Oxstones Investment Club™By Alexander E.M. Hess and Michael B. Sauter, 247WallSt,
Historically, health care spending among developed nations has grown considerably each year. However, beginning in 2010, spending has flattened. Based on figures published last week by the Organization for Economic Co-operation and Development (OECD), slow growth in 2011 reflects the continued impact the global recession has had on government spending.
As of 2011, health care cost $8,508 per person in the U.S., more than $2,800 higher than the second-highest spender among developed countries. The next big spenders are countries like Norway and Swizterland, which spent more than $5,000 per person. The reasons health care costs in these countries are so high varies considerably. Based on a report published by the OECD on global health issues, 24/7 Wall St. reviewed the 10 countries that spent the most on health care per capita.
However counterintuitive, it is clear that spending more on health care does not result in better health outcomes. Of the top 10 nations with the highest health expenditure per capita, only three are in the top 10 for life expectancy. Residents in top-spending countries like Denmark and the U.S. have life expectancy below the OECD average of 80 years. At the same time, Italy and Japan both spend less than the OECD average per capita and are tied for first with the highest average life expectancy of nearly 83 years.
“Many other factors affect life expectancy beyond health care spending” explained OECD Health Division Senior Analyst Gaetan Lafortune. He mentioned living and working conditions, and lifestyle choices such as smoking and alcohol consumption and physical inactivity. He also noted that an earlier study conducted by the OECD showed that just 40% of the increase in life expectancy between 1991 and 2003, was estimated to be as a result of increased health care spending.
Whether a health care system is more privatized, as it is in the U.S., or more socialized, as it is in Norway and the Netherlands, does not appear to have much of an impact on cost. The U.S. and Switzerland had among the lowest government expenditure as a percent of total health spending. Both are in the top five for total health care spending per capita. However, so are Norway, the Netherlands, and Luxembourg, three of the health care systems with the highest public support.
In Germany, Canada, and France, pharmaceutical costs are a factor for more expensive health care, amounting to more than $600 per person annually, compared to the OECD average of less than $500. In the U.S., drugs cost nearly $1,000 per person, by far the most in the OECD.
The average hospital stay was longer in most of these countries, which may be driving up prices. However, in many of these countries, the average hospital stay for severe conditions is much lower. This, explained Lafortune, may not be cutting costs: “too short a length of stay may also cause adverse effects on health outcomes for patients. If this leads to a greater readmission rate, the cost may fall only slightly or even rise.”
While the cost of health care in some of these countries may be a product of more generous programs and higher cost of services, people may simply need more care because of poor health habits. The U.S. and Canada — two top spenders — are also in the top five among developed nations for obesity. Luxembourg, Austria, Germany, and France, are all in the top five for alcohol consumption. Lafortune explained that both alcohol consumption and obesity have been shown to drive up health care expenses. He noted that in the U.S., obesity is estimated to increase healthcare costs by as much as 10%.
Based on figures for the 34 developed nations provided in OECD’s Health Data 2013 release, 24/7 Wall St. reviewed the 10 countries where health expenditure per capita was the highest. All data is for 2011, or for the most recent available year. Included in the OECD’s release were a variety of statistics on health spending and costs. Also from the OECD, reviewed smoking rates, alcohol consumption, and obesity, as well as life expectancy.
These are the countries spending the most on healthcare.
10. France
> Health expenditure per capita: $4,118
> Expenditure as a pct. of GDP: 11.6% (3rd highest)
> Pct. obese: 12.9%
> Life expectancy: 82.2 years
lthough nine countries in the OECD spent more on health care per person than France’s $4,118, only two countries exceeded France’s health care expense as a percent of GDP of 11.6%. The French have one of the longest life expectancies at birth of any developed nation at 82.2 years despite an above-average percentage of citizens who smoke and the second highest level of alcohol consumption in the OECD. France has made efforts to curb smoking and exposure to smoke in recent years. In 2007, smoking was prohibited in public places, although some residents and businesses have resisted the ban over the years.
9. Germany
> Health expenditure per capita: $4,495
> Expenditure as a pct. of GDP: 11.3% (4th highest)
> Pct. obese: 14.7%
> Life expectancy: 80.8 years
While it spends nearly $4,500 per person, or 11.3% of GDP, on health care, Germany’s spending growth has been minimal Since 2000, health care expenditures have risen by an average of just 2.0% per year, one of the lowest annual average growth rates in the OECD. Germans have a high number of doctors and nurses per 1,000 residents, and each resident consults a doctor nearly 10 times a year on average. They also apparently have poor evaluations of their own health. In 2011, just 64% of Germans described their health as “good,” versus an OECD average of 69%.
8. Denmark
> Health expenditure per capita: $4,495
> Expenditure as a pct. of GDP: 11.1% (6th highest)
> Pct. obese: 13.4%
> Life expectancy: 79.9 years
Denmark spent $3,827 per person in public funds on health care, more than all but four other countries. This accounted for 85.1% of all spending on health care in the country, the second-highest proportion in the OECD, behind only the Netherlands. Denmark had the second highest number of nurses in the OECD, relative to population, at 15.4 per 1,000 residents. Conversely, it spent the second lowest proportion of any OECD country on pharmaceuticals and other medical supplies, at just 7.4% of all health care spending.
7. Canada
> Health expenditure per capita: $4,522
> Expenditure as a pct. of GDP: 11.2% (5th highest)
> Pct. obese: 17.7%
> Life expectancy: 81.0 years
Only four nations spent more than Canada on health care as a percent of GDP. Although the country offers public health care, paid for through taxes under the Canada Health Act, just over 70% of health care spending came from public funds — below the 72.2% average for the OECD. Despite its above average spending, Canada had just 2.4 doctors and 2.8 hospital beds per 1,000 residents, both among the lowest for all OECD nations. However, the nation is a major spender on pharmaceutical drugs at $752 per capita each year, higher than every other nation considered except for the U.S. Still, at 16.6% of health care expenditure, it is in line with the rest of the OECD.
6. Austria
> Health expenditure per capita: $4,546
> Expenditure as a pct. of GDP: 10.8% (8th highest)
> Pct. obese: 12.4%
> Life expectancy: 81.1 years
While Austria’s per capita health spending trails only a handful of developed nations, few countries have had spending grow as little as Austria in recent years. Since 2000, health care expenditures have risen an average of just 2.3% per year. Austria had 4.8 physicians and 7.7 hospital beds per 1,000 residents, more than nearly all other OECD nations. But despite its high health care spending, the country had just 7.8 nurses per 1,000 people, below the OECD average of 8.7 nurses. Also, Austria’s high spending did not appear make residents feel especially healthy; just 69% of residents described their health as “good” in 2011, in line with the average for all OECD nations.
5 Luxembourg
> Health expenditure per capita: $4,755
> Expenditure as a pct. of GDP: 8.2% (11th lowest)
> Pct. obese: N/A
> Life expectancy: 81.1 years
Luxembourg spent $4,755 per capita on health care, one of the highest figures among OECD member nations. But because of its high per capita GDP — the second-highest in the world in 2012 at nearly $80,000, according to the IMF — total health care expenditure equaled just 8.2% of GDP. This was well below the OECD average of 9.3% of a country’s GDP. Public funds accounted for 84% of Luxembourg’s health care spending, for a total of nearly $4,000 per person. The country has universal health insurance that covers dependant family members, students and the unemployed.
4. The Netherlands
> Health expenditure per capita: $5,099
> Expenditure as a pct. of GDP: 11.9% (2nd highest)
> Pct. obese: 11.4%
> Life expectancy: 81.3 years
The Netherlands is one of just four nations to spend more than $5,000 per capita on health care. Health spending in the country accounted for 11.9% of GDP, a larger percentage than in any other developed nation except the U.S. Health care spending has been rapidly rising in the country in recent years, increasing at an annual rate of 5.1% since 2000, among the highest rates of any country considered. Public funding accounted for 85.6% of Dutch health spending, the most of any member country. Public health care spending has risen faster in the Netherlands than in all but two other countries, at an average of 7.4% per year.
3. Switzerland
> Health expenditure per capita: $5,643
> Expenditure as a pc t. of GDP: 11.0% (7th highest)
> Pct. obese: 8.1%
> Life expectancy: 82.8 years
The Swiss have the longest life expectancy at birth in the OECD, at 82.8 years. By comparison, the life expectancy of an American at birth is just 78.7 years. Likely contributing to the overall health of its residents is Switzerland’s low obesity rate — just 8.1% of residents reported themselves as obese, one of the lowest totals in the OECD and barely more than half the organization’s rate of 15.0%. The country requires residents to buy private health insurance, a program that “successfully delivers much of what the U.S is trying to achieve” by using the private sector to bring about universal coverage, according to Time magazine.
2. Norway
> Health expenditure per capita: $5,669
> Expenditure as a pct. of GDP: 9.3% (16th highest)
> Pct. obese: 10.0%
> Life expectancy: 81.4 years
Norway spent $4,813 in public funds per person on health care, the most of any country considered. One thing that may allow Norway to spend so much on health care: the nation is one of the world’s largest oil exporters and, as a result, has a massive budget surplus, and has built up over $700 billion in savings. No member nation or major developing country had a larger budget surplus than Norway at nearly 14% of GDP, according to OECD figures. The country’s residents practiced some of the healthiest behavior among developed countries. Just 17% of Norwegians smoked, 10% reported they were obese, and alcohol consumption was also among the OECD’s lowest.
1. United States
> Health expenditure per capita: $8,508
> Expenditure as a pct. of GDP: 17.7% (the highest)
> Pct. obese: 28.5%
> Life expectancy: 78.7 years
The U.S. was by far the largest spender on health care at over $8,500 per person, totalling an unmatched 17.7% of GDP. Just two other nations surveyed by the OECD, Mexico and Chile, joined the U.S. in covering less than half of all medical expenses through public funding. Still, the cost of health care in the U.S. was so high that public expenditures on health still amounted more than $4,000 per person, trailing only Norway. Also, while 90% of residents reported they were in “good” health, the most of any OECD nation, the U.S. led all member nations in obesity by a sizeable margin, and had a life expectancy at birth of only 78.7 years — lower than 25 of the 34 OECD nations.
Alexander E.M. Hess and Michael B. Sauter
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