U.S. Healthcare Costs

From a cost perspective, the U.S. health care system has been out of control for several years.

A recent study from the Kaiser Foundation found that nearly all developed countries have some kind of universal healthcare and, overall, their taxpayers pay lower prices for procedures and medication. The study discovered that the typical American spends over $10,000 annually for health expenses – the most of any other country by far. It comes to just under 18% of GDP. As a comparison, the average citizen of a developed nation spends roughly $5,000 annually for comparable care — half of what we do in the U.S. (see Chart 1)

But that may imply that residents of other countries have a lower access to care. Right? Not according to this study. Despite paying more, the average American has fewer physician consultations — about 3.9 per individual per year, below the 7.6 average for other countries, and far from the 12.7 visits per Japanese citizen. (See Chart 2). The researchers also note that Americans have a shorter average stay in hospitals — 6.1 days vs. 10.2 days for other developed countries.

The Kaiser study found that Americans pay more for a whole host of procedures such as knee replacement, angioplasty, coronary bypass surgery, MRI’s, colonoscopies, and appendectomies. As an example, the study reported that the cost of a knee replacement in the U.S. ($28,184) is almost double the cost of a knee replacement in Australia ($15,941). In addition, many medications are also a lot more expensive to American individuals than to people living abroad.

The study does not provide any prescriptive recommendations; nor does it show whether the Affordable Care Act’s passage benefitted or hurt America’s standing. It doesn’t draw conclusions at all – simply provides data for us to consider.

On the surface, it seems that other countries may have discovered ways to better manage costs without compromising access.

Chart 1

Chart 2