The Cost of Health Care
Good health is not only vital to people’s happiness and well-being, but it is also important in terms of sustaining economic progress and social development within a country. Across the globe, various countries allot drastically different amounts of money for health care spending. Regardless of amount spent, each country hopes to see a return on investment in the form of healthy and productive citizens.
To investigate the correlation between a country’s health care spending and the prevention of death due to disease amongst its citizens, we analysed the latest World Health Organization Global Health Observatory (GHO) data, focussing on two topics: The first is health expenditure per country (as a percentage of its GDP), which conveys the level of resources directed toward health relative to a country’s wealth. The second is death rates from disease (adjusted for population). Lacking the space to examine every country, we focussed on 20 countries we hoped would provide a fairly comprehensive snapshot of health expenditure and prevention of death from certain diseases: the 19 European countries that possess the highest total GDPs and the United States.
On the topic of health spending, we took into account two types: The first, general government expenditure, includes payment to health providers from government entities and mandatory health insurance payments. The second, private spending, includes spending by entities not under government control (such as voluntary health insurance) and payments from corporations and households. As for death rates from disease, we separated the data into two categories: deaths from communicable diseases (which are infectious) and deaths from noncommunicable diseases (which includes all diseases that cannot be passed from person to person). For the latter, we focused on specific diseases: heart disease, cancer, chronic respiratory diseases, and diabetes. Keep reading for a fascinating look at health care spending, prevention of disease, and the unique relationship between the two in various parts of the world.
Health Care Spending: Government vs. Private Sector
The chart above is a compilation of data representing each country’s entire health care expenditure separated by private and government spending. Among the 20 countries we looked at, the U.S. is the only one where private sector spending comprises more than half of health care expenditure. In the U.S., private spending includes out-of-pocket expenditures and private insurance costs, while government spending includes Medicare, Medicaid, the Veterans Health Administration, and other federal programmes. (As you’ll see below, the spending allocations by the U.S. in terms of health care may have a direct correlation with the health of Americans.)
Greece is the runner-up for private sector spending, which makes up just over 38 percent of the country’s total healthcare expenditure. In the financially struggling country, government expenditure on healthcare plummeted 25 percent between 2009 and 2012 – and many experts believe the entire system is on the verge of collapse. Portugal claims third place, with private spending that comprises just over 35 percent of total expenditure. In an effort to reduce the budgetary deficit, Portugal decreased public spending on health. However, although public coverage has decreased, the country has continued to provide accessible care to low-income citizens. Next comes Switzerland with 34 percent, Ireland with just nearly 34 percent, and Spain with just over 29 percent.
On the other end of the spectrum, in the Netherlands, government spending makes up the highest proportion of health care expenditure among every country – over 86 percent. Out-of-pocket healthcare expenditure is lower than average, and citizens have a high level of satisfaction regarding the health care system. Government spending comprises nearly 86 percent of expenditure in Norway, over 85 percent in Denmark, and nearly 84 percent in the U.K.
Health Care Spending Across the Globe
We mapped countries across the world based on whether the majority of their healthcare spending originated from the private sector or the government. You can tell at a glance that government spending (represented by purple) dominates health care in the majority of the developed world, while private sector expenditures (represented by teal) are more common among developing nations. However, the U.S. is a major exception. In fact, the U.S. is the only industrialised nation that does not offer some type of universal health coverage.
Proponents of universal healthcare argue that it is a basic human right – and not a privilege, as it is in the United States. Within the U.S., rising health insurance costs have led to an increasing number of uninsured Americans. While the issue was once unique to low-income people, it has spread to affect middle-income individuals as well. A lack of universal health care, according to the Institute of Medicine, has a negative impact on society in numerous ways: Decreased levels of health and shorter lifespans translate into fewer years in the workforce, uninsured children are likelier to have poor health and therefore suffer developmental delays (thus affecting future productivity), and public programs such as Medicare are much more expensive than they would be if there were universal coverage.
Out-of-Pocket Spending, by Country
Next, we zoomed in on a specific portion of private sector health care expenditures: out-of-pocket spending. The term refers to direct payments by households for goods and services intended to restore or enhance health, including health practitioners, pharmaceuticals suppliers, and therapeutic appliances. Out-of-pocket expenditure on medical care is a key issue, as it is not voluntary and utilises resources that could be spent elsewhere. High out-of-pocket payments are associated with impoverishing spending (which pushes households below the poverty line) and even catastrophic spending. The chart above ranks the percentage of total healthcare expenditures (shown as a percentage of the GDP) that stem from out-of-pocket spending in each country.
With a few exceptions, this list ranking each country’s out-of-pocket expenses is similar to the list charting each spot’s percentage of private spending. Switzerland, No. 3 in the private sector expenditure, spends the most out of pocket. In the consumer-driven Swiss healthcare system, individuals – as opposed to the government or employers – primarily fund health care expenses. But because the government regulates prices, consumers can get universal health coverage for a lower cost than they could in the U.S., for instance, but without the drawbacks of a single-payer universal care system.
Next comes Greece, Portugal, Spain, Italy, Belgium, and the U.S. – among these, Italy and Belgium are the only countries that did not make the top 7 for private sector spending. And although the United States has the highest percentage of private spending, it only claims seventh place for out-of-pocket expenditure. In the U.S., out-of-pocket spending rates can vary greatly from state to state; in recent years, personal spending for professional services has grown, while spending on prescriptions has decreased.
On the low end, the Netherlands has the lowest percentage of out-of-pocket spending. As of 2015, insured individuals in the Netherlands must pay an annual deductible that goes towards certain healthcare costs. They also share costs of certain services. However, notably, GP services and treatment for children (under age 18) are exempt from cost-sharing. After the Netherlands comes France, the U.K., the Czech Republic, Romania, and Norway – and again, the list contains several similarities to the private sector expenditure ranking.
Health Care Spending and Death Rates
The chart above compares each country’s death rate (due to disease) per 100,000 people with its total healthcare spending (as a percentage of GDP). Generally, a higher rate of spending does not necessarily correspond with a lower death rate due to disease. However, it appears that in some countries, a correlation exists – for instance, Romania’s health care spending comprises the lowest proportion of GDP of all the countries, and its death rate is much higher than average as well.
The most surprising fact is that the U.S. allots a staggeringly high 17 percent of its GDP to health care – a much higher percentage than that of any other country. This percentage translates into an average expenditure of over $9,000 per person in a year. However, not only does the U.S. have a higher than average rate of disease-caused death, but its death rate trails only those of Romania, Poland, and the Czech Republic.
In the U.S. both health services and pharmaceuticals tend to be expensive. For instance, an appendicectomy in the U.S. costs an average of nearly $14,000. However, in Switzerland (which has the second-highest average), the same operation costs just under $10,000. Despite high healthcare expenditure, Americans average fewer hospital and physician visits than other high-income countries. They also have an average life expectancy of over four years less than Swiss people.
Health Care Spending and Communicable Diseases
During the 20th century, the improvements in environmental conditions, advancements in public health, and several huge breakthroughs in medicine (from antibiotics to chemotherapy) contributed greatly to the control of communicable disease. However, despite the relatively low rate of communicable disease deaths per 100,000 people, a visualisation of the death rates compared with health care spending still proves intriguing.
Perhaps surprisingly, Finland, which spends below average on health care (when averaging the 19 countries we examined), also has the lowest communicable disease death rate. And in the opposite position, the U.S. spends the most on health care, and yet the country ranks markedly above average for communicable disease death rate. Romania spends the lowest percentage of GDP on average and also has the second-highest death rate. However, Portugal has the highest death rate due to communicable disease among these countries and spends only slightly less than average. Among Portugal’s most common notifiable communicable diseases are syphilis, salmonella, mumps, Mediterranean spotted fever, and malaria.
Health Care Spending and Noncommunicable Disease Deaths
In the same vein, we created a visualisation of death rates for noncommunicable diseases compared with healthcare expenditure (as a percentage of GDP) to plot each country. One trend emerges: Many of the countries that have below-average death rates for noncommunicable disease also spend less than average on health care, including Italy, Spain, and Ireland. However, the U.S. spends the most, yet it still has a higher than average death rate for noncommunicable disease.
Among all the countries we analysed, Switzerland has the lowest death rate for noncommunicable disease and also spends more than average on health care. And again, Romania has the lowest expenditure – and although it came in second for communicable disease death rates, it actually tops the charts for noncommunicable disease death rate.
Does High Health Care Spending Mean a Lower Death Rate?
Tracking the connection between rate of noncommunicable disease deaths and above- or below-average healthcare expenditures yielded mixed results. Overall, it appears the correlation is tenuous at best – many of the countries with the lowest death rates from noncommunicable diseases also spend less than average on health care.
However, a few notable exceptions emerge: Switzerland has the lowest noncommunicable death and France has the third-lowest, but both spend higher than average on health care. And the three countries with the highest rate of death from noncommunicable disease – Romania, Poland, and the Czech Republic – all average on the low end for health care expenditure.
Noncommunicable Disease Deaths, By Type
Unlike contagious illnesses, some noncommunicable diseases (although they can be inherited) can also to be influenced by certain habits, including tobacco use, activity level, health of diet, and consumption of alcohol. To get a clearer picture of the noncommunicable diseases prevalent in each country based on population, we broke them into five categories: heart disease, cancer, chronic respiratory diseases, diabetes, and other noncommunicable diseases. Virtually across the board, heart disease and cancer comprise the lion’s share of deaths due to noncommunicable diseases. According to the CDC, cancer is a global epidemic that is on the rise – and only 5 percent of cancer resources are spent in less developed countries. Further, a surprising proportion could be prevented by actions such as quitting smoking. Additionally, the odds of dying from heart disease, another leading cause of death, can be drastically reduced through lifestyle changes including quitting smoking, maintaining a healthy weight, eating a healthy diet, exercising, and seeking treatment for health conditions such as high blood pressure.
Heart disease dominates in Romania, Poland, and the Czech Republic, accounting for over half of noncommunicable diseases. The WHO has noted that in Eastern Europe, factors including high alcohol consumption, tobacco use, and globalisation and urbanisation, may contribute to the high rates of heart disease. France sees the highest rate of cancer (it comprises over 42 percent of deaths), followed by the Netherlands at just over 41 percent and Italy and Denmark at just over 38 percent. According to a WHO report, Europe has some of the highest smoking rates, as well as the highest proportion of ill health from drinking, both of which can contribute to cancer. Respiratory illnesses are more common than average in the U.S., Denmark, and the U.K. (nearly 9 percent apiece), while diabetes is most prevalent in Portugal (over 5 percent), Italy, and Austria (nearly 4 percent each).
Above-Average Health Care Spending and Death Rate
Finally, we averaged the population-based death rates per each disease for two categories: all countries with above-average health care spending and all countries with below-average spending. Interestingly, heart disease displays the most substantial difference: Countries that spend less on health care average a 34.1 percent higher rate of heart disease deaths. On the other hand, countries that spend more on health care average a 13.5 percent higher rate of diabetes deaths.
Treating chronic conditions such as heart disease is costly for the health care system, which may explain why countries that spend less have higher death rates from heart disease. In the U.S., for example, cardiovascular disease and stroke account for the highest proportion of health care spending. Additionally, because certain lifestyle factors can increase risk, emphasis should be placed on prevention and lifestyle change.
Your Health is in Your Hands
As our research reveals, not every situation points to a clear connection between healthcare expenditure and wellness. However, analysing the data reveals intriguing insights. For instance, despite its high health care spending, the U.S. still experiences higher than average death rates – suggesting the need for health care reform. Ideally, every person in the world deserves access to high-quality health care services – not only for their personal well-being, but also to the well-being of nations as a whole.
On a personal level, you can take charge of your own health without even leaving home. At Zava, you can consult with a qualified medical professional, no appointment necessary. We offer comprehensive solutions to enhance your well-being – whether you want to quit smoking or lose weight. If you have a chronic condition, such as high blood pressure, asthma, erectile dysfunction, or diabetes, Zava can provide testing kits, treatment, and more, all discreetly delivered by post or courier. Visit Zava today to get the health care services you need.
We used the latest available data from the World Health Organization’s Global Health Observatory data repository, including the recently updated health financing data (updated as of April 12, 2016). The database included all considered indicators: health expenditure ratios for all countries, which includes total spending as related to the country’s GDP, general government spending, private spending, and out-of-pocket spending; age-standardised death rates for communicable and noncommunicable diseases (for both genders, per 100K population); and age-standardised cause-specific mortality rates for noncommunicable diseases cancer (malignant neoplasms), heart disease and stroke (cardiovascular diseases), diabetes (diabetes mellitus), and respiratory diseases (for both genders, per 100K population).
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