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US health care spending double other countries, use rates similar

The United States spent almost twice as much as other high-income countries on health care, but the use of health care in the U.S. closely aligned with those other nations, according to research recently published in JAMA.

“Although it is well known that the United States spends more on health care than other countries, less is known about what explains these differences,” Irene Papanicolas, PhD, department of health policy and management, Harvard T. H. Chan School of Public Health, and colleagues wrote. “We sought to understand why U.S. health care costs are so much higher and where policy makers might target their efforts to encourage a more efficient system.”

Researchers’ findings suggested that the idea that the U.S. does not spend enough to address the social determinants of health was not accurate, and attributed the increased spending to the price of labor and goods – specifically pharmaceuticals and devices – as well as administrative costs.

Papanicolas and colleagues analyzed and compared social, health care spending and performance data, mostly from 2013 to 2016, from the U.S. vs. other high-income countries: United Kingdom, Switzerland, Sweden, Japan, Germany, Denmark, Canada, the Netherlands, France and Australia.

Among the findings when it came to spending:

The U.S. had the highest expenditure on health care in relation to its gross domestic product (17.8%) vs. Australia, which spent the least (9.6%)

When it came to health expenditure by function of care as a percent of total national health expenditure, the U.S.:

• Ranked first for administration and governance (8%). Japan was last (1%).
• Ranked first for outpatient care (42%) vs. the Netherlands, which was last (22%).
• Tied for fourth with Japan, Denmark, Sweden, and Germany for preventive care (3%). Canada was first (6%).
• Ranked 10th for long-term care (5%). Sweden was first (26%).

On workforce and structural capacity, the U.S.:

• Ranked first in general physician salary at $218,173. Sweden ranked last ($86,607) among the countries where this data were available.
• Ranked second in MRI units per 1 million people (38.1). Japan was first (51.7).
• Ranked seventh in hospital beds per 1,000 people (2.8). Japan was first (13.2).
• Ranked eighth in overall physicians per 1,000 people (2.6). Switzerland was first (4.3).

• Ranked first when it came to number maternal deaths for each 100,000 live births (26.4). Denmark was last (4.2).
• Ranked tenth when it came to percentage of population smoking (11.4). France was first (22.4%).

• Ranked last in life expectancy in years (78.8). Japan was first (83.9 years).

And in health care utilization, the U.S.:

• Ranked first in coronary artery bypass graft surgery per 100,000 people (79). The U.K. came in last (26) among countries where this data were available.
• Ranked second in MRI exams per 1,000 people (118). Germany was first (131).
• Tied for eighth in mean number of length of hospital stay per capita (2 days). Japan was first (5.7).

“Several findings in this report may be surprising to policy makers,” Papanicolas and colleagues wrote. There is broad consensus among U.S. policy makers that the United States spends too much on health services and too little on social services. This analysis showed that U.S. social spending appears to be similar to that in other high-income ... countries.”

“This finding calls into question the belief that higher health care spending is due to a lack of investment in social determinants. In particular, given that the United States did not appear to be an outlier with regard to utilization of services, it is unlikely that a lack of social spending results in higher health care spending due to a misallocation of resources that results in greater need (and overutilization),” they added.

The United States spent almost twice as much as other high-income countries on health care, but the use of health care in the U.S. closely aligned with those other nations, according to research recently published in JAMA. Source: Shutterstock

Policy and ethics experts gave their take on Papanicolas and colleagues findings in a series of related editorials.

Katherine Baicker, PhD, of the Harris School of Public Policy at the University of Chicago and Amitabh Chandra, PhD, of the Harvard Kennedy School wrote that although Papanicolas and colleagues’ research is “ambitious” and “comprehensive,” quality differences across countries presents a challenge in data comparisons.

“Even if it is possible to measure quantity and quality well enough to make direct price comparisons for similar health care services, it is important to be careful about drawing inferences about market competition or policy prescriptions,” Baicker and Chandra wrote.

“Higher prices may point to lack of competition among health care organizations or clinicians. ... [and] demand-side factors such as more generous insurance that covers every service.”

“What ultimately matters in health care is the value of each additional dollar spent — how much do outcomes improve as more is spent? But the answer to this question also varies across countries because each nation may choose a different approach for converting more spending into better outcomes,” they added.

Ezekiel J. Emanuel, MD, PhD, of the department of medical ethics and health policy, Perelman School of Medicine, University of Pennsylvania, wrote that reducing costs associated with imaging and 25 “high-volume, high margin procedures” could save the U.S. $41 billion a year. “What could the United States do with $41 billion per year? Everyone has a wishlist, but many people would start with early childhood interventions to give low-resource children an equal chance in life; others may want to invest in rebuilding the country’s failing infrastructure,” he wrote.

“Regardless of what is done with the money, it would be more valuable than paying high prices for a large number of CT and MRI scans, up to a third of which may be deemed unnecessary and carry radiation risks, and many expensive but not necessary surgical procedures. Can the United States reduce the cost of health care? Yes. But will the country do it? Answering that question is up to the medical profession, health systems, payers, and policy makers. The future of the U.S. health care system is in their hands.”

According to Stephen T. Parente, PhD, University of Minnesota, Papanicolas and colleagues’ findings identify the “key factors” in U.S. health care costs compared with other nations.

“The policy challenge ahead is the recognition that addressing these U.S. root causes requires tinkering with an intricate mix of legal monopoly rights in technology, education, and care delivery,” he wrote. “The United States did not suddenly arrive at this point of much higher cost. But the study by Papanicolas et al provides stronger data to start the conversation to frame policy options to change course.” – by Janel Miller

References:

Baicker K and Chandra A. JAMA. 2018;doi:10.1001/jama.2018.1152.

Emanuel EJ. JAMA. doi:10.1001/jama.2018.1151.

Papanicolas I, et al. JAMA. 2018;doi:10.1001/jama.2018.1150.

Parente, ST. JAMA. 2018:doi:10.1001/jama.2018.1149.

Disclosure: Please see the study and editorials for the authors’ relevant financial disclosures.