We spend 60% more than the average developed country, according to Richard “Buz” Cooper. But after adjusting for income and price differences, we are spending only 31% more in terms of real resources.
What explains this 31 percent? A large body of evidence suggests that it results from poverty and income inequality, which are more prevalent in the U.S. than in any other OECD country except Chile, Mexico and Turkey. And poverty is associated with substantial increments in spending. For example, the poorest decile of Medicare beneficiaries spends 30-40 percent more than the wealthiest; overall hospital utilization rates in large urban areas are 25-35 percent more than in their wealthiest Zip codes; and hospital readmissions are most prevalent from poor neighborhoods and in safety-net hospitals.
But there is more:
[S]ocial spending…in the U.S. is 33 percent less than predicted from GDP (Panel D)…It is difficult not to connect the dots from inadequate social spending to excess poverty and income inequality to more chronic illness and higher health care spending. These dots reside in the core of the OECD onion, and the failure to cope with them is placing an unsustainable burden on our health care system.