Emily RobertsAccording to the Organization for Economic Co operation and Development, the United States is the global leader in healthcare spending, with a startling $11,072 per capita in 2019. (OECD). Following closely behind are Switzerland, Germany, and Norway, each of which spends roughly $8,000, $6,600, and $6,647 per person. The factors for the high cost of healthcare in the US, the effect of rising insurance rates, and the opaque nature of the healthcare system are all covered in this article.
In a Nutshell
- To maintain health and care for their population, most countries must increase their healthcare spending
- Chronic and mental illnesses account for 90% of healthcare spending
- Lack of transparency in the healthcare system makes it difficult to know the true healthcare spending.
- Due to the high cost of care, many Americans choose to forgo seeking medical attention.
- The United States spends more per capita on healthcare than any other developed country, at $11,072 in 2019.
- Even if outcomes and service quality are frequently not at the top of the list, the United States continues to be the nation with the highest healthcare spending per person.
- Many European nations spend similarly to the United States on healthcare, but there is a significant distinction in that government subsidies account for the majority of those expenditures in Europe while pricey private health insurance policies are the norm in the US.
Countries with The Biggest Healthcare Spending
The following 2019 list ranks the top 18 in healthcare spending per capita according to the OECD.
- United States United States
- Switzerland
- Norway
- Germany
- Austria
- Sweden
- Netherlands Netherlands
- Denmark
- Luxembourg
- Belgium
- Canada
- France
- Ireland
- Australia
- Japan
- Island
- United Kingdom
- Finland
Healthcare Spending in the U.S.
The situation was more or less the same five years earlier, in 2014. OECD data ranked the United States as the country with the highest healthcare spending, at around $9,000 per capita. Compare that to Turkey, which spent $1,007 per capita on healthcare in 2014 and $1,340 in 2019, one of the lowest expenditures of any developed country.
Although the U.S. government has the highest healthcare budget, much of the cost is not publicly financed, but comes from personal and private health insurance related expenses. Countries such as Norway (the third highest spender) have socialized much of their medicine. With its surplus from oil derivatives, Norway finances much of the country’s socialized medicine and expenses through its State Pension Fund (although more costs have recently been shifted to private sources).
โHealthcare spending is a necessary part of our nationโs economic health.โ
Bernie Sanders
The fact is that Norway remains one of the healthiest countries despite spending much less than the United States on healthcare ($6,647 per capita).The United States spends more on its healthcare budget in pure dollars per capita, as well as in terms of its gross domestic product (GDP).
However, comparing the amount paid as a function of GDP results in slightly different rankings. In 2019, the United States and Switzerland again took the top two spots, spending 17% and 12% of GDP, respectively. Third place goes to Germany at 11.7%, followed closely by France at 11.2%.
No matter how you look at it, there is no denying that the United States spends more on healthcare by a wide margin. The magnitude of this difference can largely be explained by the fragmentation of the health insurance network in the U.S.
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There are multiple payment types and insurance companies, each offering different services. This lack of federal oversight contrasts with that of other nations, whose governments impose oversight that, by benchmarking prices and services, establishes a national standard of care.
Increase in Health Insurance Premiums
For most people, the rising cost of health insurance premiums is at the heart of their concerns about rising healthcare spending. According to the National Conference of State Legislatures (NCSL), the average annual premium for family health coverage increased nearly 5% in 2018, to $19,616.
The average increase in premium costs in 2018 for individuals in a private plan or health care exchange was $201. The two most cited reasons for these increases were government policy and lifestyle changes.
Government programs such as Medicare and Medicaid have increased the overall demand for medical services, resulting in higher prices. In addition, as noted above, the rising incidence of chronic diseases such as diabetes and heart disease has had a direct impact on the rising cost of medical care. Chronic and mental illnesses are responsible for 90% of healthcare costs and 60% of all Americans suffer from a chronic disease.
Rising insurance premiums are only part of the problem. Americans are paying more out of pocket than ever before. The shift to high deductible health plans (HDHPs), which can impose out of pocket costs including deductibles, copays and coinsurance of up to $13,300 per family, has greatly increased the cost of health insurance.
In fact, between 2006 and 2016, out of pocket expenses for Americans with employer sponsored health coverage increased faster than the expenses paid by their insurers.
Alex GoodmanInefficiency and Lack of Transparency
Due to a lack of openness and inefficiency, it is hard to know what the real cost of health care is. Most people know that healthcare spending is rising, but with few details and complicated bills that are difficult to decipher, it is not easy to know what you are paying.
The Wall Street Journal reported on a hospital that discovered it was charging more than $50,000 for a knee replacement operation that only cost between $7,300 and $10,550. If hospitals do not know the actual cost of a procedure, patients may have difficulty comparing prices. Regarding transparency in general, a New England Journal of Medicine (NEJM) survey found that only 17% of healthcare professionals believed their institutions had “mature” or “very mature” transparency.
Patients Avoiding Care
Rising costs have created another victim: people who skip medical care altogether. They do so not because they fear doctors, but because they fear the bills that come with health care.
A survey by the West Health Institute and NORC at the University of Chicago found that 44% of Americans refused to go to the doctor because of cost. About 40% of respondents said they had skipped a test or treatment for the same reason. In many cases, those who refuse treatment even have health insurance. If you put off or avoid treatment, it’s clear that the care you need will be even more expensive in the long run.
Wrap Up
The health of its population is seriously impacted by the fact that the United States spends more on healthcare than any other developed nation. The high cost of healthcare in the United States is mostly caused by rising insurance premiums and out of pocket expenses, and the opaque nature of the healthcare system makes it challenging to determine the actual cost of care.
Due to the high cost of medical care, many Americans put off seeking treatment, which can result in later, more severe health issues. It is obvious that the United States must deal with the issue of healthcare spending if it wants to ensure the health and welfare of its inhabitants.
FAQs
With a projected healthcare spending of $3.8 trillion in 2020, the United States spends the most. The second greatest spender, China, spends less than half as much as this.
In 2020, it is expected that the US would spend $3.8 trillion on healthcare. The second greatest spender, China, spends less than half as much as this.
17.7% of the US GDP is devoted to healthcare spending. The highest proportion in the entire world is that.
Prescription medications, hospital treatment, physician and clinical services, and administrative costs are the key sources of healthcare spending in the United States.
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- Organisation for Economic Co-Operation and Development – Health Spending
- Norges Bank – About the Fund
- National Conference of State Legislatures – Health Insurance: Premiums and Increases
- Center for Disease Control – Chronic Diseases in America
- Center for Disease Control – Health and Economic Costs of Chronic Diseases
- Kaiser Family Foundation – 2018 Employer Health Benefits Survey
- The Wall Street Journal – What Does Knee Surgery Cost? Few Know and That’s the Problem
- New England Journal of Medicine – New Marketplace Survey: A Slow Path to Transparency for Patients
- West Health Institute and NORC at the University of Chicago – Americans’ Views of Healthcare Costs, Coverage and Policy
