Sunday, January 08, 2012

US Healthcare Costs

According to the latest edition of "Health at a Glance" http://www.oecd-ilibrary.org/social-issues-migration-health/health-at-a-glance-2011_health_glance-2011-en published by the Organization for Economic Co-operation and Development (OECD) The United States stands out as performing very well in the area of cancer care, achieving higher rates of screening and survival from different types of cancer than most other developed countries. The United States does not do well in preventing costly hospital admissions for chronic conditions, such as asthma or chronic obstructive pulmonary disease, which should normally be managed through proper primary care. Avoidable hospital admissions for asthma complications and chronic obstructive pulmonary disease (COPD) are much greater in the United States than the OECD average. For asthma admissions, the rate in the United States was 121 per 100 000 adults in 2009, more than two times greater than the OECD average of 52. For COPD, hospital admission in the United States was 230 per 100 000 adults, compared with an OECD average of 198. Regarding healthcare expenditures the United States spent 17.4% of GDP on health in 2009, much more than the OECD average of 9.6%. Spending per person is two-and-a-half times higher than the OECD average. Following the United States were the Netherlands, France and Germany, which allocated respectively 12.0%, 11.8% and 11.6% of their GDP to health. Is US health spending higher due to higher prices or higher service provision? (or both?) Facts: 1) US prices for a set of hospital services is over 60% higher than the average of 12 OECD countries, 2) US prices for certain procedures (including appendectomy,coronary angioplasty, coronary artery bypass graft, hip & knee replacement) are much higher than in other OECD countries, 3) Almost DOUBLE the spending on Insurance administration expressed in terms of purchasing power parity. Its also of interest to note that in most countries, health spending is largely financed out of taxes or social security contributions, with private insurance or ‘out-of-pocket’ payments playing a significant but secondary role. This is not the case in the United States which, together with Mexico and Chile, is the only OECD country where the government plays the smallest role in financing health spending. The public share of health expenditure in the United States was 47.7% in 2009, much lower than the OECD average of 71.7%. However, the level of health spending in the United States is so high that public (i.e. government) spending on health per capita is greater than in all other OECD countries, except Norway and the Netherlands. For this amount of public expenditure in the United States, government provided in 2009 insurance coverage only for the elderly and disabled people (through Medicare) and some of the poor (through Medicaid and the State Children’s Health Insurance Program, SCHIP), whereas in most other OECD countries this was enough for government to provide universal health insurance. Public spending on health in the United States has been growing more rapidly than private spending since 1990, largely due to expansions in coverage. Private insurance accounted for 33% of total health spending in the United States in 2009, by far the largest share among OECD countries. Beside the United States, Canada and France are the only two other OECD countries where private insurance represents more than 10% of total health spending. Conclusions: we are spending more for healthcare per person than in any other country in the world utilizing an inefficient private insurance model. But also public (i.e. government) spending on health per capita is greater than in all other OECD countries but fails to provide universal coverage. We must achieve a broad based consensus on how to efficiently allocate our healthcare resource to achieve high quality healthcare for all Americans. Tinkering on the edge will not provide us with a meaningful and sustainable solution. If we do not engage in such a dialogue now we will face rationing and further economic slowdown. Yours Bernd

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