Something I'm Not Thankful For
The Organization for Economic Cooperation and Development (OECD) has just published its international comparison of health systems (find the entire publication here). This is an excerpt from the section about why US health care costs are so high:
Organization for Economic Cooperation and Development (OECD)
Health at a Glance 2011: OECD Indicators
Why is health spending in the United States so high?
The United States spends two-and-a-half times more than the OECD average health expenditure per person.
Rich countries spend more than poor countries. Chart 3 (at link below) shows that for nearly every country, if you know how rich they are, you can predict their health spending per person per year to within a few hundred dollars. The United States is an exception – Americans spend nearly $3000 per person per year more than Swiss people, even though Swiss people have about the same level of income.
Where does the money go?
Hospital spending is higher than in the five other OECD countries, by over 60%.
Spending on Ambulatory care providers – that is, physicians and specialists as well as dentists, is much higher than in the other OECD countries – almost two-and-a-half times the average of the other five countries.
Spending on Pharmaceuticals and medical goods is higher in the US than in any other country, but overall accounts for a smaller share of total health spending than in the other countries.
Spending on Public Health and Administration is particularly high – more than two-and-a-half times the average.
Are U.S. health prices high?
Overall, the evidence suggests that prices for health services and goods are substantially higher in the United States than elsewhere. This is an important cause of higher health spending in the United States.
Does the U.S. provide too much health care?
(The United States) does not have many physicians relative to its population; it does not have a lot of doctor consultations; it does not have a lot of hospital beds, or hospitals stays, when compared with other countries, and when people go to hospital, they do not stay for long. All these data on health care activities suggest that US health spending should be low compared with other countries.
On the other hand, the US health system does do a lot of interventions. Table 3 (at link below) shows that it has a lot of expensive diagnostic equipment, which it uses a lot. And it does a lot of elective surgery – the sort of activities where it is not always clearcut about whether a particular intervention is necessary or not.
US health care costs are an international outlier, by a hefty margin. For that I am not thankful. We spend more on hospital stays, doctor visits, drugs, and medical devices. On the other hand, we do not have as many hospital stays or doctor visits. So, we get less care, but we pay more for it. In part, we pay more for it because we use a lot of expensive diagnostic equipment. And we are more willing to pay for elective surgery, the kind of surgery that is more likely to be inappropriate (i.e., have little clinical science supporting its use).
We also have an expensive, bungling administrative bureaucracy (see previous post) which makes the American health care system highly inefficient.
The OECD fails to capture how much our government actually pays for health care because it fails to take into account the employer health benefit costs for public employees and the enormous tax credit given to private employers who buy health benefits for employees in the private sector.
With concentrated political will, we Americans could overhaul our health system, spend $1 trillion/year less, and enjoy more efficiency and better quality. Who will join us toward that end?
Dr. Joe Jarvis