report quotes a study which showed that the price of medications in America is 60% higher than the other five largest economies in the OECD.
• Public health and administration spending - this is particularly high in America; 150% higher than the OECD average. 7% of total healthcare spending in the USA is on public health and administration.
• Prices for hospital services - these are over 60% higher than the average in 12 other nations (the 12 richest OECD countries). Compare the prices of some procedures listed below:
  
  - Appendectomy - USA $7,962, Canada $5,004, Germany $2,943
  - Normal delivery - USA $4,451, Canada $2,800, Germany $1,789
  - Caesarean section - USA $7,449, Canada $4,820, Germany $3,732
  - Percutaneaous transluminal coronary angioplasty (PTCA) - USA $14,378, Canada $9,277, Germany $3,347
  - Coronary artery bypass graft - USA $34,358, Canada $22,694, Germany $14,067
  - Hip replacement - USA $17,406, Canada $11,983, Germany $8,899
  - Knee replacement - USA $14,946, Canada $9,910, Germany $10,011
  

According to evidence, the authors believe that:

"Overall, the evidence suggests that prices for health services and goods are substantially higher in the United States than elsewhere. This is an important cause of higher health spending in the United States."

What does the USA get for all its expenditure?

The authors also set out to find out whether the USA might be providing too much healthcare. In many cases, they found the opposite to be true. There are fewer doctors in the USA relative to its population compared to the rest of the OECD, it has fewer doctor consultations, fewer hospital beds, as well as shorter hospital stays. According to these data, the report states that US healthcare spending "shoulder be lower than the OECD average, not higher".

Examples of where the US health system is providing less than its rival countries:

• Practicing physicians per 1,000 people
  USA 2.4 (ranked 26th), OECD 3.1
• Doctor consultations per capita (per every man, woman and child)
  USA 3.9 (ranked 29th), OECD average 6.5
• Hospital beds per 1,000 people
  USA 3.1 (ranked 29th), OECD average 4.9
• Hospital discharges per 1,000 people
  USA 130.9 (ranked 26th), OECD average 158.1
• Length of stay in hospital (average)
  USA 4.9 days (ranked 29th), OECD average 7.2 days

USA has lots of expensive equipment and elective surgery

A lot of interventions are done in the US health system. There is a large amount of expensive diagnostic equipment, which is used extensively. The US health system performs a great deal of elective surgery - activities which may or may not be absolutely necessary.

Medical devices and procedures in the USA compared to OECD average:

• MRI units per million people
  USA 25.9 people (ranked 2nd), OECD average 12.2
• MRI scans done per 1,000 people
  USA 91.2 (ranked 2nd), OECD average 46.6
• CT scanners per million people
  USA 34.3 (ranked 5th), OECD average 22.8
• CT exams per 1,000 people
  USA 227.9 (ranked 2nd), OECD average 131.8
• Tonsillectomy per 100,000 people
  USA 254.4 (ranked 2nd), OECD average 133.8
• Coronary angioplasty per 100,000 people
  USA 377.2 (ranged 3rd), OECD average187.6
• Knee replacements per 100,000
  USA 212.5 (ranked 1st), OECD average 118.4
• C-sections per 100 live births
  USA 32.3 (ranked 8th), OECD average 25.8

The authors concluded:

"Hence overall the picture about whether the US spends more than other countries because its system does more than other countries is mixed. It does more of some activities, but less of others. Overall, it seems that high prices are probably a more important cause of high spending than high provision of services."

Written by Christian Nordqvist
Copyright: Medical News Today
Not to be reproduced without permission of Medical News Today

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