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US often pays much more than other countries for prescription drugs, surgery

Once you see these prices, you won't wonder why America is on track to spend 20 percent of its GDP on health care by 2025.

A new report illustrates in graphic terms how health insurers in the United States routinely pay higher — often much higher — prices for certain prescription drugs and common surgeries than those in other developed countries.

The report, issued by the insurance industry group International Federation of Health Plans, notes that a normal delivery of a baby in the United States has an average cost to insurers of more than $10,800. That's five times what a major insurer pays in Spain for the same kind of a delivery, and more than twice what a major insurer pays in Australia. And some insurers in the U.S. are paying $18,000 or more per normal delivery, the report noted.

And U.S. insurers on average pay nearly $2,670 for a month's supply of the rheumatoid arthritis medication Humira. That's about twice what major insurers in the United Kingdom and Spain pay, and three times what an insurer in Switzerland pays.

The head of the federation said the disparities seen between prices in the U.S. and the six other countries examined in the report indicates that competition between American health providers has failed to control costs for consumers, as it has in other business sectors.

"You're paying higher prices for exactly the same unit of care. ... It suggests that the market just is not working," said Tom Sackville, the federation's chief executive. "Your whole competition structure doesn't seem to apply in health care."

"You have some of the best health care in the world," Sackville said, referring to the U.S. "You also have some of the most expensive health care in the world."

"You could make the case you're being swindled."

The report compared prices derived from more than 500 million insurance claims in the U.S. to prices in Australia, New Zealand, Spain, South Africa, Switzerland and the U.K. for the private sector. The data was from one large private plan in each country.

The disparities identified by the report were most pronounced for prescription drugs, where the U.S. routinely had higher prices than other countries. The exception was for the painkiller OxyContin, which costs U.S. insurers an average of $265 on average for a month's supply. That put the U.S. second to the United Kingdom, where the OxyContin cost $590, but still well above other countries.

Likewise, in the handful of surgical procedures cited in the report where the U.S. wasn't the most expensive place, it was second.

The report comes a week after actuaries at the top U.S. government health regulator released new projections for national health-care spending.

By 2025, the United States will be spending more than $5.6 trillion on health care, accounting for 20.1 percent of the gross domestic product, according to the new estimate from the Office of the Actuary at the federal Centers for Medicare and Medicaid Services.

That level of spending is almost certain to keep the U.S. far ahead of other industrialized countries in health spending. A Commonwealth Fund report issued last fall found that U.S. health spending in 2013 was about 17 percent of GDP — more than 5 percentage points higher than spending by France, which held second place in the report, and almost double the health spending rate of Britain.

Sackville said that many people in Europe assume that Americans spend more on health care overall because they use more of it.

"But that seems not to be the case," Sackville said. "It's not the utilization that is driving up the cost of health care, it's the cost of each unit of care."

In recent years, for example, the cost of pricey new medication used to treat hepatitis C has been blamed for sharper spikes in overall prescription drug spending in the U.S.

But what U.S. insurers pay for one of those medications, Harvoni, is typically much more than what insurers pay elsewhere. In the U.S., the average cost of a four-week supply Harvoni to insurers is $32,114. That's almost 50 percent more than the $22,554 for the same amount in the U.K., and almost $14,000 more than in Switzerland.

Another striking example comes from hip and knee replacements, which are among the most common surgeries performed in the U.S. and which routinely cost significantly more than they do elsewhere in the world.

The average cost to a U.S. insurer for a hip replacement is more than $29,000, the study found. That's $9,500 or more above the average cost in Australia, which was the second-most expensive country for that procedure. In the U.K., hip replacements typically cost $16,335. And in Spain, they cost $6,757, according to the report.

Knee replacements in the U.S. cost an average of around $28,180 — $8,000 more than what a big insurer in Switzerland paid.

Another often routine surgery, appendectomies, also saw big disparities in prices. In the U.S., an appendectomy cost insurers $15,930 on average, almost double the $8,009 paid in the U.K. and about eight times the $2,003 paid in Spain.