the high cost of healthcare in the USA

The United States spends much more on healthcare than other countries, and receives less for it. But why is spending on healthcare out of control and seemingly so ineffective in the USA? Siddhartha Mukherjee, a Columbia University professor of medicine, summarizes and comments on a paper written by three researchers from Harvard and the London School of Economics. Here are some snippets from his readable essay; the full article contains much more of value and interest.

As the … [three researchers] lay it out, the United States is a sore-thumb outlier among 11 wealthy nations in medical spending. We spend 18 percent of our G.D.P. on health care, while Australia, Canada, Denmark and Japan seem to make do with about half that amount. Yet life expectancy in the United States is the lowest in the group, and infant mortality is the highest. Our out-of-control prices have a stifling effect on the economy. Companies that pay a portion of health insurance for their workers may find themselves burdened by cost. (“General Motors,” the quip runs, “is a health-insurance business that also happens to make cars.”) Why are we spending astronomically more for health care that performs worse, on aggregate, than care in most other comparable nations?

The researchers begin by extirpating some common myths. Are our health care costs astronomically high because we don’t have enough primary-care doctors? No …. Is our population more prone to illness? Yes and no; Americans smoke fewer cigarettes and drink less alcohol, but our rate of obesity is highest. Do we pay more for health care because we use more health care? Again, at face value, no. As a country, we went to the hospital about half as often as the Germans. We consulted doctors about a third as often as the Japanese. We beat the stoic Swiss and the frugal Dutch in the number of days that we spent in the hospital.

So what is driving the cost? Each time we did go to a doctor, it seems, we managed to spend more. Tests were ordered more frequently: We sat inside M.R.I. and CT scanners more often than patients in most other countries. We had high-cost surgical procedures performed more often than most other populations in the world. …. Many of these procedures cost more in America (an M.R.I. costs $1,150 in the United States and $140 in Switzerland; it’s hard to insist that an American M.R.I. is eight times as good). And some of these procedures inevitably led to complications, and then we paid for those complications. The impact on overall life expectancy was evidently minimal. The United States leads developed nations in what the surgeon and writer Atul Gawande has called an epidemic of “overtesting, overdiagnosis and overtreatment.”

If expensive procedures explain some of the costs accrued by Americans, pharmaceutical prices and spending offer an even more alarming explanation. We spent $1,443 annually per person (yes, you read that number right) on drugs — in part because each medicine costs us more, and in part because we used new drugs that weren’t even available in many other countries. ….

The study’s authors also analyzed the costs of labor, salaries and administration. American doctors and nurses were paid substantially more than their European, Canadian or Japanese counterparts. But … Americans also have fewer doctors per capita than many other countries, and so these salaries, weighted on a “per patient” basis, are only minimally higher than those in most countries. The administrative burdens were, however, disproportional and unique to American care. ….

The three major factors identified by the researchers — administrative waste, pharmaceutical price and procedural cost — may provoke familiar-sounding solutions to the costs of health care. Decrease waste by removing unnecessary and burdensome paperwork. Drive down pharmaceutical prices — through negotiation on costs, for instance, or by enabling the introduction of generic alternatives for patent-expired medicines. And limit the use of high-cost, low-value procedures where possible.

Siddhartha Mukherjee, “Can Doctors Choose Between Saving Lives and Saving a Fortune?“, New York Times Sunday Magazine, 8 April 2018 (gated paywall).

Siddhartha Mukherjee (born 1970) is an Indian-American physician, oncologist, and author of The Emperor of All Maladies: A Biography of Cancer, which received the 2011 Pulitzer Prize for General Non-Fiction. His book The Gene: An Intimate History was published in 2016. He is an Assistant Professor of Medicine at the Columbia University Medical Center in New York City.

Comments are closed.