What drives health spending in the U.S. compared to other countries

“The United States spends significantly more on healthcare than comparable countries, and yet has worse health outcomes. Much of the national conversation has focused on spending on prescription drugs and administrative costs as the primary drivers of health spending in the U.S. [..] While it is true that many brand-name prescription drugs are priced higher in the U.S. than in peer countries, health spending data indicates that other spending categories – particularly hospital and physician payments – are greater drivers of health spending.

[..] In 2018, the U.S. spent nearly twice as much per capita on health as comparable countries. Most of the additional dollars the U.S. spends on health compared to peer nations goes to providers for inpatient and outpatient care. The U.S. also spends more on administrative costs, but perhaps not as much as people think, and spends significantly less on long-term care.

[..] Health costs in the U.S. were $5,110 more per person than costs in similarly large and wealthy countries. The difference in spending on inpatient and outpatient care was $3,906 per person, accounting for over three-quarters (76%) of the difference in spending between the U.S. and comparable countries. The U.S. spent $736 more per person on administrative costs compared to comparable countries, which represented 14% of the difference in overall spending. The additional dollars the U.S. also spent on medical goods and drugs than comparable countries accounted for 10% of the overall difference in spending.

[..] Between 2008 and 2018, health spending grew at a similar rate in both the U.S. and comparable countries (3.7% and 3.6%, respectively). However, since spending in the U.S. was significantly higher to begin with, the rate amounted to roughly twice as much in spending in dollars in the U.S. compared to comparable countries. The same is true for the growth in many specific spending categories.

[..] In the U.S., the largest growth in terms of dollar value was for spending on inpatient and outpatient care, which grew by $2,089 per capita between 2008 and 2018 (i.e., 3.9% growth). In comparable countries, the largest contributor to the growth in spending was also inpatient and outpatient care (which grew by 3.2%), but the dollar increase ($712 per capita) was smaller than in the U.S.

[..] Comparable country data was taken by averaging spending data from countries that have above median GDP and above median GDP per capita (Austria, Belgium, Canada, France, Germany, Netherlands, Sweden, Switzerland, and the United Kingdom). Australia and Japan were not included due to gaps in data on categories of spending for 2018. The United Kingdom and Switzerland did not have spending data on inpatient and outpatient care for 2008, and therefore were excluded from the analysis of growth rates between 2008 and 2018.”

Full article, Kurani N and Cox C. Peterson-KFF Health System Tracker 2020.9.25