Why is there a mismatch between healthcare spending and outcomes in the United States? - Writedenweb (2023)

FAQs

What are some of the reasons for the healthcare spending gap between the United States and other countries? ›

The biggest contributor to the difference in costs between the U.S. and peer nations is spending on inpatient and outpatient care. Yet, people in the U.S. use less care and have worse health outcomes than those in peer nations.

In 2021, the U.S. spent 17.8 percent of gross domestic product (GDP) on health care, nearly twice as much as the average OECD country. Health spending per person in the U.S. was nearly two times higher than in the closest country, Germany, and four times higher than in South Korea.

US spends more on health care than peer countries

The data showed that in 2021 alone, the US spent nearly twice as much as the average OECD country on health care – and health spending in the US was three to four times higher than in South Korea, New Zealand and Japan.

There are many possible reasons for that increase in healthcare prices: The introduction of new, innovative healthcare technology can lead to better, more expensive procedures and products. The complexity of the U.S. healthcare system can lead to administrative waste in the insurance and provider payment systems.

A Journal of the American Medical Association (JAMA) study found five factors that affect the cost of healthcare: a growing population, aging seniors, disease prevalence or incidence, medical service utilization, and service price and intensity.

The United States Spends More on Healthcare per Person than Other Wealthy Countries. The amount of resources a country allocates for healthcare varies as each country has its own political, economic, and social attributes that help determine how much it will spend.

The United States spends more on healthcare than any other OECD country, both as a proportion of GDP (16.9%) and per person (USD 10 586). Spending is expected to increase with healthcare as a proportion of GDP forecast to reach 20% by 2030.

The U.S. ranks last overall on the health care outcomes domain (Exhibit 1). On nine of the 10 component measures, U.S. performance is lowest among the countries (Appendix 8), including having the highest infant mortality rate (5.7 deaths per 1,000 live births) and lowest life expectancy at age 60 (23.1 years).

The United States spends twice as much on medical care per person than other wealthy countries. In the U.S., it costs an average of about $12,600 a year for every man, woman and child. That has led to a health care system that's rich in resources, but with health outcomes that are remarkably poor.

Why is health care spending in the United States so much greater than in other high income countries? ›

Prices of labor and goods, including pharmaceuticals, and administrative costs appeared to be the major drivers of the difference in overall cost between the United States and other high-income countries.

According to a 2019 study by healthcare scholars in the Journal of the American Medical Association, the annual cost of wasteful spending in healthcare has ranged from $760 billion to $935 billion in recent years, or nearly one-quarter of total healthcare spending.

There are two reasons why high medical spending is problematic: It is associated with substantial waste, and it makes society more unequal. However, noting that high spending on medical care is not prima facie problematic does not imply that we needn't worry about the level of such spending in the United States.

The increase in health care costs might also prompt governments to raise taxes, increase borrowing or reduce investments in other critical sectors such as education and infrastructure, suppressing economic growth and affecting both businesses and households.

High costs inflate the earnings of many providers and make the industry unnecessarily large. The cost of employer-provided health insurance, largely invisible to employees, not only holds down wages but also destroys jobs, especially for less skilled workers, and replaces good jobs with worse jobs at lower wages.

The biggest reason for the increase is insurance costs, which have grown by 740% since 1984, Clever calculates.

This data set allowed for an analysis of the association of 5 fundamental factors with growth in health care spending: changes in population size, the aging of the population, and changes in disease prevalence or incidence, service utilization, and service price and intensity.

High Costs of Care

High cost is the primary reason that prevents Americans from accessing health care services. Americans with below-average incomes are much more affected, since visiting a physician when sick, getting a recommended test, or follow-up care has become unaffordable.

Premium increases, higher deductibles and copays, and soaring prescription drug prices result in spikes in healthcare costs. According to the Centers for Medicare & Medicaid Services¹, in 2021, healthcare costs skyrocketed to $4.3 trillion.

A primary cause of high health care costs in the U.S. is the use of a fee-for-service model. The increasing costs of health care for the elderly.

What are the three ways that reduce cost in the US healthcare system? ›

According to the WHO, the top countries in terms of healthcare quality are mostly in Europe, with Switzerland, France, and Germany consistently ranking highly.

The United States, on a per capita basis, spends much more on health care than other developed countries; the chief reason is not greater health care utilization, but higher prices, according to a study from a team led by a Johns Hopkins Bloomberg School of Public Health researcher.

Taxes are lower. Food costs less. And salaries are lower. Foreign doctors often make a sixth of the salary of their U.S. counterparts.

As our chart illustrates, U.S. per-capita healthcare spending (including public and private as well as compulsory and voluntary spending) is higher than anywhere else in the world, with second-placed Germany trailing quite far behind. On average, healthcare costs in the U.S. amounted up to $12,318 per person in 2021.

In the UK, the public health system can be accessed by all permanent residents, is mostly free at the point of use and is almost entirely paid for through taxation. Americans are far more likely to rely on private insurance to fund their healthcare since accessing public healthcare is dependent on your income.

In Europe, patient data is protected by GDPR, in the US it's HIPAA, — and countries over both continents are sometimes having a hard time to employ the necessary safeguards. Interoperability. Considering the fact that the USA has no unified healthcare system, it has different systems to keep the patients' data too.

The answer to the question, “what country leads the world in medical innovation?” is the United States. Medical industry professionals all over the world would have to agree that the top medical technology currently being used around the world has ties to the U.S.

For example, the average life expectancy among Black or African American people in the United States is four years lower than that of White people. These disparities sometimes persist even when accounting for other demographic and socioeconomic factors, such as age or income.

How does poor healthcare affect the economy? ›

Poor health generates costs for employers, such as greater healthcare expenses; and higher rates of disability, absences for illness and medical appointments, and presenteeism (working while sick) generate indirect costs that reduce workforce productivity and contribute to declines in labor force participation.

Still, the study adds to the body of evidence on the dramatic impact of health-care costs. Even with Medicaid as a safety net, health care is a major burden for low-income people—so much so that it deeply exacerbates differences in income and wealth.

There are many possible reasons for that increase in healthcare prices: The introduction of new, innovative healthcare technology can lead to better, more expensive procedures and products. The complexity of the U.S. healthcare system can lead to administrative waste in the insurance and provider payment systems.

Prior studies estimated that approximately 30% of health care spending may be considered waste. Despite efforts to reduce overtreatment, improve care, and address overpayment, it is likely that substantial waste in US health care spending remains.

On a per capita basis, health spending has increased in the last five decades, from $353 per person in 1970 to $12,914 in 2021. In constant 2021 dollars, the increase was from $1,951 in 1970 to $12,914 in 2021.

The largest source of waste, according to the study, is administrative costs, totaling $266 billion a year. This includes time and resources devoted to billing and reporting to insurers and public programs.

Despite high U.S. spending, Americans experience worse health outcomes than their peers around world. For example, life expectancy at birth in the U.S. was 77 years in 2020 — three years lower than the OECD average. Provisional data shows life expectancy in the U.S. dropped even further in 2021.

Put another way, if administrative spending is about 15–30 percent of national health spending, then wasteful administrative spending comprises half of that, or 7.5–15 percent of national health spending (or $285–$570 billion in 2019).

How does the US benefit from high healthcare spending? ›

There is a positive correlation between total per capita healthcare expenditure and labor productivity. Thus, by increasing healthcare expenditure, the health status of Americans will improve, increasing labor productivity.

Rising drug, technology, and professional costs, along with an aging population, are major factors contributing to a rise in health care costs.

Heart disease and stroke, which have the highest death rate, are also the most expensive to treat and responsible for six of the most expensive medical procedures.

By federal law, nonprofit hospitals must offer financial assistance to those who cannot pay their bills. Some states also have other laws about uncompensated care, such as Washington, where all hospitals must tell patients about financial assistance programs when they receive care.

The researchers determined that the higher overall health care spending in the U.S. was due mainly to higher prices—including higher drug prices, higher salaries for doctors and nurses, higher hospital administration costs and higher prices for many medical services.

The most notable way the U.S. differs from other industrialized countries is the absence of universal health insurance coverage. 5 Other nations ensure the accessibility of care through universal health systems and through better ties between patients and the physician practices that serve as their medical homes.

High cost is the primary reason that prevents Americans from accessing health care services. Americans with below-average incomes are much more affected, since visiting a physician when sick, getting a recommended test, or follow-up care has become unaffordable.

The US health-care model relies on a direct-fee system and private health insurance. This model has been criticized for contributing to high health-care costs, high rates of uninsured individuals, and high rates of health problems in comparison to the situation in other Western nations.

The increase in health care costs might also prompt governments to raise taxes, increase borrowing or reduce investments in other critical sectors such as education and infrastructure, suppressing economic growth and affecting both businesses and households.

Rising health care costs both contribute to our federal deficit and reduce our ability to spend in other important areas including education, housing and economic development.

How much does the United States spend on healthcare? ›

In 2021, spending was $187.6 billion, less than the unprecedented levels in 2020, but still higher than before the pandemic. Government sponsored pandemic relief resulted in other federal programs spending increasing from only $14.0 billion in 2019 to $193.1 billion in 2020. In 2021, spending was $71.9 billion.

Rising drug, technology, and professional costs, along with an aging population, are major factors contributing to a rise in health care costs.

South Korea tops the list of best healthcare systems in the world. It's been praised for being modern and efficient, with quality, well-equipped medical facilities and highly trained medical professionals. Generally, treatment in South Korea is affordable and readily available.