Global Healthcare Spending: Comparison & Outcomes

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  • 0:00 An Unsustainable Burden
  • 0:43 Highest Percent of GDP
  • 2:16 Different Healthcare Costs
  • 4:16 Administrative Costs &…
  • 5:07 Less Doctor Visits
  • 6:03 Lesson Summary
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Lesson Transcript
Instructor: Patricia Jankowski

Patricia has a BSChE. She's an experienced registered nurse who has worked in various acute care areas as well as in legal nurse consulting.

The Organization for Economic Cooperation and Development collects data yearly on healthcare spending in different high-income countries. This lesson examines the causes of the higher cost of healthcare in the U.S. when compared to other countries.

An Unsustainable Burden

''Today, we are spending over $2 trillion a year on health care, almost 50 percent more per person than the next most costly nation. And yet, for all this spending, more of our citizens are uninsured, the quality of our care is often lower, and we aren't any healthier. In fact, citizens in some countries that spend less than we do are actually living longer than we do.''

These words were said by President Barack Obama during his 2009 speech to the American Medical Association. He was addressing the health care crisis that led to his signing of the Affordable Care Act into law in 2010.

Highest Percent of GDP

Investopedia defines the Gross Domestic Product (GDP), as ''the monetary value of all the finished goods and services produced within a country's borders in a specific time period.'' Usually, the time period is a year. There's a great deal of research being done globally on the topic of health care costs and effectiveness, but some of the most comprehensive is done by the Organization for Economic Cooperation and Development (OECD). Each year, the OECD tracks and compares health care data for the U.S. and several other high-income countries. For the year 2013, this included Japan, New Zealand, Australia, the Netherlands, the United Kingdom, France, Germany, Norway, Denmark, Canada, Sweden, and Switzerland. The goal of the tracking is to measure and compare the cost of health care and to determine whether that cost is leading to more positive outcomes or not.

The data for 2013 shows that 17.1 percent of the U.S. GDP was spent on health care. This is significantly more than all of the other countries studied in the comparison. France is the next one down on the list, at 11.6 percent of the GDP. The total health care spending in the U.S. per capita for the year 2013 was $9,086, and the OECD average of all the countries that were compared was $3,661 for that year.

Different Healthcare Costs

So what makes American health care so expensive? First, let's note that of all the countries compared, the U.S. is the only one that doesn't have some form of universal health insurance system other than Medicare and Medicaid, which covers the elderly and some of the poor. How has that affected health care?

For the year 2013, the number of MRIs, CT scans, and PET scans that were done in the comparison countries were measured per 1,000 persons. Again, the U.S. had the highest number of all three tests, showing 106.9 MRIs, 240 CT scans, and 5 PET scans.

The U.S. population also takes more drugs. The average person over age 18 takes 2.2 prescription drugs regularly. This doesn't include over-the-counter drugs, which also cost money and have side effects, nor does it show how many drugs the average person takes if he or she is over 60.

Besides doing more tests and taking more drugs, the U.S. also spends a lot more on tests and drugs. In the U.S., it costs $1,145 to have an MRI. In Australia, it's $350. For a CT of the abdomen, it'll be $896 if you live in the U.S. But if you're from Canada, you'll pay $97 for the same CT scan.

Also, suppose you live in the U.S. and you need a Serevent Diskus to control your chronic obstructive pulmonary disease? Unless you have insurance, you'll pay about $445. But if you're in Canada, you can get it for about $80.

But why? In countries that have a national health care system, drug prices are negotiated with the appropriate government organizations. This doesn't happen in the United States, and American insurance companies don't usually negotiate the drug prices either. Brand-name drugs are more expensive than generics, and it takes the Food and Drug Administration (FDA) a long time to approve them.

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