Healthcare Spending


Japan spends the least on healthcare and the US spends the most--without providing superior care for the money.

The US spends more on healthcare than 12 other industrialized countries; however, that care is not superior in terms of patient outcomes. According to a study conducted by The Commonwealth Fund, the US spent nearly $8,000 per person in 2009 on healthcare services, while other countries in the study spent between one-third (Japan and New Zealand) and two-thirds (Norway and Switzerland) as much and obtained similar, and sometimes superior, patient outcomes.

Higher prices and greater use of technology appear to be the main factors driving the high rates of US spending, rather than greater use of physician and hospital services. US hospital stays cost more than hospital stays in other countries. A typical US hospital stay cost about $18,000 while in Canada, the cost was $13,000 and in Germany, it was just under $10,000.

Prices for the 30 most commonly used prescription drugs were a third higher in the US (no surprise there) compared to Canada and Germany, and more than double the amount paid for the same drugs in Australia, France, the Netherlands, New Zealand, and the United Kingdom.

The researchers noted that Japan offers an interesting model for controlling costs. Japan is the lowest-spending nation of the group ($2,878 per capita in 2008). Japan operates a fee-for-service system, while offering unrestricted access to specialists and hospitals. Rather than containing costs by restricting access, Japan instead sets healthcare prices to keep total health spending within a budget allotted by the government.

I traveled to Japan last year to teach the nurses there, and the first thing I noticed was that nobody there was fat. In fact, some employers require annual girth measurements of its employees. There’s also a big emphasis on healthy eating and exercise in Japan. Junk food is relatively hard to find, and although there are fast food restaurants in Japan, the portion sizes are small. While I was there, a doctor said that he thought that Americans are eating themselves to death—that just might be correct.


D. Squires, Explaining High Health Care Spending in the United States: An International Comparison of Supply, Utilization, Prices, and Quality. The Commonwealth Fund. May 2012.

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