Why Is Healthcare So Expensive In Certain Countries?

Factors contributing to high health expenditures relative to Gross Domestic Product vary, ranging from residents' low absolute incomes to high overhead in medical costs.

5. Overview

While having adequate relative health expenditures is typically consistent with a developed and accessible medical infrastructure, higher health expenditures do not always mean better health outcomes for the general populace. The list of the 15 countries with the highest relative healthcare costs, covering the entire spectrum of the quality of life and economic development spheres, further amplifies the confusion. These countries are the United States, the Marshall Islands, Tuvalu, Maldives, Micronesia, Haiti, Sweden, Switzerland, France, Germany, Austria, Sierra Leone, Cuba, New Zealand, and the Netherlands.

4. An Ambiguous Picture

It would be logical to assume that countries spending the most on health care would have citizens with the overall best health. However, this is not always the case. Health expenditures, the sum of what is spent on both the public and private health sectors of a country based on GDP, hinge on a many factors. The countries that spend the highest relative amounts on providing health services are not necessarily the healthiest, nor are they always the wealthiest. Therefore, we have delved into some of the most important factors that play into high health expenditures, what they mean in context of a country’s economic development and the state of health care globally.

3. Differences in Health Expenditures Among Developed Countries

There is a great deal of literature devoted to analyzing the health expenditures of developed countries, particularly those 34 within the Organization for Economic Cooperation and Development (OECD). Generally speaking, countries that spend the most on health care tend to provide the best health services. But what do we make of the United States, which is credited with having highest heath expenditure worldwide at 17.9% of GDP, and yet has some of the highest frequencies of some of the biggest health problems seen globally? Where is all that money being spent? Well, for one, the U.S. spends more on medical technology than any other country, which accounts for a large portion of that. Another contributing factor is the U.S.’s splintered health care system, where no central mechanism is in place to regulate pricing within the industry. As can be seen in many developed European countries, having a centralized system places limits on relative medical costs. For this reason, European medical expenditures, while high globally, are significantly lower than those seen in the U.S. for similar services.

2. Health Expenditures in the Developing World

Of the 25 countries with the highest health expenditures, nearly half are within the developing world. There is a disproportionate lack of data on these countries compared to their counterparts, particularly in relation to OECD members’ health infrastructure data. A report by the World Health Organization (WHO) (WHO) emphasizes the complexity of systems that effect health expenditures. Factors such as income, demographics, average age of the population, and the amount of external aid a government receives to contribute to spending on health all contribute to high percentages of GDP being diverted for medical expenses in many developing countries. Further, when per capita GDP is very low, meeting basic health needs may be one of the expenses people will prioritize, therefore elevating such expenditures relative to GDP.

1. What is Needed To Improve Healthcare Costs Globally?

High spending for health services is happening across the board, from the poorest developing countries to some of the wealthiest. The focus should not solely be on economic growth when working to raise the efficacy of a nation’s health care. As concluded by the WHO, there needs to be an emphasis on innovative health financing and improvement of efficiency in these often very complex and fragmented health systems. The high cost of health care services is of great concern for governments and individuals alike and, when it comes to health, it is clear that high spending doesn’t equal the best outcomes. Indeed, even those countries with the most limited of financial resources are managing to spend high percentages of their respective GDPs on health care. The focus worldwide needs to be on how the complexities of domestic health care systems and governments interact in order to best improve human health globally.

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