US Health Care Spending Still Tops The Global List

June 30, 2003 (PLANSPONSOR.com) - Health care spending per person in the United States rose to 13.9% of the Gross Domestic Product (GDP), a spike that only widened the gap between US health care spending and that of other industrialized countries in the Organization for Economic Cooperation and Development (OECD).

The increase from 13.1% of GDP in 2000 means that the US is now spending $4,900 per capita on health care in 2001, more than twice the OECD average of $2,100. Switzerland, which spent 10.9% of GDP on health, and Germany, which spent 10.7%, were the next highest spenders in relation to GDP, according to the OECD Health Data 2003, reported by Washington-based legal publisher BNA.

On the opposite end of the scale, countries with the lowest health care spending as a proportion of GDP were Korea, Luxembourg, and the Slovak Republic, spending less than 6% of their GDP on health in 2000 or 2001, the OECD said.

However, while the US continues to top the list of health care spending, industrialized countries across the globe are spending record amounts on health care, largely due to the rising cost of pharmaceuticals and the diffusion of modern medical technologies. The report shows the 30 OECD countries spent an average 8.4% of GDP on health care in 2001, up by three-tenths of a percentage point from 2000 (See US Spending More on Health Care Than Other Nations ).

Footing The Bill

Though more than half of American health care spending comes from private funding, public spending per capita in the United States remains high, with only Norway, Luxembourg, and Iceland spending more. Across the globe, public spending grew by 5.8% in 2001, somewhat faster than private spending, which grew by 4.8%. With the continued disparity between public and private spending, the OECD average remained at 72% of health care cost being funded by public spending, the report found.

In the United States, public spending accounts for 44% of all American health care costs. Yet, the report found these funds only serve approximately 25% of the population.

Comparatively, relatively expensive public health care programs cover 90% or more of the population in most other OECD countries.

Cost Factors

The increase in public and private spending on pharmaceuticals has been one of the main drivers of rising health expenditures in many OECD countries in recent years, reflecting the introduction of new and more expensive drugs. Pharmaceutical spending rose by more than 70%, in real terms, between 1990 and 2001 in Australia, Canada, Finland, Ireland, Sweden, and the United States.

With the increase, pharmaceuticals now account for more than 10% of total health spending in nearly all OECD countries, and over 20% of health spending in France and Italy.

Conversely, hospitalization costs continued trending downward in 2001, as the average length of stay in hospital declined in nearly all OECD countries. Average stays for acute hospital care across the OECD decreased from 8.8 days in 1990 to seven days in 2000. Total hospitalization time fell particularly quickly during the past decade in Nordic countries, as well as in other European countries including Austria, France, and Switzerland.

By comparison, i n the United States, average length of stay for acute hospital care fell from 7.3 days in 1990 to 5.8 days in 2000.

Additionally, the report found many countries are using shorter hospitalization for maternity care as a cost-cutting measure. In 2000, the a verage length of stay for a normal delivery across OECD countries was four days.

Copies of the report are available for purchase at http://oecdpublications.gfi-nb.com/cgi-bin/OECDBookShop.storefront/ .

«