NCPA - National Center for Policy Analysis

U.S. TOPS LIST FOR HEALTH CARE SPENDING

February 9, 2010

The United States spends more on heath care than any other country, according to a recent report published by the Organisation for Economic Co-Operation and Development.  For 2007 this amounted to $7,290 per capita, nearly two and a half times above the OECD average of $2,984 for other countries.  However, according to Linda Gorman, a senior fellow at the Independence Institute, there are problems in comparing spending and costs among different countries. 

"The current discussion is a mess because it confuses costs and expenditures," says Gorman.  "The United States' health care costs may be lower than in Europe, but expenditures may be higher simply because people are free to buy more health care than they are in the expenditure constrained government controlled European, and Canadian, systems." 

The OECD report also suggests the United States and Canada have better cancer care than most other countries, raising the question of whether high quality care can be achieved without heightened costs.  Such a scenario is unlikely, says Devon Herrick, a senior fellow with the National Center for Policy Analysis: 

  • More screening -- and especially more aggressive treatment -- will cost money; advanced cancer treatments are costly.
  • If OECD countries believe they can fight cancer without spending more money, they are either planning on using older, less effective drugs or they impose price controls that do not compensate drug makers for advanced therapies.
  • One policy that might help reduce the cost of new cancer therapies is to streamline the process of Food and Drug Administration approval for new therapies, which would bring about increased competition. 

The higher price tag in the United States is a function of better care, says Gorman.  She notes America has less disability, better infant mortality rates, better cancer survival rates, lower population blood pressure, and longer life expectancies over 65 than other OECD nations. 

"In the United States the private system serves as the benchmark for the public systems," says Gorman.  "Private systems spend more on preventive care than public ones because private payers are willing to allocate funds to reduce their individual risk even though more preventive care increases total expenditures." 

Making health care cost less will require deregulation, not further strictures on choice, says Gorman. 

Source: Sarah McIntosh, "U.S. Tops List for Health Care Spending," Heartland Institute, February 7, 2010; and Report, "Expensive health care is not always the best health care," Organisation for Economic Co-Operation and Development, December 8, 2009.

 

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