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Higher Prices, Not Defensive Medicine Or Waiting Lists, Explain Why U.S. Health Care Spending Is So High Even Countries with Equal or Better Care Pay Thousands of Dollars Less Per Capita Health Affair's July/August 2005 issue on healthspending worldwide
Bethesda, MD -- Higher prices for health services such as prescription drugs, hospital stays and doctor visits -- not malpractice claims or greater access to health care services -- is the major reason why Americans spend far more for health care than citizens in other industrialized countries, according to a new study in the July/August issue of the journal Health Affairs.
"There is a popular misconception that we pay much more for health care in the United States compared to European and other industrialized countries because malpractice claims drive up costs and there are waiting lists in most other countries," says lead author Gerard Anderson, a professor in the Department of Health Policy and Management at the Johns Hopkins Bloomberg School of Public Health.
"But what we found, is that we pay more for health care for the simple reason that prices for health services are significantly higher in the United States than they are elsewhere," says Anderson. "We have less access to most health services and higher costs associated with malpractice insurance have only a marginal effect on overall health spending." he adds.
Anderson and his colleagues looked at health care spending per capita in 2002 for the thirty nations that belong to the Organization for Economic Cooperation and Development (OECD). They found that the U.S. spent $5,267 per capita for health care, $1,821 more than the next-highest spender, Switzerland, and $3,074 or 140 percent more than the median level for all OECD countries.
U.S. health spending accounted for 14.6 percent of U.S. gross domestic product (GDP) in 2002. Only two other countries, Switzerland and Germany, spent more than 10 percent of their GDP on health care that year.
An analysis of costs associated with malpractice claims in the U.S. showed that they explain only a small portion of the difference in health spending. Malpractice awards in the U.S. amounted to only $16 per capita in 2001, compared with $12 in the U.K. and $10 in Australia. Surprisingly, the average award was lower in the U.S. than in Canada and the U.K. In 2001 the average U.S. payment was $265,103 -- 14 percent higher in Canada and 36 percent higher in the U.K.
Costs associated with defensive medicine -- tests or procedures intended to protect physicians from lawsuits -- could account for more of the price differential, the researchers note. But they point out that analysts have had a difficult time singling out services provided solely out of fear of litigation And there is debate on the extent of defensive medicine in the U.S. Perhaps most important, the highest estimate of the cost of defensive medicine is 9 percent, a small fraction of the 140 percent differential in spending with the median OECD country.
The study also finds no evidence that U.S. citizens spend more for health care because they get more services. For example, when one looks at hospital beds, physicians, nurses, magnetic resonance imaging (MRI), and computed tomography (CT) scans available per capita, Americans actually have access to fewer health care resources compared with people in many other countries.
It is true that in some countries people are forced to wait for health services. However, that doesn’t appear to explain price differences, either. The services with waiting lists account for only 3 percent of U.S. health spending. Also, per capita spending in seven OECD countries without waiting lists for health services was about $2,500 less than it was in the U.S.
Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. Copies of the July/August 2005 issue will be provided free to interested members of the press. Address inquiries to Jon Gardner at Health Affairs at 301-347-3930 or via e-mail, press@healthaffairs.org. Selected articles from the issue are available free on the journal's Web site, www.healthaffairs.org.
Two More Organizations Support Alternative Health Plan The Vermont Chamber of Commerce and Vermont Automobile Dealers Association joined the Vermont Initiative for Universal Health Access early this week. Montpelier, VT/April 28, 2005 – Two more statewide organizations have joined founding members of the "Vermont Initiative for Universal Health Access" to support The Vermont Health Security, Safety, and Quality Improvement Plan, an alternative proposal to the single-payer, government-run, taxpayer-financed plan passed by the Vermont House of Representatives last week. Duane Marsh, President of the Vermont Chamber of Commerce, said "We signed on to the initiative because unlike H.524, the Plan realistically provides the conceptual framework to accomplish employers' goals: deliver universal access, give patients more control, free hospitals and health care providers to make the strategic financial decisions necessary to improve their products through technology advancement and efficient distribution of health services, define the most effective role of government, and offer a new level of direction to our insurance carriers that can be readily incorporated into their management and administrative functions." The Vermont Chamber of Commerce represents 1,600 businesses across the state that collectively employs 45,000 individuals. The Vermont Chamber of Commerce adopted their position at a meeting of the Government Affairs Committee on Monday afternoon, April 25, 2005. Marsh explained the Vermont Chamber's interest in the alternative plan, "The Vermont Security Health Plan promoted by the Vermont Initiative for Universal Health Access takes a giant step toward addressing many of the problems with the current health care delivery system. And unlike other proposals, the Plan won't land the state in hot water with an unfunded mandate where job providers and employees will be forced to pick up the lion's share of the tab." On Wednesday, April 28, 2005, the Vermont Automobile Dealers Association Board of Directors and Insurance Trustees pronounced their support for the alternative plan. Marilyn Miller, Executive Director of the association said "The VADA Board and Trustees support the goals laid out by the Vermont Initiative for Universal Health Access." Founding members of the Vermont Initiative for Universal Health Access have been working together for the last several months to develop a plan so they could provide a constructive voice in the debate over health care reform. Members of the Vermont Initiative for Universal Health Access have been working to ensure that Vermont patients and consumers of health care have access to insurance coverage, access a more efficient system, lowers the costs associated with health care and improves the quality, safety and effectiveness of health care for all-- without the need to invest additional taxpayer dollars. Founded in 2005, the Vermont Initiative for Universal Health Access is a collaboration of organizations working to ensure that all Vermont residents will have the security of continuous coverage while addressing necessary cost savings to the system. The founding members of the Initiative would welcome others to join in this effort; for more information call Shawn Shouldice Banfield 802-229-5657. Alternative Health Care plan presented to statewide organizations. Vermont’s health care debate concerns many business sector representatives; long-term economic viability. Montpelier, VT/April 20, 2005 – A group know as the “Vermont Initiative for Universal Health Access” held a meeting Tuesday evening to unveil their alternative proposal to the single-payer, government-run, taxpayer-financed plan currently under debate in the House of Representatives. The Initiative has been working together for the last couple of months to develop a plan so they could provide a constructive voice in the debate over health care reform. At Tuesday evenings’ meeting called by the Initiative, of the 15 other organizations represented all agreed; H.524 would have a negative impact on Vermont’s economy and that the health care problem could not be fixed by changing the financing mechanism. When asked if they agreed that reforms to the system must come in the form of adjustments to the delivery system and by placing more emphasis on efficiencies in the system no one argued the point. Jim Harrison, President of the Vermont Grocers’ Association, “expressed to the group that he supported the alternative, because in the political environment in which the debate is taking place, just saying “NO” was no longer enough for his 750 members.” Mitchell Fleischer, partner of the Fleischer Jacobs Group, who has been working in the health care arena for more than 25 years, said “we can’t roll the clock back 12 years; we need to move forward by addressing the costs associated with the system. A connection must be made between a patient and cost of service that he or she is seeking. Informed decisions can be made through dialogue between the patient and the doctor.” “Part of the solution is to focus on reducing delivery costs and promoting efficiencies in the system; other industries have faced similar challenges and been successful driving down costs through standardization. Also, investments in preventative care programs should be a priority to reduce overall long-term costs,” stated, Tom McKeown Executive Director of Business Resource Services who oversees an association of more than 3,000 businesses. Founded in 2005, the Vermont Initiative for Universal Health Access is a collaboration of organizations working to ensure that all Vermont residents will have the security of continuous coverage while address necessary costs savings to the system. The founding members of the Initiative would welcome others to join in this effort, for more information call Bill Shouldice 802-229-5657.
Organizations band together to promote alternative to government-run, taxpayer financed House plan Join forces to reduce costs, provide tools to consumers to make better health decisions, and improve the quality and safety of care. April 19, 2005/Montpelier, VT – A group of business organizations have come together to form Vermont Initiative for Cost Effective Universal Health Access, a coalition dedicated to ensuring Vermont residents will have the security of continuous health care coverage while instituting much needed cost savings to the system. The group proposes a Vermont’s health care system that will enhance our ability to sustain, retain and attract business to the state. For the past several months Vermont Initiative for Cost Effective Universal Health Access has been working to develop an alternative proposal to a government-run, taxpayer-financed plan and they have done it on their own nickel. The coalition’s alternative plan would: 1. Ensure coverage security to all Vermonters - through the creation of the Vermont Health Security Program and the creation of a Common Benefit Plan, which would include incentives for healthy lifestyles. The plan would also require individual responsibility for obtaining insurance coverage equal to or greater than the common benefit plan. 2. Make Improvements to the Small Group Insurance Market – by providing consumers with more information about the services they are buying and the costs associated with those services. The plan also allows uninsured small groups to purchase a new, lower-cost Common Benefits Plan 3. Improve Patient Safety - by improving the information technology infrastructure currently being used by the provider community and insurance industry. 4. Reduce transaction costs (administrative costs) for payment of health care services. 5. Develop and require the use of common electronic claims management system and require all insurance carriers to use a common insurance card utilizing smart card technology. 6. Continuously improve the quality, safety and effectiveness of health care by; 1. fully implementing the Vermont Blueprint for Health, “Chronic Care” initiative; 2. requiring adverse event reporting, investigation and disclosure; 3. allow hospitals and physicians a “safe apology” with patients experiencing adverse events/outcomes without fear of added liability; 4. Provide incentives and support to physicians to practice evidence-based medicine and to cease practicing defensive medicine; 5. develop and Implement Pay for Performance Guidelines; 6. amend the Hospital Community Report requirements to reduce administrative costs to hospitals while increasing value to consumers; Mitch Fleischer, partner of Fleischer Jacobs Group has been intimately involved in the health care debate for almost two-decades. Fleischer said, “…overall double-digit premium increases are unacceptable, consumers must be connected to the costs associated with the health care services they seek or we will never get control of this $3.2 billion expenditure.” Without a reasonable alternative to the House proposal now under consideration; President of the Vermont Grocers’ Association, Jim Harrison’s involvement in opposing H.524 would be very difficult. “Just saying “no” isn’t enough anymore. The political landscape won’t allow it and neither will our members.” Harrison said, “My members are choking on insurance premiums and want the cost of health care addressed, but they do not believe that imposing $2 billion in new taxes is not the answer.” H.524, the House plan, known as “Green Mountain Health” would significantly harm the small businesses that provide many Vermont jobs. Harrison continued, “…our Mom and Pop stores can not bear the burden of a new 12+% payroll tax.” John Klesch, Executive Director of the Vermont Retail Association said, “Businesses currently in Vermont will hesitate to expand and businesses considering relocation in Vermont are likely to make other choices. “The House plan does not address the serious issue of reducing costs; in fact they acknowledge that costs will increase by 7% annually.” Klesch said, “Do the math; 7% of $3.2 billion is $224 million a year!” Tom McKeown, Executive Director of Business Resource Services, oversees an association plan with more than 3,000 businesses and promotes the use of Health Savings Accounts (HSA’s), says “…while HSA’s are not for everyone, our group has seen tremendous results in the last few years through the use of these insurance vehicles because the consumer is given the opportunity to make decisions by partially removing the third-party payer from the system.” McKeown who talks with Vermont residents on a daily basis, continued “Vermonters are smarter and more responsible than the House plan gives them credit for, our proposal brings carriers and the health care provider community to the table to provide the tools for Vermonters to solve this problem for themselves.” The group encourages the involvement of Vermont citizens to get involved in this debate, it will take more “To head this government-run, taxpayer-financed plan off, it will take more than just me saying it’s the wrong approach it will take the involvement of Vermont’s citizens”, said Mitch Fleischer. Vermont Initiative for Cost Effective Universal Health Access will unveil their plan to other statewide organizations this week. Vermont Initiative for Universal Health Access EMAIL: wsavt@wsavt.com All rights reserved |
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