Tuesday, April 4, 2017

The High Cost of Health Care in America - A Comparison Study

The most recent version of the Comparative Price Report from the International Federation of Health Plans (IFHP) gives us insight regarding the extreme cost of health care in the United States.  In this report, the IFHP looks at the prices of several commonly used prescription drugs as well as the price of medical procedures, scans, tests and treatments in seven developed economies including Australia, New Zealand, South Africa, Spain, Switzerland, the United Kingdom and the United States.  Here is a summary of the IFHP's findings.

Let's open with a graphic showing how much the United States spends on health care as a percentage of GDP compared to other developed economies:

As you can see, the United States has a long history of spending far more on health care (as a percentage of GDP) than its economic peers, a gap that has grown significantly over the decades since the 1980s.

Here is a table showing per capita total health care spending in 2013 for the same group of nations:

At $9,086, the United States per capita spending on health care is 148 percent greater than the OECD median.  As well, out-of-pocket spending by American consumers was second highest in the group and, at $1,074, was 72 percent higher than the OECD median.

Now, let's look at the Comparative Price Report to gain a better understanding of why health care is so expensive in the United States.  Please note that all costs in the United States are reported as average price (blue bar), 25th percentile (green dot) and 95th percentile (yellow dot).

Prescription Drugs:

1.) Humira - used to treat rheumatoid arthritis, Crohn's Disease, psoriasis, ulcerative colitis.  According to IMS Health, Humira was the number two selling drug in the global market in 2015: 

2.) Harvoni - used to treat hepatitis C.  According to IMS Health, it was the number one selling drug in the global market in 2015:

3.) Xarelto - used as a blood thinner.  According to IMS Health, it was the number 17 selling drug in the global market in 2015: 

4.) Avastin - used to treat colon, lung and renal cell cancers and certain eye diseases.  According to IMS Health, it was the number 10 selling drug in the global market in 2015:


1.) Abdominal CT Scan:

2.) Cardiac Catheterization:

3.) Daily Hospital Cost:

Total Cost of Hospital and Physician:

1.) Normal Delivery:

2.) Knee Replacement:

3.) Bypass Surgery:

As you can see, in most cases, the average cost of prescription drugs, diagnostics and costs of hospital stays and procedures in the United States far exceeds that of other nations.  In many cases, even the 25th percentile costs are higher than or just slightly lower than the average costs in the other six nations in the study.  This is particularly the case for coronary artery bypass surgery; with more than 200,000 procedures performed annually in the United States, this is a very high cost, relatively routine use of highly-priced medical services.  One of the relatively low cost diagnostics, at least compared to the six peer nations in the study, is a colonoscopy with American patients paying an average of only $1,301 compared to $1,421 in New Zealand and $3,509 in the United Kingdom.  Unfortunately, it's not really a diagnostic that one would seek on a regular basis!

This study by the International Federation of Health Plans provides us with a cross section of health care products that many of us will have to avail ourselves of at some point in our lives.  As we can see, American consumers of health care are generally paying far more than their peers in other developed economies, a situation which seems to be totally ignored by Washington.  Perhaps this explains some of Congress's reluctance to involve themselves in actually fixing the problem:


  1. The FIRE sector contributions explain a lot, as well.

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