Medicine

Labor, administrative costs drive U.S. healthcare spending far beyond other nations

Labor, administrative costs drive U.S. healthcare spending far beyond other nations

In 2016, the US spent almost twice as much as other high-income countries on healthcare, yet had poorer population health outcomes. In the United States, the average salary was $218,173.

"In addition, the reasons for these substantially higher costs have been misunderstood: These data suggest that numerous policy efforts in the US have not been truly evidence-based".

While it's been said that Americans use more medical services than peer countries, leading to higher costs, the study found salaries of physicians, as well as higher pharmaceutical prices play a significant roles in health care costs. Underinvestment in social services didn't appear to explain the difference, either.

"We know that the U.S.is an outlier in healthcare costs, spending twice as much as peer nations to deliver care".

The findings were published March 13 in the Journal of the American Medical Association.

"Most countries get to lower prices one of two ways: they either have a very strong price setter, usually a government agency, or more efficient markets", said Dr Ashish Jha, co-author of the study by researchers at Harvard's TH Chan School of Public Health.

The study also updated the reason behind these data.

The study in the Journal of the American Medical Association (JAMA) compared the USA health system to 10 other high-income countries - Britain, Canada, Germany, Australia, Japan, Sweden, France, Denmark, the Netherlands, and Switzerland. The other countries ranged from 9.6% (Australia) to 12.4% (Switzerland). In 2016, the United States spent 17.8% of GDP, compared to 9.6%-12.4% in other countries.

Researchers found life expectancy in the United States was the lowest of 11 countries at 78.8 years old, while people in other wealthy nations are expected to live between 80 and 83.9 years.

Life expectancy in the U.S.is 78.8 years, compared to the average of 81.7 years among the countries studied.

But commonly held beliefs for these differences appear at odds with the evidence, the study found.

Though utilization in many areas mirrored other nations, administrative costs in the US system dwarfed other countries.

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Despite beliefs to the contrary, "the U.S. has lower rates of physician visits and days spent in the hospital than other nations", said the report.

Belief: The U.S. has too many specialists and not enough primary care physicians.

More doctor visits and hospital stays aren't the problem.

Researchers debunked another belief that claims the USA doesn't spend enough money on social services that benefit health and helps prevent illness, thus contributing to higher health care costs.

Other countries had universal, or near universal, health insurance rates.

Despite this, the United States still lags behind all other developed countries when it comes to the quality of said healthcare.

Infant mortality was higher in the USA than the other countries, with 5.8 deaths per 1,000 live births in the US and 3.6 deaths per 1,000 live births in all 11 countries. The US actually has excellent healthcare for those who have heart attacks or strokes but is below average in avoidable hospitalizations for things like diabetes and asthma.

Instead, high prices for labor and goods, including drugs, procedures and administrative services, seemed to be the major reasons, according to the analysis. These costs, which include planning, regulating and managing health systems and services, accounted for 8% of costs in the US compared to between 1% and 3% in the other countries.

Doctors and nurses made more money in the USA than in the other countries, with nonspecialist physicians getting salaries of about $218,000, compared to an average of about $123,000 for eight other countries in the study.

However, the US had higher utilization of magnetic resonance imaging and CT scans compared to the others. Prices of drugs like cholesterol-lowering Crestor or diabetes medication Lantus were more than twice as high in the USA than in other countries. In the U.S., per capita spending was $1,443. "Worldwide comparisons are very valuable-they allow for reflection on national performance and serve to promote accountability", said first author Irene Papanicolas, visiting assistant professor in the Department of Health Policy and Management at Harvard Chan School.

People in the United States shell out $9,403 a year on health care services, while wealthy nations like Germany spend on average a little more $5,000.


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