Where health care in US stands out: price
THE United States spends almost twice as much on health care, as a percentage of its economy, as other advanced industrialised countries – totalling $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 US 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 TH Chan School of Public Health, 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 US 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 UCLA David Geffen School of Medicine also points to prices as a likely culprit. Their study spanned 1996 to 2013 and analysed US 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 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 Medicaid.
Overall, the researchers found that American personal health spending grew about $930 billion between 1996 and 2013, to $2.1 trillion from $1.2 trillion (amounts adjusted for inflation), 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.
Prices aren’t all bad for consumers. They probably lead to increased innovation. Though it’s reasonable to push back on high health care prices, there may be a limit to how far we should.