United States Has Higher Medical Costs, Worse Outcomes Than Other Developed Countries

The prices of drugs, medical devices and hospital costs have driven up the costs of healthcare in this country over the last decade — prices that doctors, patients and insurers rarely know until the money has been spent, according to a new study from Johns Hopkins.

This despite widespread opinion that the aging of the population and the large numbers of tests and treatments being prescribed has been primarily responsible for escalating healthcare costs, researchers state. Administrative costs associated with physicians and hospitals procuring payment from health insurers and individuals are rising by six percent a year.

Overall, the United States spends more money on healthcare than other developed countries and yet their outcomes are worse. But all of these issues have become obscured by the politicization of healthcare, the study suggests.

The JAMA analysis, conducted with colleagues at the Boston Consulting Group and the University of Rochester School of Medicine, attempts to dispel several common misconceptions informing the current healthcare debate. The researchers used publicly available information about who pays for and who supplies medical care.

Key findings from the report include the following:

  • While the average rate of growth has decreased steadily since the 1970s, 18 percent of the gross domestic product (GDP) that the United States spends on healthcare is 50 to 60 percent higher than any other developed country.
  • Life expectancy, which has been on the rise for a century, is now not growing as quickly in the United States as it is in the rest of the developed world, a shift that began in the 1980s, with the United States lagging by three years in both men and women.
  • Though many policymakers point to the elderly as the biggest consumers of healthcare, it is actually those younger than 65 with chronic illnesses who account for two-thirds of expenditures.
  • Individuals’ out-of-pocket healthcare costs declined from 23 percent of the cost of their medical care in 1980 to 11 percent of the cost in 2011. Those costs have been shifted to employers and the federal government, whose share grew from 31 percent of costs to 42 percent over those same three decades.

According to the report, three major forces that will change health and medicine in the decade to come include:

  • Consolidation and industrialization, with a smaller number of much larger insurance companies and hospital systems, giving people less choice, and force them to seek an institution, rather than a single physician.
  • Information technology, and

Researchers say that the United States is also lagging behind the developed world in the proportion of primary care doctors, something that takes its toll not just in preventive medicine but in coordination of care once someone becomes sick. This comes through when, say, a person with diabetes or depression requires a joint replacement. These patients are much more likely to suffer complications, but few specialists are on the lookout for them.

What is needed is an investment in people — in primary care doctors, in innovations that can streamline the process of care to improve outcomes. Four percent of healthcare spending has gone to biomedical research into new technology (drugs and devices), while only 0.1 percent has gone to improving the process of care.

Political infighting is preventing the country from achieving ways to deliver care more effectively and efficiently, researchers say.

Source: Johns Hopkins Medicine, November 12, 2013

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