Why the U.S. Spends So Much More Than Other Nations on Health Care

[Independent voter]

Was a little confused when I read this, is he saying that "they just raised the prices"?

How in the Hell do you make everyone in the health care industry lower prices?





https://www.nytimes.com/2018/01/02/u...omparison.html

The United States spends almost twice as much on health care, as a percentage of its economy, as other advanced industrialized countries — totaling $3.3 trillion, or 17.9 percent of gross domestic product in 2016.

But a few decades ago American health care spending was much closer to that of peer nations.

What happened?

A large part of the answer can be found in the title of a 2003 paper in Health Affairs by the Princeton University health economist Uwe Reinhardt: “It’s the prices, stupid.”

The study, also written by Gerard Anderson, Peter Hussey and Varduhi Petrosyan, found that people in the United States typically use about the same amount of health care as people in other wealthy countries do, but pay a lot more for it.

Ashish Jha, a physician with the Harvard T.H. Chan School of Public Health and the director of the Harvard Global Health Institute, studies how health systems from various countries compare in terms of prices and health care use. “What was true in 2003 remains so today,” he said. “The U.S. just isn’t that different from other developed countries in how much health care we use. It is very different in how much we pay for it.”

A recent study in JAMA by scholars from the Institute for Health Metrics and Evaluation in Seattle and the U.C.L.A. David Geffen School of Medicine also points to prices as a likely culprit. Their study spanned 1996 to 2013 and analyzed U.S. personal health spending by the size of the population; its age; and the amount of disease present in it.

They also examined how much health care we use in terms of such things as doctor visits, days in the hospital and prescriptions. They looked at what happens during those visits and hospital stays (called care intensity), combined with the price of that care.

The researchers looked at the breakdown for 155 different health conditions separately. Since their data included only personal health care spending, it did not account for spending in the health sector not directly attributed to care of patients, like hospital construction and administrative costs connected to running Medicaid and Medicare.

Over all, the researchers found that American personal health spending grew by about $930 billion between 1996 and 2013, from $1.2 trillion to $2.1 trillion (amounts adjusted for inflation). This was a huge increase, far outpacing overall economic growth. The health sector grew at a 4 percent annual rate, while the overall economy grew at a 2.4 percent rate.

You’d expect some growth in health care spending over this span from the increase in population size and the aging of the population. But that explains less than half of the spending growth. After accounting for those kinds of demographic factors, which we can do very little about, health spending still grew by about $574 billion from 1996 to 2013.

Did the increasing sickness in the American population explain much of the rest of the growth in spending? Nope. Measured by how much we spend, we’ve actually gotten a bit healthier. Change in health status was associated with a decrease in health spending — 2.4 percent — not an increase. A great deal of this decrease can be attributed to factors related to cardiovascular diseases, which were associated with about a 20 percent reduction in spending.

This could be a result of greater use of statins for cholesterol or reduced smoking rates, though the study didn’t point to specific causes. On the other hand, increases in diabetes and low back and neck pain were associated with spending growth, but not enough to offset the decrease from cardiovascular and other diseases.

Did we spend more time in the hospital? No, though we did have more doctor visits and used more prescription drugs. These tend to be less costly than hospital stays, so, on balance, changes in health care use were associated with a minor reduction (2.5 percent) in health care spending.

That leaves what happens during health care visits and hospital stays (care intensity) and the price of those services and procedures.

Did we do more for patients in each health visit or inpatient stay? Did we charge more? The JAMA study found that, together, these accounted for 63 percent of the increase in spending from 1996 to 2013. In other words, most of the explanation for American health spending growth — and why it has pulled away from health spending in other countries — is that more is done for patients during hospital stays and doctor visits, they’re charged more per service, or both.

Though the JAMA study could not separate care intensity and price, other research blames prices more. For example, one study found that the spending growth for treating patients between 2003 and 2007 is almost entirely because of a growth in prices, with little contribution from growth in the quantity of treatment services provided. Another study found that U.S. hospital prices are 60 percent higher than those in Europe. Other studies also point to prices as a major factor in American health care spending growth.

There are ways to combat high health care prices. One is an all-payer system, like that seen in Maryland. This regulates prices so that all insurers and public programs pay the same amount. A single-payer system could also regulate prices. If attempted nationally, or even in a state, either of these would be met with resistance from all those who directly benefit from high prices, including physicians, hospitals, pharmaceutical companies — and pretty much every other provider of health care in the United States.

Higher prices aren’t all bad for consumers. They probably lead to some increased innovation, which confers benefits to patients globally. Though it’s reasonable to push back on high health care prices, there may be a limit to how far we should.

[Gestopft]

Most of it is the prices- namely that we allow the "market" to set them, which in healthcare results in a market failure. It's a captive market, and supply and demand don't function in the same way. The competition and informed choice that make markets more efficient in most areas simply don't work. And there are many, many lobbyists and special interest groups that really, really want to keep it that way.

There are other reasons- potentially litigiousness, lack of transparency, etc, but letting the market failure is the biggest one.

Higher prices aren’t all bad for consumers. They probably lead to some increased innovation, which confers benefits to patients globally. Though it’s reasonable to push back on high health care prices, there may be a limit to how far we should.

On this point:
1) Pharma companies, for example, spend more on share buybacks than on R&D (and in some cases I think, more on advertising). Forcing prices down won't utterly deprive them of the resources they need to innovate. They'll be fine. They also have a profit incentive to treat, not cure.
2) We have high-end medical research that is public or public-private. Medical innovation doesn't just come from the biomedical/biotech industry. Corporate R&D spending has also been trending significantly toward more short-term benefits, as well, which is a worrying trend.
3) I'd just LOOOOVVVEEEE to see an American politician explain to the voters why we should have to bear the cost burden for the world's healthcare innovation that citizens of other countries get to partake in for a much lower cost. How privileged we all should feel that we still have to worry about medical bankruptcy so that Pharma companies can make pills that every other country negotiates the costs for, right?

[Deleted]

I mean most of it is just government money being funneled to big corporations. Nothing new there.

[telygroar]

i remember this pharmaceutic firm some month ago who got a 6000% augmentation (from 15$ to 750$) on his aid/low immunity poster medication after being buyed by a investment funding company...

[belfpala]

3) I'd just LOOOOVVVEEEE to see an American politician explain to the voters why we should have to bear the cost burden for the world's healthcare innovation that citizens of other countries get to partake in for a much lower cost. How privileged we all should feel that we still have to worry about medical bankruptcy so that Pharma companies can make pills that every other country negotiates the costs for, right?

I'm pretty sure that's already happening. The former Governor of my current State tried to set up a program where we could buy meds from Canada (at typically 25-50% the cost), but got shot down by the Feds.

In all seriousness, my health is not a market choice. Anyone who feels otherwise should collapse at work and tell me what happens next.

[Mormolyce]

Basically, bros like this:

[Draco-Onis]

Higher prices aren’t all bad for consumers. They probably lead to some increased innovation, which confers benefits to patients globally. Though it’s reasonable to push back on high health care prices, there may be a limit to how far we should.

Price of 40-year-old cancer drug hiked 1,400% by new owners

Novartis (NVS), the Swiss drugmaker, is charging $475,000 per patient for its Kymriah treatment for certain types of blood cancers. Another blood cancer medication developed by Gilead Sciences (GILD) called Yescarta costs $373,000.

These blood suckers brag in their conference calls that they aren't innovating but spending money on marketing and stock buy back, the system is messed up because they are allowed to do charge they want.

[Nellise]

I was looking through my insurance bills the other day and saw something crazy. I use a medical supply that you use daily, like you buy 30 for the month, and you can buy them online for about $1.25 each, or about $37 a month. I used to buy them myself before I saw that insurance covers them. Now my insurance pays for them, and I don't pay anything, which is good. But the company that supplies them for my insurance bills the insurance $125 a month for the same exact thing. The insurance has "negotiated" the price back down to $1.25 each, so they actually only pay about $37 a month.

But that's something I've noticed for a long time, everything is priced at what I like to call the "insurance price", but that causes you to get screwed for whatever you do that isn't fully covered by insurance. You still get that huge markup on everything.

[Deleted]

Lots of reasons, but a big one could be the lifestyle being worse than in almost every other Western country?

[Deleted]

Other reasons aside, don't doctors in US earn much more than doctors in the rest of the world? Their paycheck money must come from somewhere.

[Acidbaron]

Was a little confused when I read this, is he saying that "they just raised the prices"?

How in the Hell do you make everyone in the health care industry lower prices?

You remove the middle man, the insurer on a citizen level and move the talks between ideally the federal government or province based on the financial structures. Suddenly the Pharma industry and Healthcare industry is now negotiating against thousands to millions of people instead of just you. This means the businesses actually adjust their strategy since unlikely doom and gloom scenario's hospitals won't be closed, pharma won't suddenly find other markets and stop producing medication.

Right now everything in the US is the reversed, ideally the insurer task is to give you the best possible coverage for your money. However they tend to milk both the customer and the medical industry, because they can and because there's an irrational fear of government among boomers mostly.

That's what i get from it. There are more factors but considering the US slipped into this over time i don't expect it to be cured by a magical one pill solution any time soon, first the public has to be made aware that it cost them less as a tax payer if everyone is healthy and has access to healthcare. Once people accept that reality you'll get them warm for the idea of more solidarity mechanisms, instead of just "me,me,me,me"

[Draco-Onis]

Other reasons aside, don't doctors in US earn much more than doctors in the rest of the world? Their paycheck money must come from somewhere.

Actually the US doctors don't make more than other countries they are in the top but like 6th or something, most of the money is going to corporate CEOs who are adding nothing to care.

[Acidbaron]

Other reasons aside, don't doctors in US earn much more than doctors in the rest of the world? Their paycheck money must come from somewhere.

I don't believe so, perhaps private practices like plastic surgeons. So far i'm aware the insurer takes a large slice of the pie and GP's aren't all that well paid and they probably need to constantly watch what treatments they order and so on. Plus you need to include the student loans they are paying off.

Probably make the most from pushing certain pills and acting as a semi-lobbyist for certain pharma companies in your practice.

[Deleted]

Other reasons aside, don't doctors in US earn much more than doctors in the rest of the world? Their paycheck money must come from somewhere.

I don't think they even earn that much tbh.

Unless you are one of them plastic boob doctors that is.

[schwarzkopf]

It is very straight forward.

The US has individuals dealing with mega companies to provide a product which is not optional.
Other countries have the government dealing with mega companies to negotiate a reasonable price on items which are not optional.

The irony is that the the US would save $1.6 TRILLION a year by properly implementing universal health care.

Fun fact : Capitalism fails when the product either is mandatory(health) OR has no possibility of competition (infrastructure).

[unbound]

Was a little confused when I read this, is he saying that "they just raised the prices"?

How in the Hell do you make everyone in the health care industry lower prices?

Here is a nice video that explains the problem using more common language -



TL;DR - hospitals literally set the prices at whatever they want...and what they want is unreasonably high.

In regards to "How in the Hell do you make everyone in the health care industry lower prices?", that is where regulation comes in. In markets dominated by oligopolies or effectively geographic monopolies, you need the government to step in and slap their hands to make them reasonable. In fact, this is the reason we have the vast majority of regulations...not because it seems like a good idea, but because we responded to bad things that have actually happened.

Alternatively, the reason every other advanced economy has far more reasonable costs is that they all use some form of universal healthcare (yes, there are several variants - https://www.nytimes.com/interactive/...cket.html?_r=0) which prevents the games you see in the US healthcare system. Not because everyone simply has insurance, but because the major buyer represents everyone (or a huge majority) and gets to say, "Set that to a reasonable price where you make a reasonable profit, or no one will go to your hospital".

[oxymoronic]

3) I'd just LOOOOVVVEEEE to see an American politician explain to the voters why we should have to bear the cost burden for the world's healthcare innovation that citizens of other countries get to partake in for a much lower cost. How privileged we all should feel that we still have to worry about medical bankruptcy so that Pharma companies can make pills that every other country negotiates the costs for, right?

price of being american i guess

funny part is the rest of the world takes a shit on us for it

same thing with their military protection they enjoy so well. its ok, no matter how the history is written we know the truth.

[ipaq]

i remember this pharmaceutic firm some month ago who got a 6000% augmentation (from 15$ to 750$) on his aid/low immunity poster medication after being buyed by a investment funding company...

Case in point: EpiPens.

As low as $60/pair in CDN, >$600/pair in the US. For a product that cost almost nothing to produce. ($30 estimated by the NYT, but its lower)

https://www.theglobeandmail.com/news...ticle31570003/
http://time.com/money/4481786/how-mu...costs-to-make/

Pfizer answer was something in the line of: We're selling many products to Canadian consumers, the negative publicity is not worth the price to make a few more bucks.

[oxymoronic]

Here is a nice video that explains the problem using more common language -



TL;DR - hospitals literally set the prices at whatever they want...and what they want is unreasonably high.

In regards to "How in the Hell do you make everyone in the health care industry lower prices?", that is where regulation comes in. In markets dominated by oligopolies or effectively geographic monopolies, you need the government to step in and slap their hands to make them reasonable. In fact, this is the reason we have the vast majority of regulations...not because it seems like a good idea, but because we responded to bad things that have actually happened.

Alternatively, the reason every other advanced economy has far more reasonable costs is that they all use some form of universal healthcare (yes, there are several variants - https://www.nytimes.com/interactive/...cket.html?_r=0) which prevents the games you see in the US healthcare system. Not because everyone simply has insurance, but because the major buyer represents everyone (or a huge majority) and gets to say, "Set that to a reasonable price where you make a reasonable profit, or no one will go to your hospital".

adam ruins nothing ever... that guy is so lame and wrong and uses stats to back up his false claims. cherry picking wrong studies to make a point. its sick and liberals eat this shit up. but hey dont use mouthwash cause listerine made up bad breath lol. oh and dont forget women make 77cents for every dollar a man makes... but lets not bother explaining that in detail. fuck him. i could make a show doing the same exact thing for the other side of every argument. its easy when you refuse to show all the facts.

- - - Updated - - -

Case in point: EpiPens.

As low as $60/pair in CDN, >$600/pair in the US. For a product that cost almost nothing to produce. ($30 estimated by the NYT, but its lower)

https://www.theglobeandmail.com/news...ticle31570003/
http://time.com/money/4481786/how-mu...costs-to-make/

Pfizer answer was something in the line of: We're selling many products to Canadian consumers, the negative publicity is not worth the price to make a few more bucks.

only if people knew...

but hey buying nikes that cost $2 to make for $140 is way cool..

capitalism does have its problems. problem is the people that make laws to control it are paid by the same people that want laws their way. until we fix that no progress will ever be made.

[PosPosPos]

price of being american i guess

funny part is the rest of the world takes a shit on us for it

same thing with their military protection they enjoy so well. its ok, no matter how the history is written we know the truth.

Nope, it's the work of corrupt greedy alt-righters, who jack up the price of necessities and life-saving treatment because of "capitalism".