High prices, not overuse, keep US healthcare costs far above peer nations

Editor's Note

The US continues to outspend every other wealthy nation on healthcare, not because Americans use more services but because the prices of those services are far higher, Peterson-KFF Health System Tracker September 4 reports. The analysis compares US healthcare prices and utilization with 11 similarly wealthy countries and finds that inflated costs, especially in private insurance, remain the dominant driver of America’s high healthcare spending.

In 2023, the US spent $13,432 per person on healthcare, nearly twice the average of its peer countries ($7,393). Healthcare accounted for 16.7% of the US GDP compared to an average of 11% among peer nations. Switzerland, the next highest spender, devoted 12% of its GDP to healthcare. The spending gap, which has widened for decades, persists despite Americans using less care overall.

The US has fewer in-person doctor visits, shorter hospital stays, and lower rates of hospital discharges than most peer countries. For example, Americans have about half as many doctor consultations as residents of Germany or Japan, and 2021 data show 57% fewer hospital discharges per capita than peer nations. Average inpatient stays in the US last 6.5 days compared to nearly 10 days across comparable countries.

While Americans receive less care, they pay much more for nearly every service. Across 12 procedures studied—including surgery and diagnostic imaging—US prices were consistently higher than in other nations, regardless of whether patients were covered by Medicare or private insurance. In 2022, the average US Medicare cost for a coronary angioplasty was 2.9 times higher than the public insurance average abroad, while private insurers paid up to 10 times as much as Germany. For coronary bypass surgical procedures, Medicare paid $44,149 per case compared to $24,847 in peer countries, with private plans again paying roughly double Medicare’s rate.

Utilization patterns also differ: the US performs fewer inpatient surgical procedures such as knee, hip, and gallbladder procedures but shifts many of these to outpatient settings. Meanwhile, cesarean sections and CT scans occur more often in the US than elsewhere, and both cost more.

Provider pay and drug prices further widen the spending gap. US physicians and nurses earn more than counterparts in other high-income nations, and even after recent Medicare negotiations, drug prices remain on average 2.8 times higher than those abroad.