United States spends twice as much on healthcare as its peers

Despite many efforts to rein in healthcare costs in recent years, spending is still on the rise.

Americans spend more than twice as much on healthcare per person as their peers in developed nations, a new analysis from Johns Hopkins Bloomberg School of Public Health said.

It is not because people in the United States use more medical services. Instead, it is because drugs cost more, doctors and nurses are paid better, hospital administration is more expensive and many medical services have higher price tags, the study found.

The new analysis — an update of a well-known 2003 report by Princeton healthcare economist Uwe Reinhardt titled “It’s the prices, stupid” — found that the U.S. remains an outlier when it comes to spending, which was $9,892 per person in 2016.

That compares to a median of $4,033 for Organization for Economic Cooperation and Development countries in 2016 and to the $4,559 the U.S. spent per person in 2000, adjusted for inflation.

Spending increased at an average rate of 2.8 percent annually in the U.S. between 2000 and 2016, compared to the OECD median of 2.6 percent. This was driven in part by how much Americans shell out on drugs, which increased 3.8 percent per year, compared to a median of 1.1 percent for OECD nations.

“In spite of all the efforts in the U.S. to control health spending over the past 25 years, the story remains the same,” lead author Gerard Anderson, a Johns Hopkins professor, said. “The U.S. remains the most expensive because of the prices the U.S. pays for health services.”

One reason for the jump in spending increase is the widening gap between what the federal government reimburses for Medicare and what private insurers and employers pay for those with job-based coverage, Anderson said. In 2000, the difference was roughly 10 percent. Now, studies have shown it has widened to 50 percent or more.

Anderson attributes this to consolidation among hospitals and doctors’ practices, which allows them to demand higher prices.

Despite paying higher prices, Americans actually have less access to doctors, nurses and hospital beds. There are only 2.6 practicing doctors per 1,000 people in the U.S., compared to a median of 3.2 active physicians in the OECD.

“It’s not that we’re getting more. It’s that we’re paying much more,” Anderson said.

Politicians, policy experts, health care industry executives and employers have wrestled with the nation’s high health care costs for decades. The efforts include raising deductibles to give consumers more incentive to shop around for healthcare services, and paying doctors and hospitals based on patients’ health outcomes rather than for every service rendered.

Currently in the spotlight are high drug prices, which are expected to be a major focus of both Congress and the Trump administration this year.