Why the U.S. Spends So Much More Than Other Nations on Health Care<br />Since their data included only personal health care spending, it did not account for spending in the health sector not directly attributed to care of patients, like hospital construction<br />and administrative costs connected to running Medicaid and Medicare.<br />In other words, most of the explanation for American health spending growth — and why it has pulled away from health spending in other countries — is<br />that more is done for patients during hospital stays and doctor visits, they’re charged more per service, or both.<br />These tend to be less costly than hospital stays, so, on balance, changes in health care<br />use were associated with a minor reduction (2.5 percent) in health care spending.<br />For example, one study found that the spending growth for treating patients between 2003<br />and 2007 is almost entirely because of a growth in prices, with little contribution from growth in the quantity of treatment services provided.<br />A large part of the answer can be found in the title of a 2003 paper in Health Affairs<br />by the Princeton University health economist Uwe Reinhardt: “It’s the prices, stupid.”<br />The study, also written by Gerard Anderson, Peter Hussey and Varduhi Petrosyan, found<br />that people in the United States typically use about the same amount of health care as people in other wealthy countries do, but pay a lot more for it.<br />Other studies also point to prices as a major factor in American health care spending growth.<br />You’d expect some growth in health care spending over this span from the increase in population size and the aging of the population.
