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U.S. Health Care: World's Most Expensive

Is America's Health Care System the best or just the most expensive in the world?

The United States spends more on health care than any other country in the world and the health care costs continue to rise. Government figures show that in 2004 health care spending reached 1.9 trillion dollars, equaling 16 percent of the U.S. gross domestic product.

Joseph Quinlan, Chief Market Strategist for Bank of America, based in New York, says rising health care costs affect American households, as well as businesses and government. He says, "Most Americans get their health insurance from their employer. Not all of them, however. Large companies provide basic health care services. But what you see is more and more U.S. employees, the workers, spend more money out of their pocket to help cover their health care cost. So out-of-pocket expenses for the average American are rising tremendously. And then, don't forget, you've got 45 million Americans without any health insurance. They have fallen through the safety net, so to speak."

The United States spends more money per person on health care than any other country in the world, about $5,300 annually. In comparison, Switzerland spends about 35-hundred dollars per person per year, Japan about $2,000 and Turkey as little as $446 per person each year.

America's Expensive Health Care System

Colleen Grogan, Professor of Health Policy and Politics at the University of Chicago, says the primary reason for the high cost of American health care is that most medical services, materials, technologies and drugs are more expensive than in other industrialized countries.

"For example, Canada," says Professor Grogan. "You would think we would be perhaps closest to the prices in Canada. We are three times higher. The fees that are paid, the actual prices for procedures and what we pay to providers, are three times as high as in Canada."

Colleen Grogan says governments in other countries play a much stronger role in financing health care services and their citizens are obliged to help pay for it through taxes. In return, all are usually covered by national health insurance.

The United States provides similar systems, Medicare and Medicaid, but only for its elderly and low-income people. Working Americans are usually covered by employer-sponsored private insurances. The idea has been that privatizing insurance would spur market competition and decrease the prices, but analysts say the opposite has happened.

Some analysts blame doctors who are generally paid for individual services and thus have an incentive to perform too many procedures. But physicians, including Dr. Jay Lavigne, an obstetrician in rural, Virginia argue that they are forced to perform many preventive procedures to protect themselves against malpractice law suits, which are more common in the United States than in other countries. Dr. Lavigne says physicians have to pay increasingly higher malpractice insurance premiums and that in turn increases the cost of health care.

Malpractice Insurance Increases Health Care Cost

"We have to pay an incredible amount of money for malpractice insurance," says Dr. Lavigne. "And that's about one fifth of all the money that's taken in [i.e., earned] as a matter of fact. When I started to practice [medicine in 1985] it was about 30-thousand dollars a year. I still think 30-thousand [dollars] is a lot of money, but these days it's close to 100-thousand dollars a year. "

Dr. Lavigne says the use of expensive new technologies for better and faster diagnoses and treatment of diseases has also added to the rising cost of the U.S. health care in recent years. Proponents of the U.S. health care system have long argued that Americans may be paying the most, but that they also have access to the best and fastest health services in the world.

But some analysts call this is a myth. They say data for 30 countries of the Organization for Economic Cooperation and Development show that the U.S. has fewer hospital beds and physicians per person than, for example, France, Australia, Italy and Austria. The University of Chicago's Colleen Grogan says many countries also outrank the U.S. in access to advanced medical technology. She says, "Here we are above the median for MRI [i.e., magnetic resonance imaging] units per million for example. So we have 8.2 MRI units per million population. The median is 5.5. But we are not the highest."

While some analysts argue that more beds and scanning units do not necessarily mean better health care, most agree that Americans are not getting the best value for the money.

The Impact of Health Care Costs

Jonathan Skinner, Professor of Economics and Family and Community Medicine at Dartmouth College in New Hampshire, says the rising cost of health insurance is beginning to affect the U.S. economy. He says, "When [car maker] General Motors is spending more on health care than it spends on steel, then there's something wrong with the health care system. 

Yet efforts to re-haul the system have failed, including President Harry Truman's initiative for a national health insurance system in the 1940s and President Clinton's health-care plan of 1993, which mandated coverage for everyone through regulated employer alliances with insurers and price caps. President Bush's plan includes creating special health savings plans, which would provide tax breaks for individuals and families and make them more responsible for their health care costs.

Economist Jonathan Skinner says the powerful health-care lobbies and Americans' suspicion of what many see as socialized medicine make a radical overhaul of the system difficult. But he says the increasing financial strain of health care spending on American businesses, government and families will make some change inevitable.

This story was first broadcast on the English news program,VOA News Now. For other Focus reports click here.

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