United States Spends More on Health Care Than Other Nations Without ‘Substantial Benefit,’ Study Says

The fact that the United States spends more money on health care than any other nation worldwide but does not "substantially benefit" from the increased spending indicates underlying "inefficiencies" with the U.S. health care system, according to a UCLA Anderson Forecast study released today, the Contra Costa Times reports. According to the report, the United States in 1998 spent an average of $4,000 per person on health care, while the country that spent the second-most on health care, Switzerland, spent an average of $2,860 per person in the same year. Despite the higher spending, the United States lags behind other nations in average life expectancy. Americans on average live to be 77 years old, while the Swiss life expectancy is 80 years. In addition, the life expectancy for people in Canada and Japan is 81 years, although those nations in 1998 spent only $2,363 and $1,763, respectively, on health care per person.

Christopher Thornberg, senior economist at UCLA Anderson Forecast and author of the report, said that the "inefficiencies" in the U.S. health care system are likely due to the private insurance system. Thornberg added that "overconsumption" of health care is a result of the "few financial incentives" patients have to limit their use of health care products. In addition, doctors have no incentive to "curb services or offer cheaper alternatives" when they know the patient pays "little or none" of the costs of such care, he added. Although Thornberg said he does not envision the U.S. converting to a public health care system, he added that the U.S. "need[s] to think about reforming the private insurance system."

Thornberg's study also indicated that U.S. health care spending has "dramatically increased" over the last 40 years. The United States in 2000 spent 13% of its gross domestic product -- $1.3 trillion -- on health care, while it spent only 5% of the GDP on health care in 1960. Health care costs since 1975 have also "risen above" inflation rates. Increased spending over the years has had "some benefit," Thornberg said, adding that the U.S. life expectancy has risen from 70 to 77 years over the past four decades and that people are currently "living healthier lives" (Silber, Contra Costa Times, 6/19). A related study by Thornberg on the rising cost of health insurance premiums was released yesterday (California Healthline, 6/18).