Explaining the Differences in the U.S. and European Health Care Systems

How can it be that the richest, most powerful nation on earth can tolerate 47 million uninsured, the highest health care costs per capita by far on earth, and health outcomes that put the United States well down in the ranking of developed countries? Daniel Callahan

As the epigraph above indicates, Americans are spending more and receiving less in terms of the quality and accessibility of their health care compared to European nations that spend less in some cases far less per capita. Moreover, recent trends indicate that the disproportion between the U.S. and European nations continues to increase, indicating that there must be several factors that can account for these differences that have fueled these differences in the past and continue to cost Americans more of their tax dollars. The purpose of this paper is to review the literature to identify these factors and explain their implications for the health care systems in the U.S. and Europe, including the reasons for the higher costs of health insurance in the U.S. Following this review, a summary of the research and important findings concerning the differences in the U.S. and European health care systems is provided in the conclusion.

Overview of Health Care Systems in the U.S. and Europe

Comparing the respective amounts of taxpayer resources that are spent on health care by different countries requires an analysis of each countrys economic, political and social priorities, but it is possible to make some general comparisons based on recent and current trends in health care expenditures. For instance, according to the Peter G. Peterson Foundation (2022), Generally, wealthier countries will spend more on healthcare than countries that are less affluent. As such, it helps to compare healthcare spending in the United States to spending in other comparatively wealthy countries those with gross domestic product (GDP) and per capita GDP above the median (How Does the U.S. Health Care System Compare to Other Countries 2).

By practically any measure, these costs are far greater in the U.S. than elsewhere, including affluent Western European nations. In fact, at present, health care expenditures in the U.S. average about $12,300 per individual, representing the highest per capita costs among Organization for Economic Co-operation and Development (OECD) nations (How Does the U.S. Health Care System Compare to Other Countries 3). As can be readily discerned from the breakdown of respective per capita health care costs in the U.S. and Europe depicted in Figure 1 below, the U.S. outspent every OECD nation by far, and even the second-highest rated country, Germany, spent just around $7,400 and the average for OECD nations (excluding the U.S.) is about $5,800 per capita. As the analysts at the Peter G. Peterson Foundation point out, Such comparisons indicate that the United States spends a disproportionate amount on healthcare (How Does the U.S. Health Care System Compare to Other Countries 5).

Fig. 1 Health Care Costs Per Capita: U.S. versus OECD nations

Source: Peter G. Peterson Foundation (2022) at https://www.pgpf.org/sites/default/files/How-Does-The-U.S.-Healthcare-System-Compare-To-Other-Countries-chart-1.jpg

A valid argument could be made that this level of disproportionate spending is well worth the money if American health care consumers actually received top-notch health care and enjoyed a higher quality of life and longer life expectancies, but this is not the case. For example, male children who are born in the U.S. at present have an average life expectancy of 74.5 years, ranking the U.S. a dismal 47th in comparison with other OECD nations. Likewise, although women in the U.S. live longer with an average life expectancy of 80.2 years, women in the European Union have a life expectancy of 83.3 years (Life Expectancy 2023). It must also be noted that these differences in health care outcomes even apply to Eastern European nations that spend even less than their Western neighbors, underscoring the failures of the health care system in the U.S. to maximize the value of taxpayer dollars in terms of quality of life and life expectancy (Ginter 2010).

More troubling still, the infant mortality rate in the U.S., at 174th place, is among the worst in the entire world (U.S. People 2023). In addition, the disparities in life expectancy rates for African Americans compared to their European counterparts are also glaring, and these inequalities have been further exacerbated by the recent Covid-19 pandemic (Kanter et al. 2021). In sum, American consumers are not realizing the full bang for their health care buck as their European counterparts, an issue which is discussed further below.

Factors Accounting for Differences in the Costs...…to the existing health care network in the U.S. before it is too late and the nation finds itself unable to provide even the current levels of medical care for its indigent population in general and the elderly population in particular. Unfortunately, complex problems demand complex solutions and this is especially the case with the provision of health care services in the U.S. In many ways, any funding for health care services is a zero-sum proposition since there are only so many tax dollars to go around. At present, there are significant differently Medicare and Medicaid plans in place across the country, with some states offering more medical services and others requiring less income to meet the cutoff threshold to qualify (McMichen). This means that there are still disparities between the level of medical care received by some Americans simply by virtue of where they live in the U.S. (McMichen). This also means that thetax dollars that are being invested in the nations health care infrastructure are not being spread equitably, and some poorer states will invariably remain at a disadvantage compared to their more affluent neighbors (McMichen).

Conclusion

The research showed that the high cost of healthcare in the United States is disproportionate to other affluent Western European nations, averaging about $12,300 per individual, with per capita costs significantly higher than any OECD nation. Despite the significantly higher spending levels, health care outcomes in the United States remain inferior, with lower life expectancies and higher infant mortality rates compared to its European counterparts. The research was consistent in showing that a primary difference between the U.S. and European health care systems is the manner in which health care is funded. On the one hand, the U.S. health care system is heavily privatized, while on the other hand the European systems are primarily government-operated or otherwise funded. The research also showed that the prioritization of healthcare needs of consumers by European governments is a more cost-effective approach compared to America, but the strong profit motive that has caused many of the differences in health care costs and outcomes between the U.S. and European countries are longstanding and difficult to change. Finally, it is reasonable to conclude that little real progress will be achieved in reforming the health care system in the U.S. unless and…