U.S. Health Care Costs: Not As Bad As You Think?

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The high costs associated with health care in the United States (up 48% from 2013) are obvious to anyone who scrutinizes a medical bill.

A study conducted by the Commonwealth Fund in January 2023 compared U.S. health care costs with those in other developed nations, the majority of which have some form of universal health care. The U.S. was the most expensive. On average, an American spends more than $10,687 annually on health care, constituting a staggering 17.8% of the GDP. In contrast, citizens in other developed countries spend approximately $5,014 per year, which is a median of 11.5% of their total GDP.

Despite the higher expenditure, a 2018 Kaiser Foundation study found that Americans have fewer physician consultations, with an average of about 3.9 per person per year—well below the 7.6 average in the other countries studied. American hospital stays also averaged 6.1 days, compared to an average 10.2 days in other nations.

The Kaiser study also looked at the costs of expensive drugs and various medical procedures, such as angioplasty, coronary bypass surgery, MRI exams, colonoscopies, appendectomies, and knee replacements. Costs in the U.S. were notably higher. A single knee replacement, for example, averaged $28,184 here compared to $15,941 in Australia.

What do Americans receive in return for our considerable spending? Our healthcare system tends to foster more innovation than many others, including medical research, biotechnology, innovative drugs, medical devices, gene therapy, and regenerative medicine. Yet despite the substantial financial investment, the United States has the lowest life expectancy among the eight highest-income countries.

We can’t end the story there, as many do. Any comparison of a country’s health care costs must also consider any differences in tax burdens.