U.S. spends far more on healthcare than other developed countries—and researchers say prices are still to blame 

hospital money
Though prices remain the crucial driver in healthcare spending, the study found that one significant change over the past decade is the widening gap in spending by public and private payers. (Getty/PraewBlackWhile)

More than a decade after a group of health policy researchers concluded that the reason healthcare spending is so high stateside is the “prices, stupid,” an updated look at the issue identifies the same old problems. 

Three of the four researchers on the 2003 study reconvened to compare data between Organization for Economic Cooperation and Development (OECD) countries on healthcare spending and came to much the same conclusion: “it’s still the prices, stupid.” 

In 2016, the U.S. spent $9,892 per capita on healthcare, a number 25% higher than that for the next-highest country, Switzerland, which spent $7,919 per person. U.S. healthcare spending outstripped Canada's by more than 100%, according to the Health Affairs study

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“We’ve done a whole variety of things over the last 15 to 20 years, but America’s situation remains exactly the same,” Gerard Anderson, Ph.D., a health policy professor at Johns Hopkins University and the study’s lead author, told FierceHealthcare. 

RELATED: Healthcare spending slows for 2nd consecutive year, remains at 18% of GDP 

That year, the U.S. spent more than 17% of its gross domestic product on healthcare, while the OECD median was 8.9%, according to the study. The U.S. also spent significantly more on drugs and administrative costs than other countries. 

And that extra spending isn’t translating to better access to care, the researchers found. The U.S. had 18% fewer practicing doctors per 1,000 people than the OECD median in 2015, and the nurse-to-population ratio was 20% below the median. The study also found that there were fewer inpatient hospital beds per 1,000 people than the OECD median. 

Though prices remain the crucial driver in healthcare spending, the study found that one significant change over the past decade is the widening gap in spending by public and private payers. 

RELATED: Growth of healthcare prices finally dropped below inflation—and that trend may be here to stay, Altarum finds 

Anderson said that at the time of the original study Medicare and private insurers paid similar rates. At present, the differential is about 50% nationwide, and in some regions private payers pay 100% greater or more than Medicare does for services. 

“When you give hospitals and physicians more money, they will spend it. And when they spend it, costs increase,” Anderson said. “The problem is the private sector insurers—they keep giving everybody more money, and that causes costs to increase.” 

And despite these trends, much of the discussion and political energy is focused on drug pricing instead of prices for hospital and physician services. Anderson said that’s because drug price increases are more dramatic of late, while prices at hospitals were already high and are thus going up at lower rates. 

Anderson said that at some point the bubble will burst, and private payers and companies are going to take action. It could also spur action on the state level, he said. 

“Hospitals remain the most expensive and the ones we should focus on,” he said. “They’re the long-term story.”

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