Soaring US Healthcare Spending Due to Technology, Drug Costs

November 20, 2015 - Before the Patient Protection and Affordable Care Act came into play, the United States was spending much more money on healthcare than many other first world countries. Despite high levels of US healthcare spending, our nation experiences worse patient health outcomes, more chronic medical conditions, and a lower life expectancy than other high-income countries, according to a brief from The Commonwealth Fund.

The brief consists of a study analyzing the costs of healthcare and patient outcomes across 13 different nations around the globe – France, Denmark, Australia, Canada, Japan, Netherlands, Germany, Norway, Sweden, New Zealand, Switzerland, the United Kingdom, and the United States.

The study also took a look at the Economic Cooperation and Development scores of each nation. While US healthcare spending growth has slowed down, the overall costs of healthcare are far greater in the states than in other nations.

One interesting finding is that the US healthcare system uses expensive technologies like the Magnetic Resonance Imaging Machine much more frequently than other nations while our doctor visits and hospital admissions remain relatively low. The American healthcare system also uses PET and CT scans more frequently when compared to other countries.

The study also determined that the US spends little on social services like housing and employment assistance, disability benefits, or food programs. Chronic conditions and life expectancy are lower when compared to some other first world nations. However, mortality rates from cancer are falling much more quickly in the United States than other countries.

When looking at the year 2013, the UK spent 8.8 percent of its gross domestic product on healthcare costs while the United States spent nearly twice as much on healthcare at 17.1 percent of its GDP.

France had relatively high spending at 11.6 percent of its GDP. The annual growth rate of healthcare spending has slowed down in all of the countries studied with the UK and Denmark exhibiting a negative growth rate.

When it comes to out-of-pocket costs, the average US citizen spent $1,074 on healthcare in 2013. Only citizens in Switzerland spent more out-of-pocket at $1,630 that year. Despite the fact that the United States was the only country analyzed without a universal healthcare system, public healthcare spending was still the third highest at $4,197 per capita in 2013.

Another problem standing in the way throughout the American healthcare system is that there were fewer practicing physicians in 2013 when compared to other nations. The average American also commits to fewer doctor visits per year than residents of Japan, Canada, and other countries.

An average US citizen is also likely to use more prescription drugs than residents of most other countries analyzed other than New Zealand. US healthcare spending was among the highest when it came to bypass surgery, appendectomies, MRI and CT scan use, and in-patient pharmaceutical services.

Despite high levels of US healthcare spending, the results show that population health outcomes in this country fall below that of other regions around the globe. Both life expectancy and infant mortality rates are worse off in the United States than other nations studied in the report.

The study illustrates that mortality rates from cancer are lower in the US than other nations, but heart disease is still a major problem within the nation. The study concludes that the high levels of US healthcare spending may be due to merely larger prices of services as well as more utilization of expensive technologies.

“In line with previous studies, the results of this analysis suggest that the excess is likely driven by greater utilization of medical technology and higher prices, rather than use of routine services, such as more frequent visits to physicians and hospitals,” the issued brief stated.

“High healthcare spending has far-reaching consequences in the U.S. economy, contributing to wage stagnation, personal bankruptcy, and budget deficits, and creating a competitive disadvantage relative to other nations. One potential consequence of high health spending is that it may crowd out other forms of social spending that support health. In the U.S., health care spending substantially outweighs spending on social services. This imbalance may contribute to the country’s poor health outcomes.”

“New care models that reward health care providers based on their patient population’s health outcomes (e.g., accountable care organizations) are an interesting development. Such accountability could create a business case for health care providers to invest in certain social services or other nonclinical interventions, if doing so would be a cost-effective way to improve patients’ health.”

This is not the only report to illustrate that US healthcare spending has been extensively high when looking at the models of care in other nations. The document Health at a Glance 2015 shows that the United States of America actually spends more per person on healthcare costs than any other country across the globe.

The report outlines that pharmaceutical costs lead to a high percentage of this extensive medical spending. Once again, the researchers behind the analysis found that higher prices were essentially responsible for the increased costs as well.

“Pharmaceutical spending across OECD countries reached around USD 800 billion in 2013,” the document stated. “Retail pharmaceutical spending growth has slowed down in most OECD countries in the last decade, while spending on pharmaceuticals used in hospital has increased in most countries where this information is available.”

“Current market developments, such as the multiplication of high-cost medicines targeting small populations and/or complex conditions, have prompted new debates on the sustainability and efficiency of pharmaceutical spending.”