Health Care Spending


Economist Rekindles Debate over Geographic Differences in Health Spending

By Jordan Rau, Kaiser Health News

An economist at the Federal Reserve has restoked the debate over the causes of regional differences in Medicare spending, and her analysis disputes some of the thinking behind a number of policy changes in the 2010 health overhaul.

The Obama administration and many prominent economists believe that as much as a third of the $2.7 trillion spent on health care may be due to wasteful practices of physicians and hospitals that could be eliminated without hurting patients. This is based on decades of research, principally by the Dartmouth Institute for Health Policy & Clinical Practice in New Hampshire, showing that Medicare spending in some regions of the country is significantly higher than others.

This geographic variation in spending, which the government has also examined, was a motivating force behind a number of government initiatives including changes in Medicare payment to reward hospitals and doctors who provide good care efficiently. Continue reading

U.S. Outspends Other Countries on Health

By: Julie Appleby, Kaiser Health News


We’re No. 1. In health spending.  Again.

The United States far outpaces other countries in how much it spends on health care, although Americans have a lower rate of doctor visits and hospitalizations than most of the other 34 member countries of the Organization for Economic Co-operation and Development.

In its Health at a Glance 2011 report, out today, the OECD shows that the United States spent about $7,960 per person on health care in 2009 – about 2.5 times the average of the countries studied.  It also found that health spending in the U.S. has increased faster than in all other high-income OECD countries since 1970, even accounting for population growth.

Why? Generally, prices for medical care are higher in the U.S. – and some services are performed more often. Hospital prices are 60 percent higher than the average of 12 selected OECD countries, and the U.S. also generally pays more for each appendectomy, birth, joint replacement or cardiac procedure.  Americans have more imaging tests, such as CT scans and MRIs, than residents of other countries and are far more likely to have knee replacements, coronary angioplasty or surgery to remove their tonsils.

Even with all that, compared with most of the other developed countries, the U.S. has fewer practicing physicians per person, fewer hospital beds, and patients don’t stay as long in the hospital.

Administrative costs in the U.S. are also high, the report notes, accounting for about 7 percent of total spending.  That is roughly comparable to what is spent in France and Germany, which have universal health coverage. In Canada — another country with national health care – administrative costs are about 4 percent of health spending.

So what are Americans getting for their money? The U.S. has the best five-year survival rate for breast cancer and comes in second, behind Japan, in terms of colorectal cancer survival.  But the U.S. ranks 27th in life expectancy at birth, 31st in premature mortality, and 25th in the rate of cardiovascular mortality. The U.S. has the second worst rate of adult diabetes, behind Mexico, and has the highest rate of adult obesity, at 34 percent.