Health Spending In The United States And The Rest Of The Industrialized World
By Gerard F. Anderson, Peter S. Hussey, Bianca K. Frogner and Hugh R. Waters
Health Affairs
July/August 2005
Do Americans have access to a greater supply of health care resources?
Surprisingly, Americans have access to fewer health care resources than people in most other OECD countries, measured in three major categories:
hospital beds per capita, physicians and nurses per capita, and magnetic resonance imaging (MRI) and computed tomography (CT) scanners per capita.
How much savings are possible through waiting lists?
Waiting lists could explain part of the difference in health spending between the United States and other OECD countries. However, there are several reasons to believe that they explain little of the difference.
First, not every OECD country experiences waiting lists, although every country spends much less than the United States on health care. The OECD Waiting Times project identified twelve OECD countries that considered waiting times for elective surgery to be a high priority but also identified seven countries besides the United States that did not perceive that they had a problem with waiting times. Health spending in the twelve countries with waiting lists averaged $2,366 per capita, while in the seven countries without waiting lists, it averaged $2,696-both much less than U.S. spending of $5,267 per capita.
A second reason is that the procedures for which waiting lists exist in some countries represent a small part of total health spending. Using U.S. survey data, we calculated the amount of U.S. health spending accounted for by the fifteen procedures that account for most of the waiting lists in Australia, Canada, and the United Kingdom. Total spending for these procedures in 2001 was $21.9 billion, or only 3 percent of U.S. health spending in that year.
From the Discussion:
Although malpractice litigation is a growing problem in the United States as well as in Australia, Canada, and the United Kingdom, there is limited evidence that it is responsible for much of the difference in health spending levels between the United States and these countries. In all four countries, malpractice litigation costs for claims against physicians are small compared with total health spending.
Another piece of conventional wisdom about why U.S. health care costs are so much higher than other countries’ is also probably overstated. It is common for people to wait for nonemergency medical procedures in some OECD countries, but these procedures do not contribute much to health spending.
In the United States, the procedures that necessitate waiting lists in other countries would account for only 3 percent of health spending.
The finding that litigation and waiting lists do not explain most of the higher U.S. health spending is perhaps not surprising considering previous research showing that the prices of care, not the amount of care delivered, are the primary difference between the United States and other countries.
These higher prices are increasingly making health care unaffordable for many Americans. Equally troubling, the more-costly U.S. health care has not resulted in demonstrably better technical quality of care or better patient satisfaction with care. Future U.S. policies should focus on the prices paid for health services and on improving the quality of those services.
http://content.healthaffairs.org/cgi/content/abstract/24/4/903
And…
Outcomes and Cost of Coronary Artery Bypass Graft Surgery in the United States and Canada
By Mark J. Eisenberg, MD, MPH; Kristian B. Filion, BSc; Arik Azoulay, BComm, MSc; Anya C. Brox, BSc; Seema Haider, MSc; Louise Pilote, MD, MPH, PhD
Archives of Internal Medicine
July 11, 2005
Coronary artery bypass graft surgery (CABG) requires substantial resources in Canada and the United States. However, patients undergoing CABG at US hospitals incur approximately twice as much cost compared with those at Canadian hospitals, with little difference in clinical outcome and despite shorter average LOS (length of stay). The difference in total in-hospital costs is almost equally attributable to differences in direct and overhead costs between the Canadian and US hospitals. This cost differential primarily reflects higher resource prices for products and labor and higher overhead costs in the United States resulting from a nonsocialized medical system.
http://archinte.ama-assn.org/cgi/content/abstract/165/13/1506
Comment: So why are health care costs so much higher in the United States than in other industrialized nations? Clearly, prices are higher.
Why are prices higher? Often the reason given is that we offer more high tech care than do other nations. But these studies suggest that we don’t, and, even if we did, we are not purchasing any improvement in quality outcomes. Although the costs of malpractice litigation and defensive medicine are frequently cited as a major contributor, these account for an almost negligible amount of the higher prices in the United States. Neither does the aging of the population account for a significant portion of the international variations in spending.
The authors tend to dismiss the administrative waste inherent in our system as being only a minor contributor to increased U.S. health spending. But numerous other studies confirm that the administrative burden is excessive and can be reduced with significant savings. Another potential source for savings by which all nations could benefit would be to identify and adjust supply side excesses (over-utilization) which fail to improve outcomes.
One other important factor that partially explains our high prices is that they are correlated with higher U.S. incomes and higher cost of living.
While we can be thankful about our nation’s wealth, most of us are quite upset about our excessive health care prices, especially when we can do something about it. We can begin by instituting administrative simplification and negotiated pricing through a single, universal health insurance program.