Health care costs spiral sets u.s. apart in the world

Health care costs spiral sets u.s. apart in the world

March 31st, 2013 in Opinion Times

Higher cost projections by BlueCross BlueShield last week for health care insurance after the Affordable Care Act is implemented next January were quickly followed by Gov. Bill Haslam's lamentable decision to reject a federally funded expansion of Medicaid/TennCare for an estimated 180,000 lower-income workers in Tennessee for the next three years. But while cost factors in both cases reflected current U.S. health-care cost trends, neither event gave significant attention to the root cause of this nation's excessive health-care costs relative to the stunningly lower cost of excellent universal care in all other rich industrial nations.

The staggering difference merits serious scrutiny.

Many other rich countries run single-payer, non-profit health insurance programs (think, Medicare for all) financed under an income tax. Several, like Germany, allow or require higher-income citizens to buy private insurance. Regardless of their insurance mix, most other rich countries spend about half of what the United States spends for health care as a percentage of their Gross Domestic Product.

In 2010, the last year for data points on GDP spending, the United States spent 17.8 percent of GDP on health care. By contrast, Australia spent 9.1 percent; Spain and the United Kingdom, 9.6 percent; New Zealand, 10.1 percent; Canada and Switzerland, 11.4 percent; France, 11.6 percent. The average health-care spending was 9.5 percent in the 34 member countries (including the U.S.) of the Organization of Economic Cooperation and Development.

Perhaps more significant is that health-care indices in the United States generally trail the OECD's healthiest countries in such factors as longevity, wellness, infant mortality, obesity and chronic diseases. Which raises an obvious question: If the United States' spending on health care, now more than 18 percent and almost double those of other OECD countries, cannot be justified by common measures of good health, why is it doubly costly?

As anyone who has visited friends and hospital patients in today's modern, high-tech international competitors -- or consumed their prescriptions drugs or been scanned by their exported imaging equipment -- the cost difference is not attributable to lack of the most modern care standards and health-care equipment. Patients in most other rich nations, moreover, have more doctors per 1,000 population and are typically allowed longer hospital stays.

In fact, the difference in health-care costs and spending in the U.S. versus other rich nations results mainly, and simply, from far higher charges by providers and hospitals than most in other rich nations, according to data reported by the International Federation of Health Plans.

The average 2012 cost per hospital day, for example, was $476 in Spain, $731 in the Netherlands, $853 in France, $964 in Chile, $979 in New Zealand and $1,472 in Australia. But the average cost in the United States was a whopping $4,287.

Scanning and MRI imaging typically costs is in the $300 range in Netherlands, the U.K. and France, but jumps to an average of $1,121 in the U.S. A hip prothesis costs five times more in the U.S. than in Spain. Costs of prescription drugs in the United States are similarly a sharp multiple of costs abroad, primarily because Republicans forbid Medicare, which pays for 60 percent of prescription drugs in the U.S., from bargaining with pharmaceutical companies on prescription drug prices.

Routine office visits to doctors, surgical procedures like angioplasty, and major surgeries -- i.e., bypasses and hip and knee replacements -- are similarly disproportionately costly in the United States versus other rich countries. Total hospital and physician costs for an angioplasty in rich, medically modern Switzerland, Netherlands, France and Australia are from about $5,300 to $7,600, but it cost an average of $28,182 in the U.S.

The cost for heart bypass surgery runs a similar course -- from roughly $14,000 to $23,000 in five of the top European countries, to an average of $73,420 in the U.S.

The cost difference can't be explained by technology, availability of care, quality of doctors and hospitals, costs shifting for care of the uninsured or medical outcomes. Providers simply charge more, and Americans simply pay more of their dollars for health care. Health-care experts here would argue that our fee-for-service system and provider competition incentivizes and spurs higher costs. But there's something else at work: unreasonably higher charges all around. Yet our leaders aren't talking about that.