Prices Cited in Health Cost Gap

The large gap in per capita spending on healthcare between the United States and other major industrialized countries cannot be explained by differences in malpractice costs or access to care, according to a study published today in the journal Health Affairs.

“We pay more for healthcare for the simple reason that prices for health services are significantly higher in the United States than they are elsewhere,” said lead author Gerard Anderson, a professor of health policy at the Johns Hopkins Bloomberg School of Public Health.

The U.S. spent $5,267 per person for prescription drugs, hospital stays and doctor visits in 2002, compared with $3,446 in Switzerland, the next biggest spender, followed by $3,083 in Norway, $3,065 in Luxembourg, and $2,931 in Canada. The median cost of healthcare per capita was $2,193 for the 30 nations that belong to the Organization for Economic Cooperation and Development.

Healthcare spending accounted for 14.6% of the U.S. gross domestic product that year. Only two other countries, Switzerland and Germany, spent more than 10% of their GDP on healthcare.

But contrary to conventional wisdom, Americans are not getting more healthcare with higher expenditures, the study found. In fact, in several key areas, Americans had comparatively less than the other countries.

For example, the survey found there were:

* 2.9 hospital beds per 1,000 Americans, compared with a median of 3.7 per 1,000 residents in the other countries;

* 2.4 physicians per 1,000 Americans (in 2001), compared with 3.1 per 1,000 elsewhere in 2002;

* 7.9 nurses per 1,000 Americans (in 2001), compared with 8.9 nurses per 1,000 elsewhere in 2002;

* 12.8 CT scanners per million Americans (in 2001), compared with 13.3 per million elsewhere in 2002.

The U.S. did appear to have more magnetic resonance imaging units per capita than many other countries. But other nations may get more use out of the MRI machines because they typically operate them for 18 hours a day, compared with 10 hours in the U.S., Anderson said.

Malpractice, as it turns out, is not the cause of our higher medical bills, according to the study. It found that malpractice payments -- settlements and judgments -- were a small portion of overall health spending and were lower in the U.S. than in Canada and Britain. The average malpractice payout in the U.S. was $265,103 in 2001, compared with $309,417 in Canada and $411,171 in Britain.

The latest study bolsters a 2003 paper co-authored by Anderson entitled, “It’s the Prices, Stupid,” which identified fee differences as the primary cause for the gap. That report found, for instance, that the average cost of a one-day stay in a hospital in the U.S. was $2,434 in 2002, compared with $807 in Canada.

The “U.S. does not get commensurate value for its healthcare dollar,” said Karen Davis, president of the Commonwealth Fund, a New York-based private, nonpartisan organization that supported the study.

Jack Lewin, chief executive of the California Medical Assn., said malpractice costs were probably only a small reason for the healthcare spending gap. He believes that the difference in spending has more to do with a uniquely American expectation for a high level of care.

“We have a little twinge in our knee, we want an MRI,” he said. “We want to see a specialist immediately. We want care now. Some of that is good in terms of getting an early diagnosis. But it’s expensive.”

He added: “All of us baby boomers [want] to play tennis til 90 -- [that means] new hips, new knees. We’re going to have it all. So until all of us as a society get more realistic about healthcare, I don’t know that we’re going to change this dynamic.”

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Heathcare spending

The United States has the highest per capita spending on healthcare among countries in the Organization for Economic Cooperation and Development, but that doesn’t necessarily translate into more resources.

Highest per capita healthcare spending and OECD median in 2002

United States: $5,267

Switzerland: $3,446

Norway: $3,083

Luxembourg: $3,065

Canada: $2,931

OECD median: $2,193

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*--* Country Hospital beds Physicians Nurses MRI units per 1,000 per 1,000 per 1,000 per million United States 2.9 2.4* 7.9* 8.2* Switzerland 3.9 3.6 10.7** 14 1 Norway 3.1 3.0* 10.4* NA Luxembourg 5.8 2.6 10.8 4.5 Canada 3.2* 2.1 9.4 4.2* OECD median 3.7 3.1 8.9 5.5

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*2001

**2000

Data are for 2002 except where noted. U.S. data on MRIs may be an underestimate because the numbers in locations with multiple scanners may be undercounted.

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Source: Organization for Economic Cooperation and Development