Countries that spend the most on health care

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The United States spends more than any other country but has the eighth-lowest life expectancy in the Organization for Economic Co-operation and Development survey.

By Michael B. Sauter and Charles B. Stockdale, 24/7 Wall St.

This week, the Supreme Court considered President Obama’s health care reform law. The Patient Protection and Affordable Care Act expands health coverage to millions of uninsured Americans. If the law is overturned, health care costs covered by the federal government would drop substantially.

While government spending on health care could decline, that will not result in lower health care costs. Based on data published by the Organization for Economic Co-operation and Development on global health issues, 24/7 Wall St. identified the countries where health care costs are the highest per person.

Spending a great deal on health care does not result in a healthier population. Of 34 OECD member countries, only three that spent the most per person have citizens that live the longest. The United States spends more than any other country but has the eighth-lowest life expectancy in the OECD. Japan, meanwhile, spends $2,878 per person -- about $5,000 less than the U.S. -- and has the highest life expectancy among developed nations. 

According to the OECD's Matthias Rumpf, health care spending does not result in better treatment. In countries that spend more, he says, people opt for expensive tests and elective procedures that drive up costs. To discourage excess in Germany, for example, citizens are penalized if they see a specialist without first consulting their doctor.

In most of the OECD countries, health care expenses come to more than $2,000 per person each year. In the case of the 10 countries with the highest costs, expenses are roughly twice that. In the U.S., spending on health care per capita comes to nearly $8,000 per person. Many proponents of public health care blame the U.S.’s highly privatized system as the reason for such high costs. But according to Rumpf, a number of factors influence the national spending on care.

How patients use medical services impacts health care expenses. Expensive diagnostic procedures and elective surgeries, like MRI scans and corrective knee surgeries, drive up costs. Conversely, irregular visits to the doctor impair preventative care.

In many of these countries, the source of high costs is drug prices. In four of the countries with the most expensive health care, pharmaceutical expenses come to at least $600 per person per year. In the U.S., those costs are more than $950 per capita.

Another factor that increases cost is poor health-related behavior of the population. Of course, excessive alcohol consumption, tobacco use and poor exercise increase health problems. The incidence of these behaviors is different country to country.

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Many of the countries that spend the most per capita on health care have highly privatized systems. In the U.S. and Switzerland, which spend the most and third-most on health care, respectively, the government pays less than 65 percent of the total health care costs. In most of the countries in the developed world, public expenditure accounts for at least 70 percent of total costs.

Many of the countries with the highest expenditure per capita on health care also have among the most government-funded health care systems. The governments of Denmark, Austria and Luxembourg pay 84 percent or more of the total health care cost. Total public spending in these countries, without accounting for private health care spending, ranges from 6.5 percent of GDP in Luxembourg to the OECD-high 9.8 percent of GDP in Denmark. In most of the OECD nations, the government foots the majority of the health care bill.

These are the countries that spend the most on health care. 

1. United States

Total expenditure on health per capita: $7,960Expenditure as percent of GDP: 17.4 percent (the most)Annual growth of total health expenditure: +2.2 percent (14th least)Life expectancy: 78.2 years (27th highest)

The U.S. has, by far, the highest total expenditure on health care per capita. America spends approximately $2,600 more per person annually than Norway, the second-highest spender. Only 47.7 percent of this amount is public expenditure -- the third-smallest percentage among developed countries. However, the actual amount of public spending, $3,795, is among the highest. The U.S. also spends the largest amount on pharmaceuticals and other medical nondurables. The country has fairly low rates of doctors and hospital beds relative to its population. It also has the eighth-lowest life expectancy, at 78.2 years.

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2. Norway

Total expenditure on health per capita: $5,352Expenditure as percent of GDP: 9.6 percent (16th most)Annual growth of total health expenditure: +8.4 percent (4th most)Life expectancy: 81.0 years (10th highest)

After its neighbor, Denmark, Norway has the most nationalized health care system in the developed world. Of the country’s $5,352 expenditures per person, 84.1 percent are covered by the public sector. Access to health care in the country is high. There are approximately four physicians per 1,000 people, the third most in the OECD. Despite the high percentage of total costs covered by the public, the nation’s residents still pay more than $800 per person on health care.

3. Switzerland

Total expenditure on health per capita: $5,344Expenditure as percent of GDP: 11.6 percent (5th most)Annual growth of total health expenditure: +2.8 percent (17th most)Life expectancy: 82.3 years (2nd highest)

Switzerland currently spends the third most on health care per capita, or the equivalent of 11.6 percent of the country’s GDP. Switzerland has one of the most privatized health care systems in the world, with 30.9 percent of expenses coming out of pocket. Because of the wealth of country, this comes to $1,650 per person, more than double every country in the developed world except the U.S.

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4. Netherlands

Total expenditure on health per capita: $4,914Expenditure as percent of GDP: 12 percent (second most)Annual growth of total health expenditure: +16.4 percent (the most)Life expectancy: 80.6 years (14th highest)

Health care costs in the Netherlands amount to $4,914 per person each year. The Dutch health expenditure is equivalent to 12 percent of the nation’s GDP -- the second greatest relative health expenditure of every nation in the OECD except the U.S. Total expenses jumped by 16.4 percent between 2008 and 2009, the most among OECD nations. Despite this increase, total out-of-pocket expenses per capita are just $227 per person, the fourth-lowest in the OECD.

5. Luxembourg

Total expenditure on health per capita: $4,808Expenditure as percent of GDP: 7.8 percent (seventh least)Annual growth of total health expenditure: +8 percent (6th most)Life expectancy: 80.7 years (tied for 12th highest)

Health care expenditure in Luxembourg is $4,808 a year, or 7.8 percent of national GDP. This is the greatest decrease among OECD countries. Of that, public expenditures account for 84 percent of the total, the eighth-highest rate among OECD countries. The country’s system faces some difficult challenges in offsetting unhealthy lifestyle choices. For instance, Luxembourg has the highest annual rate of alcohol consumption at 15.5 liters per capita.