"Price is what you pay. Value is what you get." These words spoken by Warren Buffett come to mind when looking at how much people across the world pay for health care.
Are the nations that pay much more for health care than others also getting commensurately more value? Let's look at the seven countries with the highest health care costs among the 34 member nations of the Organisation for Economic Co-operation and Development, or OECD.
Danes pay greatly for health care when compared to other countries. Denmark spends 11.1% of the country's GDP on health care, or around $4,464 per person. However, the country's life expectancy is 79.3 years, below the OECD average of 79.8.
The Alps aren't the only things reaching lofty heights in Switzerland. The nation spends 11.4% of its GDP on health care, high enough to claim the No. 6 spot on our list. Switzerland's per capita spending of $5,270 ranks third-highest among all OECD countries. The Swiss might be getting a good return on this spending, though. The nation's life expectancy of 82.6 ranks as the second-highest of all OECD nations after Japan.
Canada stands as the second-largest country in the world in terms of geographical area, but it also has relatively large health care costs. Canadians spend 11.4% of GDP on health care. The country's $4,445 per capita in medical spending ranks seventh-highest among OECD nations. Canadians have a life expectancy of 80.8 years, one year more than the OECD average.
Germany is Europe's greatest economic powerhouse, with a sizable portion of that economic power directed toward health care. German spending on health care comprises 11.6% of its GDP and totals $4,338 per person. The German life expectancy of 80.5 years exceeds the OECD average but only ranks 20th among the 34 OECD member nations.
France also spends 11.6% of its GDP on health care, but edges Germany in our ranking. French medical-related spending amounts to $3,974 per person. On the positive side, though, France boasts the ninth-highest life expectancy in the OECD at 81.3 years.
Healthcare isn't exactly a Dutch treat. The Netherlands spends 12% of its GDP -- $5,056 per capita -- on medical costs. The country ties Canada for 13th place among OECD members with a life expectancy of 80.8 years.
1. United States
As you probably expected, Americans are No. 1 -- unfortunately, in an area where we'd prefer to rank lower. The U.S. spends a staggering 17.9% of its GDP on health care. That's $8,680 per person -- 61% higher than the next-highest nation. However, Americans' life expectancy of 78.7 years places 27th among OECD members and is over a year less than the OECD average.
Digging into some of the details behind these numbers yields some interesting information. There are some areas where the U.S. fares much better than most other countries. Americans' cancer survival rates rank among the best in the world. The U.S. also has significantly lower waiting times than other nations for receiving certain types of care, including elective surgeries.
The U.S. has the sixth-lowest average hospital stay length and the seventh-lowest number of hospital beds per 1,000 people. This either means that American hospitals are more efficient than most of the world -- or they push patients out the door more quickly one way or the other.
There are far fewer physicians per 1,000 people in the U.S. than most other countries. The U.S. ties for seventh-lowest among OECD member nations, with 2.4 physicians per 1,000 persons. However, even with fewer physicians, more CT and MRI exams are performed in the U.S. than nearly any other country. This likely results from multiple factors, including fear of lawsuits and financial incentives within the U.S. health care system.
The U.S. is by far the most obese nation among OECD nations. More than 28% of American reported being obese compared with the OECD average of 15%. The next most obese country was Australia with an obesity rate of 21.3%.
Two findings struck me as most intriguing. First, Americans ranked first among all OECD countries in how healthy they think they are with 89.8% reporting perceived good health. Our life expectancy isn't high relatively speaking, but we think we're in good shape health-wise.
Second, although our health care costs are by far the highest, the growth rate doesn't look nearly as bad comparatively. U.S. health care costs grew by 4.2% annually between 2000 and 2010, while the average growth rate for all OECD nations was 4.3%.
The Motley Fool always looks for an investing angle, so what's the takeaway from all this health care cost information? I think it makes sense for investors to look at the big picture. The U.S. spends way too much on health care. Companies that help control those costs should have significant growth opportunities over the long run.
Pharmacy benefit managers, or PBMs, fit the bill nicely. Average spending on prescription drugs in the U.S. last year was $898 per person. Prescription drugs rank as the third-highest cost of health care, trailing only hospital care and physician/clinical services.
Several PBMs look attractive, but I particularly like Express Scripts (NASDAQ:ESRX). The company ranks as the largest PBM in the nation. Its scale and analytical capabilities give it a competitive edge, in my view, for helping organizations control prescription drug spending.
The stock trades currently at a forward price-to-earnings multiple of 12.5. That's not bad at all considering the company's solid growth prospects. After all, price is only what you pay. Value is what you actually get.