High prices mean Americans spend more on healthcare than Europeans, says policy expert
Americans average a whopping $9,403 per person in annual healthcare spending, which is much more than the per-capita health spending in Europe.
High drug prices, the excessive use of imaging and surgical procedures, and excessive administrative burdens are what most contribute to America's healthcare overspending compared to Europe, according to policy expert Ezekiel J. Emanuel, MD, who wrote his opinion in an editorial in this week's Journal of the American Medical Association.
Americans average a whopping $9,403 per person in annual healthcare spending, which is much more than the per-capita health spending in other wealthy, aging countries, said Emanuel, who is chair of the department of Medical Ethics and Health Policy at the Perelman School of Medicine at the University of Pennsylvania. The Germans and Dutch, for example, average $5,182 and $5,202 respectively.
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But while America's higher prices tend to get most of the attention in analyses of its healthcare overspending, there are also big differences in the volume of healthcare purchases.
"There are twice as many caesarean deliveries per capita in the United States compared to the Netherlands, for example," Emanuel wrote. "That difference in volume clearly is a major contributor to the overall spending discrepancy -- $62 per capita for caesareans in the U.S. vs. $9 in the Netherlands."
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In the editorial, Emanuel said administrative costs are another big contributor, accounting for $752 per capita of Americans' annual healthcare spending, versus just $208 in the Netherlands, and $232 in Germany. He argued that healthcare policy in the U.S. should take aim at these major drivers of excessive spending, which could free up hundreds of billions of dollars for better social uses.
Emanuel referenced a new analysis from other researchers which included a comparison of healthcare expenditures in the U.S. and 10 other wealthy countries, most in Europe. The analysis showed that on a per-capita basis, the U.S. spends roughly twice as much as these peer countries. Using the data from this analysis as well as from other sources, Emanuel highlighted several key drivers of this huge spending difference.
One consists of high-price, high-volume surgical procedures such as caesareans, knee and hip replacements, coronary artery bypasses, and angioplasties. Per capita, Americans spend two to six times more on these procedures than their peer country counterparts.
"Just the top 25 of these high-margin, high-volume procedures, with cost differences of $20-$40 per capita, explains approximately 20 percent of the per-capita healthcare spending difference between the U.S. and other high-income countries," Emanuel wrote.
Administrative bloat in the U.S. is a second major spending driver, with per capita costs that are three- to five-times higher than costs in peer countries.
Medical imaging procedures, meaning mostly CT scans and MRIs, are a third major driver of spending differences, and also involve both high prices and high volumes. CT scans alone account for $220 in annual per-capita spending in the U.S., compared to $23 per-capita in the Netherlands, for example.
The fourth major driver, pharmaceuticals spending, is the only one in which high prices are the dominant factor. Americans spend $1,443 per capita on pharmaceuticals, versus $566 for Swedes, for example, yet this huge excess is almost entirely due to higher U.S. prices, not higher volume.
Doctors, too, cost more in America; their average salaries are higher than the averages in most peer countries. Yet Americans' net per-capita spending on doctors' salaries isn't much greater than in peer countries, because there are proportionately fewer doctors in the U.S.
"There are just 2.6 physicians per 1,000 citizens in the U.S., whereas in Germany the ratio is 4.1 per 1,000 and in Sweden 4.2 per 1,000," Emanuel said. "The difference in per-capita spending on doctors' salaries accounts for only 4 percent of the overall health spending gap."
Emanuel emphasized that the four largest drivers of excess U.S. spending -- high-price-high-volume procedures, administrative bloat, excessive medical imaging, and pharmaceutical spending -- account for about two-thirds of the overall per capita spending gap, and thus should be the prime targets for cost-reduction policies.
Such policies, he said, should include government regulation to force down drug prices; mandatory shared decision-making among doctors to reduce the overuse of expensive procedures and imaging; Medicare-style reference pricing to lower per-procedure costs; and automated/electronic record-keeping to reduce administrative costs.
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
