May 9, 2017

How the US stacks up to other countries when it comes to health care spending

Daily Briefing

    The United States spends an average of $9,237 per person on health care annually, which is more than any other country, according to two studies published in The Lancet.

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    Details of the studies

    For the first study, the Global Burden of Disease Health Financing Collaborator Network—a group of researchers who specialize in various aspects of health care—reviewed data that represented health spending in 184 countries from 1995 through 2014 to estimate national spending by type and source of care. The data included program reports, budget data, national estimates, and 964 National Health Accounts.

    For the second study, the researchers extracted gross domestic product (GDP) and government spending in 184 countries from 1980 to 2015, as well as health spending data from 1995 to 2014, to project national:

    • All-sector government spending;
    • Development assistance for health;
    • Future GDP; and
    • Government, out-of-pocket, and prepaid private health spending.

    The researchers' estimates, which they adjusted for inflation and purchasing power, ran through 2040.

    Health spending from 1995 to 2014

    In the first study, the researchers found that across all countries, health spending ranged from an average of $33 per person in Somalia to $9,237 per person in the United States. The researchers wrote that the findings show "tremendous variation" in health care spending around the world.

    Specifically, the researchers found that, in 2014, per capita spending among:

    • Lower-middle-income countries was $267, but ranged from $92 in Bangladesh to $791 in Tunisia;
    • Upper-middle-income countries was $914, but ranged from $228 in Angola to $1,980 in the Maldives; and
    • High-income countries was $5,221, but ranged from $853 in Seychelles to $9,237 in the United States.

    According to the study, upper-middle- and lower-middle-income country groups increased per capita health spending the fastest between 1995 and 2014, with annual growth rates of 5.9 and 5 percent, respectively. The researchers found that per capita health spending nearly tripled among upper-middle-income countries, from $309 in 1995 to $914 in 2014.

    In low-income countries, per capita health spending grew by 4.6 percent annually. Overall, the researchers found the slowest growth was observed among high-income countries, at a collective rate of 3 percent annually. However, "despite this slower rate, the largest health spending increases in terms of dollar per capita increase was in high-income countries," the researchers wrote.

    The researchers attributed per capita health spending growth in high-income and middle-income countries to increases in government spending. In comparison, the researchers attributed per capita health spending growth in low-income countries to a 51 percent absolute increase in development assistance for health.

    Health spending and outcomes

    The researchers wrote that they did not "trac[k] health spending in relation to health outcomes," but added that "more spending on health does not guarantee better health outcomes."

    Joseph Dieleman—an assistant professor at the University of Washington's Institute for Health Metrics Evaluation and lead author of the studies—said life expectancy generally improves as medical spending goes up, but "it's a little hard to prove that higher spending causes better health outcomes."

    Instead, he said "it's easier to show that higher spending leads to more health services provided and more people covered for health services—and that's what leads to better health." However, he noted there are some exceptions to the theory. For instance, he said, "The [United States] and the [United Kingdom] are both high-income, highly developed countries," but although the United States spends more on health care per person, the United Kingdom reports better health outcomes.

    Projected health financing through 2040

    In the second study, the researchers projected that per capita health spending would increase the fastest in upper-middle-income countries at 5.3 percent annually between 2014 and 2040, driven by continued gains in GDP, government spending overall, and government spending on health care. In comparison, the researchers predicted that per capita annualized health spending would grow by:

    • 4.2 percent in lower-middle-income countries;
    • 2.1 percent in high-income countries; and
    • 1.8 percent in low-income countries.

    Despite this growth, the researchers projected that health spending per capita in low-income countries would remain low through 2040, when they expect it to reach $195.  

    Dieleman said spending predictions for the lowest-income countries indicates that "2040 won't likely be that different from today," because in 2014, the lowest-income countries spent an average of $120 per person annually  (Brink,  "Goats and Soda," NPR, 4/20; Dieleman et al. [1], The Lancet, 4/19; Dieleman et al. [2], The Lancet, 4/19).

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