Pricey health­care

Stud­ies show U.S. costs are higher, ben­e­fits lower—with blame for all

Modern Healthcare - - Opinions Editorials - NEIL MCLAUGH­LIN Man­ag­ing Editor

The old say­ing that you get what you pay for doesn’t nec­es­sar­ily ap­ply in health­care.

A re­cent study high­lighted that point once again. The re­port, pub­lished in the Septem­ber is­sue of the jour­nal Health Af­fairs, con­cluded that higher physi­cian fees—rather than higher prac­tice costs, vol­ume of ser­vices or tu­ition ex­penses—were the main driv­ers of higher spend­ing in this coun­try, es­pe­cially on or­tho­pe­dics.

The re­searchers com­pared fees paid by pub­lic and pri­vate pay­ers for pri­mary-care of­fice vis­its and hip re­place­ments in Aus­tralia, Canada, France, Ger­many, the United King­dom and the U.S. It also ex­am­ined doc­tor in­comes (net of prac­tice ex­penses), dif­fer­ences in pay­ing for the costs of med­i­cal ed­u­ca­tion and the rel­a­tive con­tri­bu­tion of pay­ments per physi­cian and physi­cian sup­ply in the coun­tries’ national spend­ing on physi­cian ser­vices.

As Washington Bureau Chief Jes­sica Zig­mond re­ported (Sept. 12, p. 6), the study found that Medi­care paid about 27% higher fees for pri­mary-care of­fice vis­its than did for­eign pub­lic pay­ers, while pri­vate health plans paid 70% more. When the spot­light was turned on or­tho­pe­dic care, re­searchers found that pub­lic pay­ers in the U.S. shelled out 70% more for hip re­place­ments and pri­vate pay­ers paid 120% more.

One of the re­searchers, Columbia Univer­sity pro­fes­sor Miriam Lauge­sen, spec­u­lated that pri­vate in­sur­ers may be less likely to ne­go­ti­ate fees, that there is no stan­dard price for pro­ce­dures in the pri­vate sec­tor. The lack of price trans­parency in health­care here and else­where may be an im­ped­i­ment to un­der­stand­ing dif­fer­ences, Lauge­sen and other ex­perts said.

Af­ter the study’s re­lease, physi­cians com­plained that they were be­ing sin­gled out for high pric­ing. In­sur­ers griped that hos­pi­tals and physi­cians need to be more trans­par­ent about their prices.

Ac­tu­ally, there’s plenty of blame to go around. And this study is just the lat­est in a string of such re­ports. A 2003 study, also pub­lished in

Health Af­fairs, noted that per-capita health spend­ing in the U.S. was sig­nif­i­cantly higher than that of 30 other de­vel­oped na­tions.

Data from the Or­gan­i­sa­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment showed that the U.S. spends more on health­care than any other coun­try, but on mea­sures of ser­vices use, the U.S. falls be­low the OECD me­dian. U.S. pub­lic spend­ing on health­care was al­most iden­ti­cal to pub­lic spend­ing in sev­eral na­tions.

Here’s an­other ex­am­ple: A 2005 re­port by other re­searchers came to sim­i­lar con­clu­sions. Among other things, it re­jected mal­prac­tice and de­fen­sive medicine costs as a ma­jor rea­son for the high price tags on U.S. care. Mean­while, ex­perts crank out vol­umes of stud­ies show­ing that Amer­i­cans are no health­ier and of­ten sicker than their for­eign coun­ter­parts de­spite this sky-high spend­ing.

“But U.S. pol­i­cy­mak­ers need to re­flect on what Amer­i­cans are get­ting for their greater health spend­ing,” the au­thors of the 2003 study wrote. “They could con­clude: It’s the prices, stupid.”

Given the ac­cu­mu­lated re­search, it ap­pears the health­care in­dus­try es­caped the most dras­tic cost-con­tain­ment mea­sures crit­ics might have wanted in the Pa­tient Pro­tec­tion and Af­ford­able Care Act. While some providers howl about some cuts, the Independent Pay­ment Ad­vi­sory Board and com­par­a­tive ef­fec­tive­ness re­search, these pro­vi­sions are mild and grad­ual com­pared with what could have been de­manded.

Un­for­tu­nately, the deficit-re­duc­tion frenzy may re­sult in mas­sive slash­ing of health pro­grams rather than in­tel­li­gent tar­get­ing of waste­ful spend­ing. Fu­el­ing some of this is a con­tin­gent in Congress that op­poses pub­lic in­sur­ance of any kind, in­clud­ing Medi­care and Med­i­caid.

As all this un­folds, the in­dus­try should re­mem­ber that it was warned about high prices.

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