It's the Prices, Stupid: Why The United States Is So Different From Other Countries

Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey, Varduhi Petrosyan

Health Affairs. 2003;22(3) 

In This Article

Abstract and Introduction

This paper uses the latest data from the Organization for Economic Cooperation and Development (OECD) to compare the health systems of the thirty member countries in 2000. Total health spending - the distribution of public and private health spending in the OECD countries - is presented and discussed. U.S. public spending as a percentage of GDP (5.8 percent) is virtually identical to public spending in the United Kingdom, Italy, and Japan (5.9 percent each) and not much smaller than in Canada (6.5 percent). The paper also compares pharmaceutical spending, health system capacity, and use of medical services. The data show that the United States spends more on health care than any other country. However, on most measures of health services use, the United States is below the OECD median. These facts suggest that the difference in spending is caused mostly by higher prices for health care goods and services in the United States.

Every year the Organization for Economic Cooperation and Development (OECD) publishes data that allow for comparisons of health systems across thirty industrialized countries. Over the years Health Affairs has published papers on a wide range of topics using these data.[1] This paper, the latest installment in an annual series, uses the most recent OECD data to present a series of snapshots of the health systems in the thirty OECD countries in 2000. Together these snapshots show that the United States spends more on health care than any of the other OECD countries spend, without providing more services than the other countries do. This suggests that the difference in spending is mostly attributable to higher prices of goods and services. This same story is told in earlier, more in-depth studies by other researchers, including Mark Pauly, Victor Fuchs and James Hahn, and Pete Welch and colleagues.[2] Our paper updates these earlier studies with more recent data and more countries.[3] The story is particularly relevant given the recent increases in U.S. health care prices.