In a Special Communication article in the JAMA (Journal of the American Medical Association) this week, Harvard researchers Irene Papanicolas, Liana Woskie and Ashish K. Jha analyzed data from Japan, Australia, Switzerland, Germany, France, the Netherlands, the United Kingdom, Canada, Sweden and Denmark about healthcare and social spending as well as outcomes. It is a huge amount of data gleaned from diverse sources and the authors have presented it beautifully. I will only comment on it and can't possibly do it justice. Still, there are several really interesting facts to point out, so I will dig in.
In US dollars, our spending per person per year is higher than any other country in this group. We spend the equivalent of $9403 in public and private money on healthcare for each of us. Our closest competitor is Sweden at $6808 and the UK comes in at $3377, in last place. This is 17.8% of our gross domestic product. Sweden spends 11.9% of its GDP and the UK 9.7%. How did we get so expensive?
First, the researchers wanted to test the assertion that American healthcare is expensive because people use too much of it. That is a complex question, but generally speaking the answer is no. We place right in the middle of the pack in hospitalizations for heart attacks, pneumonia, lung disease and mental illness. Germany is the leader there. We do get more cardiac bypasses and angioplasties, far more knee replacements and a few more caesarian sections and CT scans. We don't get more hip replacements. We have more outpatient visits but not more hospitalizations. This is not the key issue.
They also wanted to test the hypothesis that we spend more in healthcare because we don't allocate as much on "social spending" which is defined as benefits to people who are in bad circumstances. We are neither the highest nor the lowest in this category, though we are on the low end, near Australia and Canada. I'm not at all sure that supporting people once they are in trouble should be the definition of "social spending." It seems to me that money spent on education or a healthy environment, walkable cities, good jobs and opportunities for vibrant aging would be more likely to affect healthcare spending than social welfare. Perhaps spending on those is difficult or impossible to measure.
Health expenditures are quite different in different countries. The US, for instance, spends much more than the other countries on administration, think billing clerks and insurance companies. We spend 8% of our budget on this stuff. Surely we could follow the examples of Japan, France, Denmark, Sweden and the UK, all of whom keep these costs to under 3%. That would be an enormous amount of money saved without jeopardizing vital services.
We are neither high nor low in our spending on preventive healthcare, though I think they are doing different prevention than we are.
We have fewer primary care physicians compared to specialists than France and Canada, but not than the rest of the countries, which surprised me.
We spend more money on prescription drugs than any other country, equivalent to $1443 per person, twice as much as the average for all of the countries combined. We lead the pack in use of generics, but apparently that doesn't matter because even our generics are expensive.
There is a measurement called "horizontal inequality" which I hadn't heard of before. It is the likelihood of seeing a doctor in the last 12 months and whether that correlates strongly with wealth. In the US it does. Wealthy people see doctors pretty often and poorer ones do not. We are significantly worse in this regard than in Canada, France, Germany or the UK. The other countries did not have data to evaluate that. The reason for this is pretty clear: in every other country healthcare is available at a cost that is affordable, either by private insurance or government coverage, to 99-100% of the population. We are at 90%.
We do not look very stellar when it comes to certain outcomes. Our maternal mortality is 3 times as high as the next highest country, the UK. Our infant mortality is also higher, though not as egregiously so. Our life expectancy is 3 years shorter than the average of all of these countries, at 78.8 years. We are among the best, however, in mortality from strokes and heart attacks, and it is easier to get in to see a primary care doctor or specialist in the US than most other places.
We are more obese (70% obese or overweight), but not more likely to smoke or drink to excess. Our doctors are paid considerably more, but there are fewer of them per number of patients, so that apparently balances out.
Americans are the people least happy with their healthcare system. 19% feel the system works well and 23% believe it needs to be completely rebuilt. But none of these privileged countries to which we are compared is doing a great job, in the view of their citizens. Germans are happiest, but only 60% of them think their system works well. Canada pleases only 35% of its people. Worldwide, it seems like there may be quite a bit of room for improvement.
The authors of this study conclude that the costs of pharmaceuticals, devices, labor and administration are the main drivers of higher healthcare costs in the US. That is a good starting place for explaining how our system got to be so much more expensive than other countries. I'm curious, though, about how other countries develop good systems, what processes they have that are not good, either inefficient or providing poor care, and how they have evolved, since that could be helpful in moving all of us in the right direction. The United States continues to be one of the most productive innovators in the world, sometimes jettisoning expensive and useless routines and replacing them with ones that serve us better. Our innovations often drive savings and better outcomes in other countries. We need to learn from them as well.
This article is a good way to look at "how is American healthcare so expensive?" The why of it is more complex. Several commentary articles accompany this one, with delightfully different conclusions. It's a fascinating subject. I'll keep looking into it and write when I find the answer.
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