Why the US Spends So Much More Than Other Nations on Health Care
The US spends about twice as much as a percentage of its economy as other advanced countries. A 2003 study found we use about the same amount of health care but pay twice as much.
A recent study by JAMA scholars for the period 1993-2013 looked at 155 different health conditions, the amount of inpatient, outpatient and prescriptions as well as finer detail about what went on as part of the treatment.
The health care sector grew at a rate of 4 percent annual growth while the economy grew at 2.4% Demographic changes, e.g. size of population and aging, explained less than half the growth.
Did we get sicker? Not really a 2.4% decrease in spending was associated with decreasing health care costs mostly for cardiovascular disease.
Did we spend more time in the hospital? A 2.4% decrease in spending was attributed to less hospital stays.
Did we do more and charge more for each hospital stay and outpatient stay? Yes, these accounted for 63% increase in spending.
Other studies show most of this increase is do to higher prices rather than more and better care. For example hospital prices are 60% higher than in Europe.
Now we need to know who is getting all this money? The physicians, the hospitals, the insurance companies?
One of my relatives who is a doctor says a lot of that cost increase is going to administration. I don't know how accurate that is; of course he is unlikely to say it is going to doctors. My personal opinion is that administration gets more than their share, but that doctors and hospitals get plenty. Particularly when the doctors are involved in a corporation that owns the clinic or hospital.
ReplyDeleteIt might depend on the ailment. I pay reasonable fees for my doctors and monitoring. My palliatives are cheap. It's the drugs that manage chronic illnesses that are unmanageable. At the end of the year, the hematology oncologist does her tests and gives me her best prediction about where the cancer will go in the next 12 months (it's chronic and indolent, not acute and aggressive), and I buy the cheapest insurance I can get that will cover the likeliest contingencies.
DeleteDrug costs are so arcane. I think thats how the pharmaceutical companies want it to be. I take atorvastatin, which is a cholesterol-lowering drug. Before it went generic, it was over $70 for a month's supply. I didn't pay that, because we had a $20 insurance copay. Now that it's generic, it's less than $10 for a month's supply. They say that the price is for R&D, not ingredients, on the non-generic drugs. I know there are some drugs that are an absolutely insane cost to the patient and their insurer.
DeleteI hope Patrick Shannon will comment on this thread.
"Administration" was a nasty cost long before Obamacare. Republicans talk as if Obamacare imposed layers of gummint bureaucracy on thebsystem. Well before the ACA most of our doctors had full- or at least part-time insurance contact people whose job is to stay on the phone all day with people at the insurance companies (on a first-name basis) trying to get the insurer to disgorge what the policy said it would. I assume having someone to talk to the doctors' paid importuners was a cost to the companies. It'd be one they could bear by raising prices or denying claims. The latter would, of course, increase the need for telephone answers, which, of course, would increase the need for more people at the doctor's officr to ask why their patients are not covered for what their policy says they are.
DeleteIt's called a "business plan." And USA #1. MAGA.
R&D expenses is a fiction. Drug companies spend more in advertising.
DeleteIn addition, there is the Orphan Drug Act of 1983 (which was slated for obliteration in one version of the tax plan). That reimburses companies for the hoops they have to jump through with the FDA in getting approval for drugs for rare diseases. The ODA also allows drug companies to hang into there patents linger than the standard 20 years.
It's a Reagan era program that has resulted in more therapies, but certainly not at affordable prices. Newer drugs to manage my disease range from $1,800 to $10K. Per month. For the rest of your life.
Folks from Europe and Australia get these drugs for free. Since only one company makes these meds world wide, I have to wonder if those of us in the U.S. are subsidizing lower prices for folks in Copenhagen and Melbourne.
These two articles, one from 2015 and one from 2017, seem to be largely in agreement as to the reasons our healthcare costs are higher than other rich nations', with outcomes that are no better:
ReplyDeletehttps://www.investopedia.com/articles/personal-finance/080615/6-reasons-healthcare-so-expensive-us.asp
http://www.sandiegouniontribune.com/news/health/sd-me-healthcare-costs-20170318-story.html
What is worrisome is that Obamacare doesn't seem to be bending the cost curve. Obamacare has some admirable features, but doesn't seem to be getting at the core issues it was intended to address. Republicans have probably weakened its effectiveness even more by removing the individual mandate, but it's difficult to detect much of an appetite for further health care reform. Indeed, when Republicans attempted it last year, they were booed out of the building by the same public that never has felt more than lukewarm toward Obamacare. I think people are risk-averse - they don't trust change.
I guess it depends on how you define "good outcomes." My illnesses are keeping a lot of people in business: sonographers, lab techs, medical receptionists, billing specialists, cardiologist, hematologist, GP, Rite Aid, pharmacists and techs, physical therapists, the massage therapist, several drug companies, researchers interested in weird diseases, and the dentist.
DeleteI am a helluva boon to the national economy!
Obamacare was never going to address costs. It simply subsidizes people like me who could not otherwise afford to participate in our bloated system.
Any Republican who truly cares about access to health care is in a bind because a) letting the market solve the problem works only if you are willing to let a lot of people die because the docs they need don't take their insurance and b) setting price caps and regulations is against your ideology.
I can't help thinking that the booming stock market has an effect (big? medium?) here.
DeleteBig Pharma is Big though I don't know the stock numbers; Ditto some insurance companies and "health care facilities, Ditto for-profit hospitals.
Where's Patrick?...he may know something here.
A physician friend, and ardent Trump supporter, saw Obamacare as failing to face the root issues.
ReplyDelete1. The greed of physicians. When insurance companies were non-profit there was no mechanism to control the greed of the physicians. The insurance companies simply tacked on an administrative fee.
2. The greed of the for-profit insurance companies. The cure for the greed of physicians simply made things worse. He maintains we have to go back to the non-profit insurance companies but with some controls for the greed of physicians.
3. The greed of lawyers. Malpractice insurance is simply too high and there are too many law suits. However the solution is not easy. He is against caps on settlements because there are cases when people deserve high settlements when they have been terribly wronged.
I dunno. Doctors graduate from med school with incredible debt. Greed? Or the need to pay off high bills? And most doctors are now hired on salary by hospital systems. Maybe the hospital systems are greedy?
DeleteI mentioned in a previous post that I had been reading a book entitled "Catholicism and Health-Care Justice / Problems, Potential and Solutions" by Philip S. Keane, SS.
ReplyDeleteA major section of the book deals with mergers and consolidations of hospitals. Much of this merger activity is driven by the perceived need for these health care delivery organizations to gain more market power vis a vis managed-care organizations and drug manufacturers, both of which tend to be very large organizations, many magnitudes larger than an individual hospital or a single religious order's "system" of a few hospitals.
Keane also casts a skeptical (but objective) eye at the profit motive when it comes to healthcare. He notes that we might make a distinction between a small doctors' practice, consisting of a partnership of a few physicians, which needs to make a reasonable profit in order to support its members and their families, and the profit motives of a gigantic managed care organization, or of a very large system of hospitals, whose profits may be going to investors. He finds the latter cases problematic, or at least potentially problematic, given the nature of health care.
So the landscape now is that the health care marketplace is dominated by huge managed care organizations, mammoth drug manufacturers, and increasingly, very large systems of hospitals. It seems to me that, with one important exception, these huge providers "out-class" the individual consumers and individual employers, most of whom are small and medium-size businesses, who purchase health care. There is an imbalance in market power.
It might be objected that the free-market competition between hospitals or drug manufacturers or managed care organizations keeps consumer prices down. I believe there is some truth to that. But when we consider that many local markets may not have much competition between hospitals (there may be only one hospital in a market), and that patents reduce competition among drug manufacturers, competition isn't always full and free-flowing in the health care marketplace.
The important exception to the market-power disparity that I mentioned above is the federal government. Medicare, Medicaid and other federal government programs are large enough that those programs have the market power to drive prices downward on behalf of the health care consumers they represent. It's noteworthy that both of the articles to which I provided links in my previous comment point out that in other rich countries, their national governments take a much more active role in negotiating prices for consumers. For a conservative like me, this notion of active government intervention is practically anathema. But Keane's view is that the Catholic moral tradition takes neither an overly positive nor overly negative view of government activity. He positions the Thomistic tradition as seeing that much good can come from government activity. Lower consumer prices for health care may be a practical example.
"Obamacare was never going to address costs. It simply subsidizes people like me who could not otherwise afford to participate in our bloated system."
ReplyDeleteI agree. It did move millions of people onto Medicaid (and would have moved millions more if GOP governors had played ball by accepting federal Medicaid-expansion dollars), which probably does bend the cost curve downward. But I believe your characterization of Obamacare as a premium-subsidy program is largely correct.
The political brilliance of Obamacare is that the plan's architects managed to get all of the major stakeholders - the pharmaceutical companies, the doctors, the insurance companies, AARP - on board. The Republicans failed utterly on this count last year. And because lobbyists basically run Washington, that failure to get stakeholders on-board doomed any Republican attempt at Obamacare reform.
But that political brilliance by the architects of Obamacare also put real constraints on the possibility of reform. These stakeholders were brought on board with promises that their core businesses wouldn't be severely disrupted, and might be improved. That is a recipe for perpetuating the status quo.
Jim, at one time, I too rejected any thought of a european style healthcare system. Until we had personal experience with the French system. About ten years ago my husband had a stroke while on a beach about 1 1/2 hours south of Nice. End of vacation. We were plunged into the French system. His care involved three hospitals - an emergency hospital (like a giant, multi-story urgent care clinic but with more equipment), where a CAT was done, then a full-service hospital for MRI, back to the emergency hospital, then a transfer to the French equivalent of Walter Reed for its neurology dept. Civilians are treated in this hospital, unlike Walter reed. Even American tourists.
ReplyDeleteAlso three long ambulance trips (45 - 60 min). At the military hospital he had EKG, another MRI, echocardiogram, etc. His doc looked really young - she looked like Twiggy. I worried about this until our primary care doc at home told me that France has the "best neurology in the world and she has had the best training in the world".
Before our trip the docs here had missed several TIAs, including one episode severe enough to put him in the hospital. He wasn't a textbook case for stroke, and the exams in the hospitals here turned out to have been incomplete - the narrowed artery that caused the TIAs(diagnosed in hindsight) and stroke were in the vertebral arteries, not in the carotids, where most strokes originate. In the US, they only looked at the carotids, and since the tests showed no blockages they put him on a seizure med.
Dr. Twiggy told me he had had a rare kind of stroke, diagnosed based on symptoms alone, before she had seen a single scan. She told me that they would do more tests and "I'll show you where the blockage occurred". She was right of course. Since my husband was not covered under the French system, I worried about the cost. They did not demand any kind of payment before leaving the hospitals involved, or in leaving the country - said they would send a bill. Unbelievable compared to the US system. His total bill - three hospitals, three long ambulance trips, multiple specialists, multiple high tech tests, etc came to about 6000 euros - about $7000 at the exchange rate at the time. Our insurance picked it up because he was treated initially in an emergency room (I had been told on my first call to our insurance that "France is out of network"). Seriously. When home, he spent two days at Hopkins. The eventual total of all bills for that came to about $80,000 (if we had had to pay it. The insurance company paid around $28K) including the costs to repair the femoral artery that the young resident doc had dissected (oops), necessitating hours of surgery to repair. The insurance company paid, including the surgery that was due to medical error. A friend got stitches in an ER in France – total was $35.
This experience led me to research the French and other OECD country health systems. We cost the most and get the least for our money, as already noted. We are the only system where profit (hospitals, clinics, insurance, labs, pharma etc) plays a significant role in costs. There is a range of practice in the OECD, but all are more cost efficient than ours, and result in better care and outcomes. The commonality is that everyone has access to affordable or free health care, no matter how poor.
Some articles -
On late stage cancer treatment in Paris - (I'm heading there if I am ever diagnosed with cancer),
http://blogs.reuters.com/anya-schiffrin/2014/02/12/the-french-way-of-cancer-treatment/
an article pairing countries with somewhat similar systems (France v Australia, UK v Canada, US v Singapore etc),
https://www.nytimes.com/interactive/2017/09/18/upshot/best-health-care-system-country-bracket.html?emc=eta1
and another discussion of the French system - not cheap, but far better than the US system
https://www.npr.org/templates/story/story.php?storyId=92419273
The cost efficiencies promised by allowing so much profit into our healthcare system haven't happened.
The Schiffrin article is really worth a read. It may be helpful to know that, at least for now, Medicare pays 100 percent of in-home hospice care. Dad was in it before he died. There are questions Jim P. has raised in the past about some hospice policies that run counter to Church teaching (re withholding water and food), but otherwise the care was fair to good. The problem is that staff is spread very thin. Probably less of a problem in an urban area.
Delete"withholding water and food"
DeleteIt used to be a relatively complex question, which St. John Paul II rendered relatively simple by decreeing that food and water always are to be considered ordinary care. The classic Catholic analysis distinguishes between ordinary and extraordinary care, and it was formerly possible for a caregiver to deem food in particular as extraordinary care in some circumstances, and therefore not always required. (Probably the same was true with water, although I'm told that the bias in favor of keeping the patient hydrated was somewhat stronger than is the case with nutrition).
People who are in the biz, such as ethicists and hospital chaplains, did not greet JPII's simplification with unalloyed joy - at least the ones I knew thought that the former rules had a lot to be said in their favor. It wouldn't surprise me if hospitals, nursing homes, hospices and the like continue to use their best judgment on these questions.
My suggestion as someone who's "been there" is that Catholics caring for a dying person on home hospice should stay in contact with a priest or select Catholic hospice services to help them navigate the ethical and moral landscape when things become less clear re food and water at the end. Talking to a priest about it after the fact means you have to relive it all, and the priest still won't get the whole picture and will fall back on "the rules" and an examination of your intentions and understanding, which will leave you with lifelong recriminations.
DeleteThat's good information, Jean - about Medicare paying for in-home hospice. At least for now. If someone wanted to move to France for care, there is only a six month residency requirement along with an intent to continue to live there for 6 months + 1 day each year to qualify for their healthcare system. You do have to pay into it, as do the French, but it's about the same as Medicare Part B + a supplementary policy here.
ReplyDeleteIf I could afford to live in France, I could probably afford American health care. Mexico used to offer American retirees almost immediate landed immigrant status and inclusion in the national health plan. Panama City is seen as a retirement Mecca for elders on lower incomes worried about health care costs.
DeleteNYT offered this a few years ago about retiring abroad to beat high health care costs in the U.S. https://www.nytimes.com/2014/02/22/your-money/the-dream-of-retiring-abroad-with-good-health-care.html
We're gonna be po' folks wherever we go, so we might as well stay where we have friends, family, and like the climate. We may opt for a larger city where free services to the elderly through non-profs are more plentiful. Out here in the sticks, the Methodist ladies will feed you free dinner three times a week, but that's about it.
Jean, your community and living situation is very different from ours. We have considered France ever since the election! Not just for the health care, even though we think it is better than ours. I lived in France for a year while young (before marriage)and we have traveled a lot in France over the years as a couple and with our kids. Now one of our daughters-in-law is French. We have gotten to know her family, staying with them for part of our French vacations, and they are wonderful people. Cost of housing in Paris is horrible, but we wouldn't go there. We would head south, Provence or Languedoc-Roussillon where the winters are mild and sunny, and the cost of living is lower than the DC area. As a native southern Californian I could not live in your climate even though you love it! Even the mid-Atlantic is not unpleasant for me, too hot and humid in the summers, and too cold and gray in the winters. I have never adjusted and I have lived here ever since I arrived for grad school for what was planned as two years. The DC area is very transient, and many good friends we have had over the years have moved elsewherem usually due to job transfers. Also, alas, many of our neighborhood friends, older than we were when we moved into our house, have moved on to whatever lies beyond this life. So it would not be hard for us to leave our neighborhood, or the DC area. It's not the cozy, small-town, rural mid-western life that you and Katherine and others enjoy. Everyone compares new possible hometowns with where they are - you live in a low-cost area of the country but we live in a high cost area. We would be able to live better on less in southern France than in the close suburbs of DC. Neither Mexico nor Panama appeal to us. In fact, the tropics don't appeal to us as a place to be for longer than a vacation. We don't speak Spanish or Italian, but can bumble along in our very rusty French. Our son left for the UK several years ago for one year of grad study. He is still living overseas six+ years later,now in Australia. They like it there, but find it is too far from both families, so will move somewhere closer to family in another year or so. Obviously finding a job is important, so they may end up in the US. Our d-i-l speaks four languages fluently, but our son only speaks one language fluently. ;) But if they do end up in Europe, we will give France serious consideration. They may decide after the 2018 elections, to see where the US might be headed. They were shocked and horrified by the election. So we will wait until they decide! We also have children/grands on the west coast, so our family is very widespread these days. Friends and family in the sunbelt also, Florida, SC, Calif., AZ, etc
ReplyDeleteI can get by in Spanish, and Zacatecas has a beautiful climate and a good hospital. Slso a lot of kidnappings. But I feel that staying here might shave off some years in Purgatory.
DeleteWeather commentary from the wimpy mid-Atlantic capital of this country, currently suffering a long-lasting freeze, addressed to our northern friends.
ReplyDeletehttps://www.washingtonpost.com/lifestyle/style/dear-northerners-we-get-that-this-weather-is-no-big-deal-for-you-now-please-shut-up/2018/01/04/2084459a-f0ba-11e7-b390-a36dc3fa2842_story.html?hpid=hp_local-news_northerners-1215pm%3Ahomepage%2Fstory&utm_term=.3912e75087d1
I get healthcare through 2 sources: the VA and Kaiser Permanente, an integrated managed care consortium, based in Oakland, California. Both providers negotiate pharmaceutical prices with a very sharp pencil. Obamacare? Not allowed to do that. That most certainly explains a lot of our cost problems. Even though I am Medicare-eligible, I am not enrolled, having coverages elsewhere. Does anyone know if Medicare is also prohibited from negotiating drug prices?
ReplyDeleteLast I read, Medicare was prohibited from negotiating drug prices--a deep bow of the Congress to the pharmie companies.
DeleteJean, for me hell would be an eternity of snow and ice and gray skies and temps below 55 degrees. Since you like your climate, it isn't purgatory even to stay there!
ReplyDelete