The U.S spends more money on healthcare than any other county yet life expectancy is shorter, obesity is higher, and the rate of maternal and infant death spikes above many other developed nations. Researchers associated with Harvard probed what was behind this trend in America. It comes down to the costs of certain goods and services and massive administrative overhead.
The U.S. health care system, when ranked against other developed nations, appears average, which is shocking considered the country’s advanced health care systems, methods, research an state-of-the-art technology-not to mention incredible physicians—heroes in the author’s eyes. But the reality sets in—America health care (as a system for all) ranks middle-of-the-road. The Harvard study focused on analysis of spending and performance for America and countries such as Canada, Germany, Australia, Japan, Sweden, France, Denmark, The Netherlands, Switzerland, and others.
As researchers compared the U.S. and these other countries, one clear cost difference was with branded pharmaceuticals. In the U.S., individuals spend nearly double, on average, than those of the other countries—totaling $1,442 as compared to an average of $749 for the other countries. An example would be the diabetes drug Crestor, which has a monthly cost of $186 in the U.S but costs a third of that in Canada.
The research revealed generic drug spend in the U.S. represented 30% of the total dollar outlay implying that branded pharmaceuticals are a major cost driver.
More Money Out for Less People Covered
Back in 2016, America spent 18% of its GDP on health care yet only 90% of its population had the advantage of access via some form of health care coverage. Other countries don’t spend as much on health care per GDP, reports Dr. Hector M. Florimo for ABC 11. For example, Australia pays 9% of the total GDP while Switzerland pays 12%—both countries ensure that their country residents enjoy 99% coverage.
The study revealed that health care utilization was similar in the countries studied. Utilization is the quantification or description of the use of services by persons for the purpose of preventing and curing health problems, promoting maintenance of health and well-being, or obtaining information about one’s health status and prognosis.
America’s challenge is that the country not only pays higher prices for products such as pharmaceutical and for services such as tests (not to mention a private sector and public sector health care bureaucracy that is incredibly bloated), but the volume of consumption far exceeds those other countries both in absolute numbers as well as on a per capita basis.
For example, American providers order far more CT scans than their counterpart countries—1.3 million per year. The price for this decision: each scan is 10X more than in the Netherlands, for example. Dr. Florimo used the cesarean delivery example as well—in the U.S. the service is 7X the cost than the Netherlands.
About 67% of the cost difference comes down to the following: medication costs, expensive tests and procedures and administrative costs. First author Irene Papanicolas, a visiting assistant professor in the Department of Health Policy and Management, Harvard Chan School, commented, “As the U.S. continues to struggle with high health care spending, it is critical that we make progress on curtailing these costs. International comparisons are very valuable—they allow for a reflection on national performance and serve to promote accountability.”
America’s health care dynamics are unique to the circumstances of the country and a direct comparison to comparable countries, while helpful in many regards, also simplifies the problem to one of cost of goods and services. What is faced today is a crisis of unprecedented proportions and price tinkering won’t have much impact—in fact, it could adversely impact the economic underpinnings leading to further health degradation.
The health of the people has so badly degraded that it actually is more expensive to care for this population. We have discussed the health crisis and its different aspects, such as obesity (and the co-morbidity implications) for example, and how that phenomena alone is already generating ripple effects through the system that will lead to more costs as the natural consequences manifest and accumulate.
Simply pushing to have lower drug or testing services won’t solve this problem and, in fact, could trigger adverse economic reactions given financial contribution of the health care sector (from providers to drug producers). A national emergency is upon us and few understand the implications and ramifications—perhaps ignorance is bliss. It surely is in Washington, DC.
Health crisis directly feeds the crisis as the total debt climbs at $22.5 trillion ($877,590 per family) as of writing. Average per citizen debt is about $60,000 while savings barely makes $12,000. We have argued in this digital forum that the health care crisis is directly connected to a growing financial crisis. As the country ages, the health care cost impact will only intensify especially when considered with the overall decline of population health. For example, the number of Americans to reach 65 and older is projected to nearly double from 52 million in 2018 to 95 million in 2060 combined with a total obesity count that will continue to rise. Average health care cost totaled $5,485 in the year 2000 and $11,470 today. While median household income equals about $63,688 pre-tax, the health care spend will continue to erode total earnings on the one hand while growing debt-driven payments deplete available money on the other hand, leaving the average earner with next to nothing.
And of course along with aging, as the overall population health metrics worsen associated costs will increase, contributing to even more debt (individual, family and State) making the average interest payment a tsunami for all.
Irene Papanicolas, a visiting assistant professor in the Department of Health Policy and Management, Harvard Chan SchoolSource: JAMA Network