Huge cost of U.S. healthcare driven by drugs prices and salaries

Henrietta Strickland
March 13, 2018

The results suggest that people looking to lower US health care spending should look beyond factors commonly blamed for the imbalance - such as utilization of the medical system - when searching for solutions, the researchers write in the paper. Researchers found America spends twice as much on administration as other nations with multiple insurance systems like the Netherlands or Switzerland, Woskie said. The study also contradicts several common beliefs, such as the idea that America uses more healthcare services than peer countries (it actually has lower rates of physician visits and days spent in the hospital than other nations) and that the quality of healthcare is always lower than in other countries. Analysts are fond of describing the system as wasteful, with too many patients getting too many services, driven by too many specialist doctors and too few social supports.

But a large and comprehensive review in The Journal of the American Medical Association punctures a lot of those pat explanations.

Though utilization in many areas mirrored other nations, administrative costs in the US system dwarfed other countries.

Despite this, the country had significantly poorer health outcomes in many areas.

"Most countries get to lower prices one of two ways: they either have a very strong price setter, usually a government agency, or more efficient markets", said Dr Ashish Jha, co-author of the study by researchers at Harvard's TH Chan School of Public Health. But the research, he said, didn't match his expectations.

Doctors and nurses are also paid more generously in the United States. Many analysts have called for the country to shift its physician training away from specialty care and toward more primary care medicine, for example.

"In addition, the reasons for these substantially higher costs have been misunderstood: These data suggest that numerous policy efforts in the US have not been truly evidence-based". The nation did rank near the top in its use of certain medical services, including expensive imaging tests and specific surgical procedures, like knee replacements and C-sections.

The data are consistent with other evidence that health care systems are beginning to converge, as information and technologies spread around the world among doctors and administrators.

"We actually seem to have about the same number of tests and visits as other countries do".

The data did not suggest that any country had a plug-and-play policy template for devising a lower-cost, high-performing system. The systems tended to perform better than the United States on some measures and worse on others, with lots of idiosyncrasies.

Jha said whether the USA moves toward more private healthcare, as advocated by Republicans, or to single-payer healthcare, as advocated by liberal Democrats, price tags on all American health services need to be addressed.

The study by researchers at Harvard University and the London School of Economics disputes the long-held belief USA costs are high because patients see doctors too often or otherwise abuse the healthcare system.

Researchers used data from 2013-2016 on about 100 metrics that underpin healthcare spending, and confirmed what experts have long known - that the United States "has substantially higher spending, worse population health outcomes, and worse access to care than other wealthy countries".

That's not just because the United States has a complicated insurance setup, either. Health care accounts for nearly 18% of the U.S.'s GDP, compared to 9.6% to 12.4% in the other developed countries, the paper says.

Margot Sanger-Katz is a domestic correspondent and writes about health care for The Upshot.

Other reports by Click Lancashire

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