U.S. Health Care Spending: Comparison with Other OECD Countries

The United States spends more money on health care than any other country in the Organization for Economic Cooperation and Development (OECD). The OECD consists of 30 democracies, most of which are considered the most economically advanced countries in the world. According to OECD data, the United States spent $6,102 per capita on health care in 2004 — more than double the OECD average and 19.9% more than Luxembourg, the second-highest spending country. In 2004, 15.3% of the U.S. economy was devoted to health care, compared with 8.9% in the average OECD country and 11.6% in second-placed Switzerland.

Why does the United States spend this amount on health care?

Economists break health care spending into two parts: price and quantity (which includes the number of visits to health care providers and the intensity of those visits). In terms of quantity, OECD data indicate that the United States has far fewer doctor visits per person compared with the OECD average; for hospitalizations, the United States ranks well below the OECD and is roughly comparable in terms of length of hospital stays. The intensity of service delivery is a different story: the United States uses more of the newest medical technologies and performs several invasive procedures (such as coronary bypasses and angioplasties) more frequently than the average OECD country. In terms of price, the OECD has stated that “there is no doubt that U.S. prices for medical care commodities and services are significantly higher than in other countries and serve as a key determinant of higher overall spending.”

What does the United States get for the money it spends?

Said slightly differently, does the United States get corresponding value from the money it spends on health care? The available data often do not provide clear answers. For example, among OECD countries in 2004, the United States had shorter-than-average life
expectancy and higher-than-average mortality rates. Does this mean that the U.S. system is inefficient in light of how much is spent on health care? Or does this reflect the greater prevalence of certain diseases in the United States (the United States has the highest incidence of cancer and AIDS in the OECD) and less healthy lifestyles (the United States has the highest obesity rates in the OECD)? These are some of the issues that confound international comparisons.

However, research comparing the quality of care has not found the United States to be superior overall. Nor does the U.S. population have substantially better access to health care resources, even putting aside the issue of the uninsured. Although the United States does not have long wait times for non-emergency surgeries, unlike some OECD countries, Americans found it more difficult to make same-day doctor’s appointments when sick and had the most difficulty getting care on nights and weekends. They were also most likely to delay or forgo treatment because of cost.

The OECD data and other research provide some insight as to why health care spending is higher in the United States than in other countries, although many difficult research issues remain.

This report presents some of the available data and research and concludes with a summary of study findings.