The United States is among the countries with the highest healthcare expenditure. The expenditure went exponentially high in 2016 recording a budget of $3.3 trillion which translates to approximately $10,348. In the same year, spending on healthcare accounted for up to 17.9% of the Gross Domestic Product (GDP). The Organization for Economic Cooperation and Development (OECD) is an intergovernmental organization that brings together up to 36 countries for world trade and economic progress. The US is marred with several health concerns such as the low life-expectancy, obesity, and risk factors such as alcohol and smoking. As a result, this makes it spending slightly more than the average expenditure of the OECD countries. As one of the countries with the highest healthcare expenditure, it remains critical to analyze how it compares with other wealthy nations falling under the umbrella of OECD.
US Healthcare Expenditure and Its Comparison to OECD Countries
It is common knowledge that wealthy nations such as the US would tend to spend more per person on health-related expense in comparison to other lower-income nations. Over the recent years, it has become increasingly apparent that the US spends more per person than the average of all the countries in the OECD. A 2016 data showed that the health care spending per person in the US stood at $10,348 more than Switzerland, which came second. More intriguing is the research that showed that on average, all the other wealthy countries falling under the OECD spend approximately half of what the US spends per person. Most fundamentally, it is critical to appreciate that health spending has a close relationship with the country's overall healthcare. Therefore, as a result, the expenditure per individual significantly correlates with the country’s GDP. Countries that record above median national incomes as translated in the GDP also depict above median outlays per individual (Health at a Glance 2017: OECD indicators, how does the United States compare?).
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As earlier mentioned, the US tops the list with an expenditure of $10,348 per person. Switzerland follows closely at $7,919.Germany, the Netherlands, and Australia have an average of about $5169 per individual. Countries such as Belgium, Canada, Australia, France, Japan, and the United Kingdom have an average expenditure of $4400. Furthermore, it is also critical to appreciate that the difference in healthcare spending in the US’s economy and comparable to other OECD countries has markedly increased. For instance, the US spent a paltry 6% of its entire GDP on health during the 1970s. During this time, the expenditure compared well with that of other wealthy countries which had an average of approximately 5% of their GDPs. The US kept pace with these countries up to the 1980s. However, towards the 21 st century, the country’s health expenditure skyrocketed at a faster rate relative to the GDP. Statistics have shown that in 2016, the US spent up to 18% of its entire GDP on health with the next country, Switzerland, spending 13% of its GDP. Also, it is important to appreciate that the US experienced the highest acceleration rate in its healthcare expenditure during the 1980s with a record of 10.1% annual increase. On the contrary, the other countries in the OECD had a yearly increase of about 7% (Health at a Glance 2017: OECD indicators, howdoes the United States compare?).
Although the gap in spending remains significantly high, the rate of growth has slowed down in comparison to the other countries. Between 2010 and 2016, the US experienced a growth rate of 4.2% per year compared to the 7.2% it has before this period. The other comparable countries also dropped to a similar rate of approximately 4.2% in the last five years. When assessing the expenditure of the US on the healthcare system, it is vital to take consideration of its private sector spending. Research has shown that the private sector spending is almost thrice that of the other countries in the OECD. Therefore, over the last three decades, both the public and private expenditure have shown exponential increases in comparison to other countries (Health at a Glance 2017: OECD indicators, how does the United States compare?).
Impact Technology on Healthcare Spending
The steady rise in health care spending has become a significant cause of concern to many countries worldwide. Pundits and commentators have however blamed the advent of medical technology as the leading cause for the burgeoning spending. Most importantly, it is vital to appreciate that healthcare spending in most OECD countries has surpassed the GDPs of the respective countries (Sorenson, Drummond, & Khan, 2013). Although other factors such as the increased life expectancy and personal income growth have played a significant growth in the increase, it would be foolhardy to ignore the role that medical technology has played in this impasse. Medical technology has crisscrossed several areas including surgical procedures, diagnostic tests, imaging equipment, and also the health records amongst others. In the wake of the concerns regarding the increased expenditure, it remains critical to understand that the technological advances have allowed the care providers to not only diagnose but also treat diseases in ways that would have previously been impossible. It, therefore, calls on significant policymakers to understand the complex dynamics exhibited between innovations and spending. It should be critically understood that there are certain circumstances that medical technology has played a vital role in the betterment of healthcare.
In 2015, Medicare spending per beneficiary (MSPB) conducted a detailed experiment to assess the impact of technology on medical expenditure. The research pitted two groups of hospitals including the top technology and other hospitals that do not have a strong emphasis on technological advancement. The investigation concluded that about 65% of the top technology hospital recorded an MSPB below the national average compared to the 56% showed by the rest of the non-top technology facilities (The Impact of Medical Technology on Medicare Spending, 2015). Although it is a common sentiment that medical innovation increases expenditure, this research showed otherwise when focusing on Medicare payments. Some of the reasons to explain this reduction in spending include cost savings and cost offsets that come as a result of reduced healthcare complications and the efficiency in health resource use. However, another study conducted by the Center for Medicare and Medicaid Services postulated that technology had had a mixed bag of fortunes on the healthcare system. Although it has enabled medical professionals to tackle the debilitating health concerns properly, it has partially played a significant role in the overall rise in healthcare costs.
The study further revealed that medical technology has resulted in up to 40% to 50% of the annual cost increases (Sorenson, Drummond, & Khan, 2013). Although this is only a problem at the initiation periods, it is critically vital to note that the advent in technology has cost efficient implications as illustrated by the research conducted by MSPB. It, therefore, shows that there is a complex relationship between technology and health expenditure, but what remains undoubtedly true is the fact that innovation in healthcare has resulted in desirable outcomes.
In conclusion, the increase in healthcare expenditure continues to be a major concern for wealthy countries across the globe. The US has been at the forefront in this recent trend with a record high healthcare expenditure per person. More fundamentally, the country's health expenses take a large chunk of the overall GDP. With the advent of technology, there has been an increase in healthcare expenditure. However, research has also indicated that technology can lead to cost saving as it improves efficiency in treatment and diagnosis. With the debate ongoing, it is nevertheless critical to appreciate the role innovation has played in improving health outcomes.
References
Health at A Glance 2017: OECD indicators, How Does the United States Compare? From: https://www.oecd.org/unitedstates/Health-at-a-Glance-2017-Key-Findings-UNITED-STATES.pdf
Sorenson, C., Drummond, M., & Khan, B. B. (2013). Medical technology as a key driver of rising health expenditure: disentangling the relationship. ClinicoEconomics and Outcomes Research: CEOR, 5, 223.
The Impact of Medical Technology on Medicare Spending, (2015) Advanced Medical Technology Association. From: https://www.advamed.org/sites/default/files/resource/993_20150929_avalere_advamed_whitepaper_final.pdf
