Nav: Home

Key drivers of high US healthcare spending identified

March 13, 2018

Key takeaways:

  • In 2016, the U.S. spent nearly twice as much as other high-income countries on healthcare, yet had poorer population health outcomes.

  • The main drivers of higher healthcare spending in the U.S. are generally high prices--for salaries of physicians and nurses, pharmaceuticals, medical devices, and administration.

  • Contrary to commonly held beliefs, high utilization of healthcare services and low spending on social services do not appear to play a significant role in higher U.S. healthcare costs.

  • In addition, despite poor population health outcomes, quality of healthcare delivered once people are sick is high in the U.S.

Boston, MA - The major drivers of high healthcare costs in the U.S. appear to be higher prices for nearly everything--from physician and hospital services to diagnostic tests to pharmaceuticals--and administrative complexity.

The new findings, from Harvard T.H. Chan School of Public Health, the Harvard Global Health Institute, and the London School of Economics, suggest that common explanations as to why healthcare costs are so high--such as the notions that the U.S. has too many doctor visits, hospitalizations, procedures, and specialists, and spends too little on social services that could mitigate healthcare needs--may be wrong.

The study will be published March 13, 2018 in JAMA (Journal of the American Medical Association).

"We know that the U.S. is an outlier in healthcare costs, spending twice as much as peer nations to deliver care. This gap and the challenges it poses for American consumers, policymakers, and business leaders was a major impetus for healthcare reform in the U.S., including delivery reforms implemented as part of the Affordable Care Act," said senior author Ashish Jha, K.T. Li Professor of Global Health at Harvard Chan School and Director of the Harvard Global Health Institute (HGHI). "In addition, the reasons for these substantially higher costs have been misunderstood: These data suggest that many of the policy efforts in the U.S. have not been truly evidence-based."

Using international data primarily from 2013-16, the researchers compared the U.S. with 10 other high-income countries--the United Kingdom, Canada, Germany, Australia, Japan, Sweden, France, Denmark, the Netherlands, and Switzerland--on approximately 100 metrics that underpin healthcare spending.

The study confirmed that the U.S. has substantially higher spending, worse population health outcomes, and worse access to care than other wealthy countries. For example, in 2016, the U.S. spent 17.8% of its gross domestic product on healthcare, while other countries ranged from 9.6% (Australia) to 12.4% (Switzerland). Life expectancy in the U.S. was the lowest of all 11 countries in the study, at 78.8 years; the range for other countries was 80.7-83.9 years. The proportion of the U.S. population with health insurance was 90%, lower than all the other countries, which ranged from 99%-100% coverage.

But commonly held beliefs for these differences appear at odds with the evidence, the study found. Key findings included:

Belief: The U.S. uses more healthcare services than peer countries, thus leading to higher costs.
Evidence: The U.S. has lower rates of physician visits and days spent in the hospital than other nations.

Belief: The U.S. has too many specialists and not enough primary care physicians.
Evidence: The primary care versus specialist mix in the U.S. is roughly the same as that of the average of other countries.

Belief: The U.S. provides too much inpatient hospital care.
Evidence: Only 19% of total healthcare spending in the U.S. is spent on inpatient services--among the lowest proportion of similar countries.

Belief: The U.S. spends too little on social services and this may contribute to higher healthcare costs among certain populations.
Evidence: The U.S. does spend a bit less on social services than other countries but is not an outlier.

Belief: The quality of healthcare is much lower in the U.S. than in other countries.
Evidence: Overall, quality of care in the U.S. isn't markedly different from that of other countries, and in fact excels in many areas. For example, the U.S. appears to have the best outcomes for those who have heart attacks or strokes, but is below average for avoidable hospitalizations for patients with diabetes and asthma.

What does explain higher spending in the U.S. is administrative complexity and high prices across a wide range of healthcare services. For example, the findings showed that:
  • Administrative costs of care--activities related to planning, regulating, and managing health systems and services--accounted for 8% of total healthcare costs, compared with a range of 1%-3% for other countries.

  • Per capita spending for pharmaceuticals was $1,443 in the U.S., compared with a range of $466 to $939 in other nations. For several commonly used brand-name pharmaceuticals, the U.S. had substantially higher prices than other countries, often double the next highest price.

  • The average salary for a general practice physician in the U.S. was $218,173, while in other countries the salary range was $86,607-$154,126.


"As the U.S. continues to struggle with high healthcare spending, it is critical that we make progress on curtailing these costs. International comparisons are very valuable--they allow for reflection on national performance and serve to promote accountability," said first author Irene Papanicolas, visiting assistant professor in the Department of Health Policy and Management at Harvard Chan School.

Liana Woskie, assistant director of the Harvard Global Health Institute's strategic initiative on quality, was a co-author of the study.

"Health Care Spending in the United States and Other High-Income Countries," Irene Papanicolas, Liana R. Woskie, Ashish K. Jha, JAMA, online March 13, 2018, doi: 10.1001/jama.2018.1150
-end-
Visit the Harvard Chan School website for the latest news, press releases, and multimedia offerings.

Harvard T.H. Chan School of Public Health brings together dedicated experts from many disciplines to educate new generations of global health leaders and produce powerful ideas that improve the lives and health of people everywhere. As a community of leading scientists, educators, and students, we work together to take innovative ideas from the laboratory to people's lives--not only making scientific breakthroughs, but also working to change individual behaviors, public policies, and health care practices. Each year, more than 400 faculty members at Harvard Chan School teach 1,000-plus full-time students from around the world and train thousands more through online and executive education courses. Founded in 1913 as the Harvard-MIT School of Health Officers, the School is recognized as America's oldest professional training program in public health.

Harvard T.H. Chan School of Public Health

Related Science Articles:

PETA science group promotes animal-free science at society of toxicology conference
The PETA International Science Consortium Ltd. is presenting two posters on animal-free methods for testing inhalation toxicity at the 56th annual Society of Toxicology (SOT) meeting March 12 to 16, 2017, in Baltimore, Maryland.
AAAS and March for Science partner to uphold science
AAAS, the world's largest general scientific organization, announced Thursday that it will partner with the March for Science, a nonpartisan set of activities that aim to promote science education and the use of scientific evidence to inform policy.
Citizen Science in the Digital Age: Rhetoric, Science and Public Engagement
James Wynn's timely investigation highlights scientific studies grounded in publicly gathered data and probes the rhetoric these studies employ.
Science/Science Careers' survey ranks top biotech, pharma, and biopharma employers
The Science and Science Careers' 2016 annual Top Employers Survey polled employees in the biotechnology, biopharmaceutical, pharmaceutical, and related industries to determine the 20 best employers in these industries as well as their driving characteristics.
Three natural science professors win TJ Park Science Fellowship
Professor Jung-Min Kee (Department of Chemistry, UNIST), Professor Kyudong Choi (Department of Mathematical Sciences, UNIST), and Professor Kwanpyo Kim (Department of Physics, UNIST) are the recipients of the Cheong-Am (TJ Park) Science Fellowship of the year 2016.
Danforth Plant Science Center & Valent BioSciences collaborate in root science initiative
A Master Agreement will focus on improving agriculture with non-destructive imaging technology for root growth dynamics.
2016 Cool Science Image contest: Amazing pictures tell tales of science, nature
Ten images and two videos by University of Wisconsin-Madison students, faculty and staff have been named winners of the 2016 Cool Science Image contest.
National Science Foundation and Popular Science announce 2016 Vizzies winners
The National Science Foundation (NSF) and Popular Science magazine today announced the winners of the 2016 Vizzies, awards that celebrate the use of visual media to clearly and accessibly communicate scientific data and research.
Over 900 science leaders from over 100 countries gather at the World Science Forum 2015 Budapest calling for a more responsible and ethical use of science to address pressing global challenges in environment and health
At the Opening Ceremony of World Science Forum 2015 under the theme of 'The Enabling Power of Science' a panel of global thought-leaders declared renewed intent to fight poverty and promote just, equitable and inclusive social development based on the restoration, protection and sustainable use of natural resources and ecosystems.
AAAS to expand the Science family of journals by launching 2 new journals -- Science Robotics and Science Immunology
In keeping with its mission to advance scientific progress and innovation, the world's largest general scientific organization -- the American Association for the Advancement of Science -- today announced plans for two new peer-reviewed journals, Science Robotics and Science Immunology.

Related Science Reading:

Women in Science: 50 Fearless Pioneers Who Changed the World
by Rachel Ignotofsky (Author)

Everything You Need to Ace Science in One Big Fat Notebook: The Complete Middle School Study Guide (Big Fat Notebooks)
by Workman Publishing (Author), Sharon Madanes (Author), Michael Geisen (Editor), Editors of Brain Quest (Editor)

Klutz LEGO Chain Reactions Craft Kit
by Klutz Press

The Science Book (Big Ideas Simply Explained)
by DK (Author)

Astrophysics for People in a Hurry
by W. W. Norton & Company

The Everything Kids' Science Experiments Book: Boil Ice, Float Water, Measure Gravity-Challenge the World Around You!
by Tom Robinson (Author)

Science Encyclopedia: Atom Smashing, Food Chemistry, Animals, Space, and More! (Encyclopaedia)
by National Geographic Kids (Author)

What Is Science?
by Rebecca Kai Dotlich (Author), Sachiko Yoshikawa (Illustrator)

Algorithms to Live By: The Computer Science of Human Decisions
by Brian Christian (Author), Tom Griffiths (Author)

The Best American Science and Nature Writing 2017 (The Best American Series ®)
by Hope Jahren (Author), Tim Folger (Author)

Best Science Podcasts 2018

We have hand picked the best science podcasts for 2018. Sit back and enjoy new science podcasts updated daily from your favorite science news services and scientists.
Now Playing: TED Radio Hour

Dying Well
Is there a way to talk about death candidly, without fear ... and even with humor? How can we best prepare for it with those we love? This hour, TED speakers explore the beauty of life ... and death. Guests include lawyer Jason Rosenthal, humorist Emily Levine, banker and travel blogger Michelle Knox, mortician Caitlin Doughty, and entrepreneur Lux Narayan.
Now Playing: Science for the People

#491 Frankenstein LIVES
Two hundred years ago, Mary Shelley gave us a legendary monster, shaping science fiction for good. Thanks to her, the name of Frankenstein is now famous world-wide. But who was the real monster here? The creation? Or the scientist that put him together? Tune in to a live show from Dragon Con 2018 in Atlanta, as we breakdown the science of Frankenstein, complete with grave robbing and rivers of maggots. Featuring Tina Saey, Lucas Hernandez, Travor Valle, and Nancy Miorelli. Moderated by our own Bethany Brookshire. Related links: Scientists successfully transplant lab-grown lungs into pigs, by Maria Temming on Science...