It is a well known fact that the U.S. spends more on health care per person than any other country. But maybe healthcare spending is converging between countries?
At least for the years 2000-2008, there is mixed evidence. U.S. healthcare spending per person grew by 3.4%. This is slower than Spain (4.7%), the U.K. (4.6%), the Netherlands (4.3%), Belgium (4.2%), and Sweden (3.6%). However, spending as a share of GDP grew fastest in the U.S. of any country over this time period. The U.S. experienced a 2.6 percentage point gain in health care spending as a share of GDP. The next closest country was Belgium with a 2.1 percentage point increase in healthcare spending as a share of GDP and the Netherlands with a 1.9 percentage point increase.
In 2008, the disparities in healthcare spending as a share of GDP were still immense. The U.S. spent 16% of its economic production on health care. The next closest countries are France (11.2%), Belgium (11.1%), Switzerland (10.7%), Germany (10.5%), Austria (10.5%), Canada (10.4%), and the Netherlands (9.9%).
Even if the U.S. doesn’t reduce it’s health spending level, if the current health care spending rate does not slow, this country could be bankrupt sooner rather than later.
- Source: Kaiser Family Foundation using data from the OECD.
There is indeed evidence that the underlying cost drivers are the same in all developed countries. In a 2008 report, CBO noted “If the health care system adopts new services rapidly and applies them broadly in the future—as it has tended to do in the past—then large increases in health care spending are likely to continue.” But that doesn’t mean costs are converging. During 2002-2008, Switzerland, Germany and Norway all reduced health spending as a share of GDP. The difference is productivity. Comparative studies of domestic providers show that the US health system as a whole is passing up productivity gains of 30 percent or more.
Americans are rightly wary of price controls, as practiced abroad. Such regimes notoriously weaken innovation and breed organizations that are more interested in their employees than their customers. But then that model pretty much describes the state of American medicine. It turns out that the one thing worse than price controls is price fixing. Ninety percent of Americans face hospital markets that are highly concentrated, and in ten percent of markets there is only one hospital system. So long as providers can fix prices for the privately insured, they will never realize their productive potential.
Interesting statistics. One of the ways the U.S. can not only slow the health care spending rate, but actually reduce it, is by taking a look at the supply chain to identify cost-savings strategies. Smart healthcare supply chain strategies such as third-party medical device reprocessing have the potential to save the healthcare industry nearly $2 billion every year. These types of operational strategies need to be part of the reform discussion.
–Lars Thording, Stryker Sustainability Solutions, protectoursavings.com
Concern about national health spending has always struck me as the biggest bogus issue of all. About half that spending is by government, the rest is what we choose to spend on a voluntary basis. There is no compulsion. We spend it on health care because we can afford to. As a nation we are very well-fed, well-dressed, well-housed, and while our education could be a whole lot better, it does not lack resources. We spend far more on education than any other country.
Would we have a better country if we had to spend 25% of our GDP on food, and therefore less on health? I don’t think so.
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