Why the U.S. Spends So Much More Than Other Nations on Health Care
- 6 years ago
Why the U.S. Spends So Much More Than Other Nations on Health Care
Since their data included only personal health care spending, it did not account for spending in the health sector not directly attributed to care of patients, like hospital construction
and administrative costs connected to running Medicaid and Medicare.
In other words, most of the explanation for American health spending growth — and why it has pulled away from health spending in other countries — is
that more is done for patients during hospital stays and doctor visits, they’re charged more per service, or both.
These tend to be less costly than hospital stays, so, on balance, changes in health care
use were associated with a minor reduction (2.5 percent) in health care spending.
For example, one study found that the spending growth for treating patients between 2003
and 2007 is almost entirely because of a growth in prices, with little contribution from growth in the quantity of treatment services provided.
A large part of the answer can be found in the title of a 2003 paper in Health Affairs
by the Princeton University health economist Uwe Reinhardt: “It’s the prices, stupid.”
The study, also written by Gerard Anderson, Peter Hussey and Varduhi Petrosyan, found
that people in the United States typically use about the same amount of health care as people in other wealthy countries do, but pay a lot more for it.
Other studies also point to prices as a major factor in American health care spending growth.
You’d expect some growth in health care spending over this span from the increase in population size and the aging of the population.
Since their data included only personal health care spending, it did not account for spending in the health sector not directly attributed to care of patients, like hospital construction
and administrative costs connected to running Medicaid and Medicare.
In other words, most of the explanation for American health spending growth — and why it has pulled away from health spending in other countries — is
that more is done for patients during hospital stays and doctor visits, they’re charged more per service, or both.
These tend to be less costly than hospital stays, so, on balance, changes in health care
use were associated with a minor reduction (2.5 percent) in health care spending.
For example, one study found that the spending growth for treating patients between 2003
and 2007 is almost entirely because of a growth in prices, with little contribution from growth in the quantity of treatment services provided.
A large part of the answer can be found in the title of a 2003 paper in Health Affairs
by the Princeton University health economist Uwe Reinhardt: “It’s the prices, stupid.”
The study, also written by Gerard Anderson, Peter Hussey and Varduhi Petrosyan, found
that people in the United States typically use about the same amount of health care as people in other wealthy countries do, but pay a lot more for it.
Other studies also point to prices as a major factor in American health care spending growth.
You’d expect some growth in health care spending over this span from the increase in population size and the aging of the population.