United States Healthcare Spending and Outcomes
The United States is spending more money and achieving fewer quality health outcomes than many of the Organization for Economic Cooperation and Development (OECD) peer higher-income nations. The United States has a lower life expectancy, highest rate of suicide, highest burden of chronic disease, double the average rate of obesity, and among the highest rates of hospitalization for preventable illness (Tikkanen & Abrams, 2020). Government spending rates of OECD nations are similar, but U.S. individual out of pocket expenses are greater than most, and U.S. private spending is more than five times the rate of Canada, the second highest private spender. This then begs the question: if the government is spending similar per capita, why are Americans spending more private money and yet still achieving poorer results?
The first consideration is a comparison of cost for goods and/or services. In their economic analysis report, Papanicolas et al. (2018) considered drivers of U.S. healthcare spending compared with other developed nations. Despite broad generalizations among policy makers to the contrary, this report found that the United States is not spending too much on healthcare and too little on social services comparative to peer nations. There was no notable difference in services targeting improvement of social determinants of health across nations in this data analysis review. The United States did demonstrate high levels of administrative spending costs, as well as higher rates of some common surgical procedures (coronary revascularization and joint replacement), and more expensive pharmaceuticals, fees for physician/hospital services, and diagnostic tests. (Papanicolas et al., 2018). Targeted action to decrease cost of these goods and services could help to rein spending.
The recent enactment of the No Surprises Act, which protects patients from onerous out-of-network billing practices, was a bipartisan effort by legislators to curb health costs (Hall, 2021). While this bill will certainly be a welcome protection for patients, it has the potential to simply shift out-of-pocket costs from the consumer to insurance payers while doing little for the overall balance of spending. Costs will continue to be high until the United States decides if it wants to spearhead a true national health plan, or if it will continue to provide the either/or option of government sponsored plans versus private insurance.
In light of similar rates of government spending, we must also consider the efficiency with which the government money is spent. Government money is defined here as public funding generated via taxation. The United Kingdom (UK), which spends only half as much on healthcare as the United States, funds 79% of of its National Health Service (NHS) through taxation. By comparison, Switzerland funds only 30.5% of healthcare expenditure with tax funds; the bulk is largely via compulsory private insurance (Cooper, 2019). Switzerland spends a combined (government and private funds) 12% of its adjusted GDP, compared to the United States 16.0% and UK 9.8%, and achieves among the highest overall outcomes (Tikkanen and Abrams, 2020). One takeaway one might consider is that private dollars achieve better outcomes than government, and that cost is relative to outcomes. Is the United States actually spending “too much”, or is it possible that the high outcomes Switzerland achieves really do come with a higher price tag?
