OECD Health at a Glance 2011

Health at a Glance 2011: OECD Indicators

Organization for Economic Cooperation and Development (OECD)
November 23,2011

Why is health spending in the United States so high?

The United States spends two-and-a-half times more than the OECD average health expenditure per person.

Rich countries spend more than poor countries. Chart 3 (at link below) shows that for nearly every country, if you know how rich they are, you can predict their health spending per person per year to within a few hundred dollars. The United States is an exception – Americans spend nearly $3000 per person per year more than Swiss people, even though Swiss people have about the same level of income.

Where does the money go?

Hospital spending is higher than in the five other OECD countries, by over 60%.

Spending on Ambulatory care providers – that is, physicians and specialists as well as dentists, is much higher than in the other OECD countries – almost two-and-a-half times the average of the other five countries.

Spending on Pharmaceuticals and medical goods is higher in the US than in any other country, but overall accounts for a smaller share of total health spending than in the other countries.

Spending on Public Health and Administration is particularly high – more than two-and-a-half times the average.

Are U.S. health prices high?

Overall, the evidence suggests that prices for health services and goods are substantially higher in the United States than elsewhere. This is an important cause of higher health spending in the United States.

Does the U.S. provide too much health care?

(The United States) does not have many physicians relative to its population; it does not have a lot of doctor consultations; it does not have a lot of hospital beds, or hospitals stays, when compared with other countries, and when people go to hospital, they do not stay for long. All these data on health care activities suggest that US health spending should be low compared with other countries.

On the other hand, the US health system does do a lot of interventions. Table 3 (at link below) shows that it has a lot of expensive diagnostic equipment, which it uses a lot. And it does a lot of elective surgery – the sort of activities where it is not always clearcut about whether a particular intervention is necessary or not.

Why is health spending in the United States so high?

Health at a Glance 2011: OECD Indicators
(The entire publication can be accessed for free at this website.)


By Don McCanne, MD

The Organization for Economic Cooperation and Development (OECD) has just released "Health at a Glance 2011: OECD Indicators." It "provides the latest comparable data on different aspects of the performance of health systems in OECD countries." You should save the link above that provides free access to this publication since the data are frequently used by the policy community to compare the United States with other nations.

When examining the tables, charts, graphs and text, keep in mind that the data are sometimes presented in a manner that does not always correlate with highly credible data from other sources.

For instance, the category of public health and administration does not include the same administrative costs as measured by Woolhandler and colleagues in their landmark NEJM articles. Nevertheless, the OECD still reports that public health and administrative costs in the United States are more than two-and-a-half times the OECD average.

Also, the OECD estimates of public spending for health care in the United States leave out two important categories. The tax deductibility of employer-sponsored plans amounts to a subsidy of taxpayer funds, plus taxpayers also pay for the employer component of health insurance premiums for employees of federal, state and local government agencies. Although the OECD reports the percent of government spending on health care in the United States as being one of the lowest, on a per capita basis our public spending on health care is actually higher than the public and private spending combined in almost all other nations.

So when you hear others cite the OECD data, it would be helpful if you have a heads up on the actual data and how it compares to that of other reliable sources. Save the link above for future reference.