U.S. spends more on medical care per person than any country, yet life expectancy isn’t higher: How come?

Posted on August 2, 2012 by

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Three posts ago we started wondering why the U.S. spends more per capita than any other nation for healthcare–and falls behind even below-average spenders in life expectancy.

Part I showed the staggering visual of U.S.’s disproportionate spending, part II addressed some common misbeliefs about why our healthcare costs are so high.

Even those of us who aren’t financial analysts are curious about this issue–since it affects us quite profoundly in terms of what we spend on health insurance, co-pays, Medicare supplement plans–and don’t forget taxes.

The UC Atlas of Global Inequality depicts the situation in a different graph than we’ve seen before [although I still recommend the visual on this post, for really bringing the point home]

Some answers to the perplexing discrepancy are found in the Commonwealth Fund’s paper, Explaining High Health Care Spending in the United States: An International Comparison of Supply, Utilization, Prices, and Quality .”

It isn’t the aging of our population, and it isn’t our smoking rates that is causing the explosion of spending–with very little payback–so it’s time to address what does cost so much money, and, perhaps, why it doesn’t, in the end, help us stay healthy and alive all that much.

The paper argues the main points for our inflated healthcare costs clearly and persuasively, and it’s worth reading the whole paper. Below is a digest of the major issues:

1. Prices for health services are higher in the U.S. than in any other country:

a. Medications cost more. In fact, writes author Squire, the “30 most-commonly prescribed drugs are one-third higher than in Canada and Germany, and more than double the prices in Australia, France, Netherlands, New Zealand, and the U.K .”

b. Fees for physician visits are higher. In fact, primary care visits were nearly three times as expensive in the U.S. as in Australia and France, and primary care doctors in the U.S. earned around double their counterparts in those countries.

2. Americans have and make use of expensive medical technology much more frequently than their counterparts in other countries.

a. The U.S. has an above-average number of MRI machines, CT and PET scanners, and mammograph machines. For MRI machines, America has five times as many per million people as Australia, and four times as many as Canada and the UK. While the country doesn’t top the list of PET scanners per million, it still has three times as many as Australia, Canada and France, with four times as many as New Zealand.

b. More expensive procedures and diagnostic imaging is done in the U.S. than in most other countries. In 2009 the U.S. and German did the most knee replacements, 75% more than the median. However, the U.S. outperformed any other country in doing the most MRI and CT exams per 1000 people.

c. The fees for such services are higher in the U.S. than in any other studied country. In 2011, an MRI scan cost $280 in France, but $1080 in the U.S. CT scans of the head would run a Canadian $122, a German $272, a Swiss $319–but an American $510.

Thus the reason that the U.S. is an outlier in per capita spending on healthcare become perfectly clear. With more expensive medicine, higher-paid doctors, more expensive machinery, and higher fees to use that machinery (along with more usage), the dollars just keep on flowing.

And to return to my parents, and the “you get what you pay for” philosophy? You’ll remember that life expectancy in the U.S. is below countries that spend in the below-average range per person. What does that look like when you break it down? Well, something like this:

1. Cancer survival rates

Just so we don’t feel totally awful, we have the highest survival rate for breast cancer and shared with Norway in colorectal cancer.

But it takes a nosedive from there.

The survival rate for cervical cancer was worse than the median. And when moving on from cancer our statistics got worse.

2. Asthma and diabetes

The U.S. had among the highest rates of preventable mortality due to asthma, and lower-extremity amputations from diabetes.

3. Hospital fatality rates

And apparently our hospitals aren’t particularly earning themselves any medals, particularly for those who enter with heart attacks or strokes.
The death rate for myocardial infractions was average, for ischemic stroke a bit better than average. And hemorrhagic stroke? Below average.

After all that? we think. All the replacements and mammograms and MRI’s? Seems so.

Says Gerard Anderson, who studies health insurance worldwide, “More care does not necessarily mean better care.”

I’ll have to let my parents know they were wrong all these years: when it comes to American healthcare, you really don’t get what you pay–a whole heck of a lot–for.

Posted in: Health Care, Research