High Spending, Poor Results

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Last week, Diabetes Flashpoints looked at how health insurance in the United States operates, compared with several other rich countries. The United States is notable both for its widespread reliance on employer-provided insurance, and for its wide variety of insurance types for different groups within the country — in most developed countries, young children and seniors, the rich and the poor, are covered by the same system. So what does our hodgepodge of systems in the United States cost, and what outcomes does it create? The data paint a picture that isn’t very pretty.

There are two ways to measure how much a country spends on health care: how much the country spends per person, and what percentage of the overall economy is spent on health care. On both of these measures, the United States is by far the world’s leader in health-care spending. According to 2010 data from the Organization for Economic Cooperation and Development (OECD), the United States spends $8,233 per person per year on health care, representing 17.6% of the entire US economy. The next-highest-spending country was Norway, which spent the equivalent of $5,388 per person, representing 9.4% of the Norwegian economy. As a share of the economy, the second-highest-spending country was the Netherlands, whose $5,056 per person represented 12% of the Dutch economy. The graph below, using data from 2008, shows just how drastic the spending difference is between the United States and other countries.

Health-Care Spending 2008

So are Americans simply getting more health care than other countries? Not really. One stunning fact that makes these numbers look even worse is that over 20% of Americans ages 18–64 are uninsured, while in nearly every other rich country, virtually no one is uninsured. But Americans aren’t getting much for their high spending because virtually all procedures and drugs are far more expensive in the United States than in other countries. Earlier this year, the Washington Post blog Wonkblog published 21 graphs that show prices for various procedures and drugs in several countries. The first notable feature of these graphs is that while all other countries have one price for each drug or procedure, the United States has a range of prices due to the lack of a standard health insurance system. In nearly every case, the average US price is far more than any other country pays for a drug or procedure, and in many cases — especially for drugs — even the 25th-percentile US price (meaning only 25% of Americans pay this price or lower) is much higher than people in other countries pay. These numbers reflect the total cost of each drug or procedure, regardless of how much of the price is paid by insurance or out-of-pocket.

So what do Americans get for these high prices? A study released last month by The Commonwealth Fund, a health-care research organization, found that Americans were far more likely than people in 10 other rich countries to go without recommended care and to have trouble paying their medical bills. According to an article on the study at DoctorsLounge, 37% of US adults went without recommended care, did not see a doctor when sick, or did not fill a prescription because of cost, compared with 4% to 6% in countries like Britain and Sweden. Among US adults, 32% had dealt with insurance-claim-related disputes, denials, or time-consuming paperwork, compared with 25% in Switzerland, 19% in the Netherlands, and 17% in Germany — all countries with competitive insurance markets — and virtually no one in countries with single-payer universal coverage like Britain, Norway, and Canada. The United States also had the highest administrative costs for insurance, at $606 per person; the next highest costs were in France, at $277 per person. While three-fourths of US adults surveyed said that our health-care system needs a major overhaul, most in the Netherlands and Switzerland, and as high as 63% in Britain, said their health-care system needs only minor tweaks.

Death Rate 2008Americans are also not healthier as a result of our high health-care spending. While it’s impossible to know how much of Americans’ poor health is related to the health-care system and how much is related to lifestyle and other cultural factors, what’s clear is that Americans are less healthy than the population of any other rich country. According to a report issued earlier this year by the National Research Council and the Institute of Medicine, Americans are more likely to die of nearly all possible causes of death than people in 16 other rich countries (as the graph above, from the report, shows). Americans are far more likely to die as a result of violence or car accidents — probably not the result of our health-care system — but also pregnancy complications, and the United States has the second-highest rate of death from both coronary heart disease and lung disease (despite lower rates of smoking). Even high-income, physically fit, nonsmoking Americans have higher death and disease rates than comparable populations in the other countries, according to an article on the report by The Atlantic magazine.

What, if anything, do you think can be done to lower US health-care costs, or improve our health-related outcomes? In your view, will the Affordable Care Act lead to improvements in these areas? Can, and should, the government do anything to help more Americans lead healthier lifestyles? Should Congress allow Medicare to bargain with pharmaceutical companies for lower drug prices? Would extending Medicare-like coverage to all Americans, or requiring people to pay more costs out-of-pocket, lead to lower health-care costs? Leave a comment below!

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