Health Care Spending in the United States and Other High-Income Countries


A study of why the United States spends so much more on health care than in other high-income countries concludes that higher prices — particularly for doctors and pharmaceuticals — and higher administration expenses are predominantly to blame. U.S. policy must focus on reducing these costs in order to close its spending gap with other countries.

The Issue

Pulled Quote
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.

Health care spending in the United States greatly exceeds that in other wealthy countries, but the U.S. does not achieve better health outcomes. Policymakers commonly attribute this spending disparity to overuse of medical services and underinvestment in social services in the U.S. However, there has been relatively little data analysis performed to confirm that assumption. Writing in JAMA, researchers led by former Commonwealth Fund Harkness Fellow Irene Papanicolas and mentor Ashish Jha, M.D., report findings from their study comparing the U.S. with 10 other high-income countries to better understand why health care spending in the U.S. is so much greater.

Key Findings

  • The U.S. continues to spend more on health care. In 2016, the U.S. spent 17.8 percent of its gross domestic product (GDP) on health care, while the average spending level among all high-income countries was 11.5 percent of GDP.
  • The U.S. has lower rates of insurance coverage. While health coverage in the U.S. has risen to 90 percent since enactment of the Affordable Care Act, every other high-income country has achieved coverage for at least 99 percent of its population.
  • The U.S. has mixed levels of population health. While Americans smoke less than people in other wealthy countries do, they have higher rates of obesity and infant mortality. Life expectancy in the U.S. is 78.8 years, nearly three years less than the average life expectancy in high-income countries.
  • Except for diagnostic tests, the U.S. uses health care services at rates similar to those of other countries. Numbers of hospital visits and surgeries performed in the U.S. are similar to those in other countries. However, the U.S. performs 118 MRI scans per 1,000 people, compared to an average of 82 MRIs per 1,000 people among all high-income countries. The U.S. also performs a higher rate of CT scans: 245 per 1,000 people, compared to 151 per 1,000 people among all high-income countries.
  • The U.S. pays more for . . .
    • Doctors. The average salary for a general practitioner in the U.S. is $218,173, nearly double the average salary across all high-income countries. Specialists and nurses in the U.S. also earn significantly more than elsewhere.
    • Pharmaceuticals. The U.S. spends $1,443 per person on pharmaceuticals, compared to the average of $749.
    • Health care administration. The U.S. spends 8 percent of total national health expenditures on activities related to planning, regulating, and managing health systems and services, compared to an average 3 percent spent among all high-income countries.

The Big Picture

The study demonstrates that overall health system performance in the United States does not compare well with that in other wealthy nations, particularly given high U.S. spending — a finding consistent with the Commonwealth Fund’s most recent health system rankings. The health care spending gap with other countries appears to be driven by the high prices the U.S. pays for health care services — particularly doctors, pharmaceuticals, and administration. Compared to its peers, the U.S. has similar levels of spending for social services (including both public and private spending) and similar health care use, neither of which appear to be major causes of the spending gap. To reduce spending, the authors say that U.S. policymakers should focus on lowering prices and administrative costs, rather than just reducing use of health care services.

About the Study

The researchers analyzed data on health care spending, performance, and utilization made available by the Organisation for Economic Co-operation and Development and the Commonwealth Fund from 11 high-income countries: Australia, Canada, Denmark, France, Germany, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the U.S.

The Bottom Line

The United States spends more on health care than other countries do because it pays more for health care services and administration.


Americans’ Views on Health Insurance at the End of a Turbulent Year

The Affordable Care Act’s 2018 open enrollment period came at the end of a turbulent year in health care. The Trump administration took several steps to weaken the ACA’s insurance marketplaces. Meanwhile, congressional Republicans engaged in a nine-month effort to repeal and replace the law’s coverage expansions and roll back Medicaid.

Nevertheless, 11.8 million people had selected plans through the marketplaces by the end of January, about 3.7 percent fewer than the prior year.1 There was an overall increase in enrollment this year in states that run their own marketplaces and a decrease in those states that rely on the federal marketplace.

To gauge the perspectives of Americans on the marketplaces, Medicaid, and other health insurance issues, the Commonwealth Fund Affordable Care Act Tracking Survey interviewed a random, nationally representative sample of 2,410 adults ages 19 to 64 between November 2 and December 27, 2017, including 541 people who have marketplace or Medicaid coverage. The findings are compared to prior ACA tracking surveys, the most recent of which was fielded between March and June 2017. The survey research firm SSRS conducted the survey, which has an overall margin of error is +/– 2.7 percentage points at the 95 percent confidence level. See How We Conducted This Study to learn more about the survey methods.


Adults were asked about:

  • INSURANCE COVERAGE 14 percent of working age adults were uninsured at the end of 2017, unchanged from March–June 2017.
  • AWARENESS OF THE MARKETPLACES 35 percent of uninsured adults were not aware of the marketplaces.
  • REASONS FOR NOT GETTING COVERED Among uninsured adults who were aware of the marketplaces but did not plan to visit them, 71 percent said they didn’t think they could afford health insurance, while 23 percent thought the ACA was going to be repealed.
  • CONFIDENCE ABOUT STAYING COVERED About three in 10 people with marketplace coverage or Medicaid said they were not confident they would be able to keep their coverage in the future. Of those, 47 percent said they felt this way because either the Trump administration would not carry out the law (32%) or Congress would repeal it (15%).
  • SHOULD AFFORDABLE HEALTH CARE BE A RIGHT? 92 percent of working-age adults think that all Americans should have the right to affordable health care, including 99 percent of Democrats, 82 percent of Republicans, and 92 percent of independents.


Healthcare Triage: Why Does the U.S. Spend So Much on Healthcare? High, High Prices.

Image result for Healthcare Triage: Why Does the U.S. Spend So Much on Healthcare? High, High Prices.


American healthcare spending is still WAY higher than pretty much all other industrialized countries. But not that long ago, things were different. The US didn’t spend nearly as much in this realm. What changed? Demographics? More sickness? Nah. Spoiler alert, prices have risen much, much faster than the rate of inflation. We’ve got a few suggestions for getting it under control.


Knock it off, Idaho. (But carry on, Idaho.)

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Credit where credit is due: the Trump administration announced yesterday that it won’t look the other way if Idaho flouts the Affordable Care Act. The ACA “remains the law and we have a duty to enforce and uphold the law,” CMS administrator Seema Verma explained in a letter to Idaho’s governor and its insurance director.

Maybe it’s a mark of how low we’ve sunk that I’m surprised, happy, and relieved to see the Trump administration acknowledge that the law is the law. But politics ain’t beanbag, and Azar and Verma were under immense pressure to allow Idaho to regulate its health insurers without regard to the ACA. That they chose to push back is a testament to their integrity.

Not that the ACA is out of the woods. In her letter, Verma notes that HHS has issued a proposed rule to allow for the sale of short-term health plans that would offer coverage for up to 364 days in a year. By statute, “short-term, limited duration insurance” are exempted from the ACA’s rules. If the rule is finalized, Verma believes that Idaho could allow for the sale of exactly the same noncompliant plans, so long as those plans trim their coverage by one day. Idaho can’t ignore the ACA, but it can bypass it.

Can this be right, though? Can it really be against the law to sell a noncompliant health plan that offers coverage for the whole year, but completely OK to sell the exact same plan if it covers someone for the whole year less one day?

I’m skeptical. Health insurance is typically sold on a one-year basis. If 365 days is the relevant baseline, how can you say with a straight face that a 364-day plan is “short term limited duration insurance”? The statute doesn’t define the term, which means that HHS has some discretion to set a standard. But HHS doesn’t have the discretion to interpret the exception to swallow the rule.

Not only does HHS’s proposed interpretation do violence to the language of the statute. Verma’s letter stands as a tacit acknowledgment that Idaho can achieve its goal of subverting the ACA by exploiting a loophole for short-term plans. How can the agency claim that it’s being faithful to the statutory plan if its interpretation would countenance such flagrant disregard of the law?

The best argument I’ve heard in defense of HHS’s proposal is that it would simply restore a rule that was on the books for twenty years before the Obama administration decided, in 2016, to clamp down and limit “short-term, limited duration insurance” to three months. That argument does give me pause: an agency interpretation of longstanding vintage is entitled to some respect.

But the courts have no problem striking down old rules if they’re inconsistent with statutory text. And, for my part, I’m struggling to understand how a plan that’s 0.27% shorter than a typical insurance plan can possibly count as “short-term limited duration insurance.”


White House pitch to bolster Obamacare includes tough trade-offs for Democrats

The White House is pictured. | Getty

The White House is seeking a package of conservative policy concessions — some of which are certain to antagonize Democrats — in return for backing a legislative package bolstering Obamacare markets, according to a document obtained by POLITICO.

The document indicates the administration will support congressional efforts to prop up the wobbly marketplaces, in exchange for significantly expanding short-term health plans and loosening other insurance regulations.

The document also makes severalreferences to abortion language that will be problematic for Democrats. A potential stumbling block in passing any stabilization package is whether conservatives will insist on including language prohibiting the use of government dollars to pay for abortions.

“Although congressional efforts to provide taxpayer money to prop up the exchanges is understandable, any such efforts must also provide relief to middle-class families harmed by the law and protect life,” the document states.

The source of the document provided to POLITICO isn’t identified and it isn’t dated. The White House declined to comment on the document but didn’t question its authenticity. A spokesperson for HHS said the department does not comment on leaked documents.

Two health policy experts who have been in contact with White House officials indicated that the document is consistent with ideas the administration has discussed for creating more stability and flexibility in the insurance markets.

“It’s legit,” said one former White House policy official.

Republican and Democratic lawmakers have been in delicate negotiations over a stabilization package that could clear the House and Senate. Democrats want to bolster the federal health care law after Republicans failed in their efforts to repeal it last year.

The list of White House policy requests includes allowing insurers to charge older enrollees up to five times as much as their younger counterparts, as opposed to the current three-to-one cap. That policy would require amending the Affordable Care Act.

The White House is also seeking to allow short-term plans — which offer skimpier benefits with lower premiums — to be renewed. Short-term plans, exempt from Obamacare rules, can deny people coverage or charge them more based on a health condition, in a process known as underwriting. The Trump administration recently proposed expanding the maximum length of these plans from three months to one year. However, the White House document envisions allowing people to renew this coverage “without those individuals going through health underwriting.”

The document doesn’t include support for reinsurance, which insurers have been pushing to shield them from the costs of particularly expensive customers.

The document also reiterates that the administration supports funding for cost-sharing reduction payments, which Trump cut off in October. The president’s budget proposal including funding for the payments, which help insurers reduce out-of-pocket costs for low-income Obamacare customers.

There is at least one item on the White House list that could garner bipartisan support: Expanding the use of health savings accounts. Last week, a bipartisan group of House members introduced a package of potential changes, and business groups have been pushing for HSA proposals to be part of the appropriations package Congress must pass by March 23.

Republicans fear another year of eye-popping premium increases will hit voters just before Election Day — and that they’ll get the blame this time since they’re now in charge.

But the White House asks could further unsettle those talks. In particular, the emphasis on abortion language tripped up earlier negotiations.

Democrats have been seeking a very different list of policies to boost the markets. They want to increase the subsidies provided to Obamacare customers, reinstate funding for outreach and marketing, and prevent the executive branch from expanding the availability of what they deride as “junk” insurance plans.

“People nationwide are looking at higher premiums and out-of-pocket costs as a direct result of the damage President Trump has done on health care,” said Sen. Patty Murray (D-Wash.), who has been in the middle of negotiations over a stabilization package, in a statement to POLITICO. “I certainly hope the president and Republican leaders won’t once again sabotage an opportunity to undo some of the damage they’ve done by choosing to play politics with women’s health and making last-minute, harmful demands that would raise families’ costs even more and place an age tax on seniors.”


Big Pharma’s lobbyists are losing despite their ‘pass the buck’ campaigns

Big Pharma's lobbyists are losing despite their 'pass the buck' campaigns

As policymakers and the administration focus on high drug prices, the brand drugmaker lobby has responded by unleashing millions of dollars in an attempt to shift blame.

They’ve blamed price gouging scandals on a “broken system” and claim to want to reform. They bankroll more than 1,400 lobbyists along with many “patient groups” and so-called “experts” to carry these messages to the media outlets and politicians on whom they lavish millions in advertising dollars and campaign contributions.

However, their polling numbers remain as low as before their advertising blitz began as Americans have overwhelmingly negative views of drugmakers and the pricing schemes of “Pharma Bro” Martin Shkreli and others who increased drug prices simply because they found that they could.

The response from the drugmaker lobby has been to rollout slick public relations slogans like “Share the Savings” and “Let’s Talk About Cost” that use fancy infographics in an attempt to move the conversation away from those setting the price of the drug (drug companies) to everyone else who uses or pays for their products, like employers, hospitals, pharmacy benefit managers, insurers, and others.

This isn’t surprising and certainly not unpredictable, but ignores the basic challenge facing drug companies: no amount of money can change the fact that Republicans and Democrats know the problem is high drug prices and that drugmakers alone set those prices.

So despite all this overwhelming lobbying and financial firepower, the question remains: Why are drugmakers losing?

In the recent budget bill, drugmakers were singled out by both parties to pay billions more in discounts to help seniors in the Medicare prescription drug benefit “donut hole.”

This comes as states across the country are taking a harder look at drugmaker pricing schemes and passing legislation in California and Nevada that faced significant pushback from drug companies (and their surrogates).

Like the emperor who wore no clothes, drugmakers have confused politician’s fear of speaking out against them with support for their pricing practices. It appears that most politicians will tolerate, but not believe in the drug lobby’s messages or goals.

Drug manufacturers have a number of options to alter public perception of their pricing strategies. They can assert that their products are a great value at any price but there is definitely a level where that argument fails. They can also compete on price and refrain from automatic pricing increases that obviously impact healthcare affordability.

Instead, they peddle distracting narratives and government mandates that undermine federal programs and result in huge industry profit windfalls. One recent example would be to prevent brand discounts and rebates from being used to lower premiums for seniors.

According to the White House’s budget proposal, this mandate alone would cost the government about more than $42 billion and lead to higher premiums for Medicare beneficiaries.

This is yet another distraction from the real problem of excessive drug pricing. If the drugmakers were truly concerned about affordability, the drug companies would simply reduce their prices. That would have a direct impact on the cost of health care to every American consumer.

Simply put, drugmakers have failed to give policymakers the one thing they need: real solutions that reduce costs. They’ve offered no solutions that score savings — in fact, they all raise costs.

Their relentless, ongoing PR blitz is simply an effort to pass the buck and direct attention away from their pricing strategies. The drug lobby has underestimated the one politician, with whom their money and power doesn’t carry much weight: President Trump. It was only last year that he said drugmakers were “getting away with murder.”

If the record is any indicator, he still thinks Big Pharma is one of the creatures lurking in the swamp he intends to drain.



The Price They Pay


THE BURDEN of high drug costs weighs most heavily on the sickest Americans.

Drug makers have raised prices on treatments for life-threatening or chronic conditions like multiple sclerosis, diabetes and cancer. In turn, insurers have shifted more of those costs onto consumers. Saddled with high deductibles and other out-of-pocket costs that expose them to a drug’s rising list price, many people are paying thousands of dollars a month merely to survive.

For more than a year, President Donald Trump and Democrats in Congress have promised to take action on high drug prices, but despite a flurry of proposals, little has changed.

These are the stories of Americans living daily with the reality of high-cost drugs. And there are millions of others just like them.