The United States continues to spend significantly
more on health care than any country in the world. In 2005,
Americans spent 53 percent per capita more than residents
of the next highest country and 140 percent above those in
the median industrialized country, according to new
research from the Johns Hopkins
Bloomberg School of Public
Health. The study authors analyzed whether two possible
reasons — supply constraints and malpractice
litigation — could explain the difference in health
care costs. They found that neither factor accounted for a
large portion of the U.S. spending differential. The study
is featured in the July/August 2005 issue of the journal
"It is commonly believed that waiting lists in other
countries and malpractice litigation in the United States
are major reasons why the United States spends so much more
on health care than other countries. We found that they
only explain a small part of the difference," said Gerard
Anderson, lead author of the study and a professor in the
Department of Health Policy and Management.
The study authors reviewed health care spending data
on 30 countries from the Organization for Economic
Cooperation and Development for the year 2003. U.S.
citizens spent $5,267 per capita on health care. The
country with the next highest per capita expenditure,
Switzerland, spent $3,446 per capita. The median OECD
country spent $2,193 per capita.
One of the commonly cited reasons why Americans spend
more on health care than citizens of other countries is
that these other countries have waiting lists, especially
for elective surgery. The procedures with waiting lists,
however, represent only 3 percent of spending and therefore
cannot explain much of the cost differential. Another
perceived cause of higher health care costs in the United
States is that malpractice suits increase prices charged by
doctors and cause them to practice defensive medicine,
ordering extra tests or procedures to reduce their risk of
being sued. The researchers compared the number of
malpractice claims and awards in the United States, Canada,
Australia and the United Kingdom and found that while U.S.
citizens sue more often, actual settlements in the four
countries were comparable.
According to the study authors, defensive medicine
probably contributes more to higher health spending than
malpractice premiums, but determining which tests and
second opinions should be defined as defensive medicine is
less clear. The highest estimate for costs of defensive
medicine in the United States is only 9 percent, and many
experts believe this number is too high.
"We can't blame the United States' higher health care
costs on limiting procedures in other countries or the
elevated number of lawsuits filed in the United States,"
said Peter S. Hussey, co-author of the study and a recent
graduate of the Department of Health Policy and
"As in previous years, it comes back to the fact that
we are paying much higher prices for health care goods and
services in the United States. Paying more is OK if our
outcomes were better than other countries'. But we are
paying more for comparable outcomes," said Anderson, who is
also the director of the Johns Hopkins Center for Hospital
Finance and Management.
In 2004, Anderson and Hussey also co-authored, along
with Uwe E. Reinhardt of Princeton University, a similar
comparison for Health Affairs. It was the most viewed study
in the journal's end-of-year review.
"Health Spending in the United States and the Rest of
the Industrialized World" was supported by a grant from the
Commonwealth Fund. Additional authors were Bianca K.
Frogner and Hugh R. Waters, both of Johns Hopkins.