Disparities in health expenditure across OECD countries: Why does the United States spend so much more than other countries?

This document is a written statement to Senate Special Committee on Aging, written by Mark Pearson on September 2009. It describes different factors (such as price, times and quantity) that may explain higher health expenditures.

“The United States spends much more on health than any other OECD country on a per capita basis and as a share of GDP. This higher expenditure can only be partly explained by the high income level of US citizens. The extra $750bn that America spends on health more than expected is not due to greater ‘need’ due to aging or sickness.”

The statements developed are the following:
Health expenditure in the United States is far higher than in other developed countries
What areas of health spending are high (and low) in the United States?
Expenditure = Price times Quantity: which one explains high US health spending?

As a conclusion, the author says that “higher spending than in other countries is due either to higher prices for medical goods and services or to higher service use. Unfortunately, existing comparisons of health prices across countries are of poor quality. Nevertheless, all evidence suggests that prices of health goods and services are significantly higher in the United States than in most OECD countries, and that this is the main cause of high overall health spending.

Health service use is high in some areas, particularly those which are funded on a fee-for-service basis, including some advanced diagnostic techniques and elective surgery. But it is notable that where there are payment structures that encourage cost-consciousness, the United States has a very efficient system: there are few physicians and hospital beds, and average length of stay in hospital is low. This is a sign that the structure of the health system determines expenditures.”

You can download the pdf on:
http://www.oecd.org/dataoecd/5/34/43800977.pdf

< Back to main