The vast majority of the difference comes from just the raw cost of inpatient and outpatient care. Even if you were to completely zero out the administrative costs per capita, you'd hardly make a dent in bridging the gap.
I am interested to understand what makes the "raw" costs so wildly different.
When my son had an infection in germany, we went to the equivalent of pediatric urgent care and after seeing the nurse, having bloodwork done and a few different 15 minute sessions with the physician we came to the end of the visit with the doctor, they apologized that we had to be charged the full uninsured rate and that a bill would be given to us later that we could use to have our insurance (they could not bill our insurance internationally.) We paid the 50 euros and asked what the total amount would be, assuming that was the co-pay. There was a lot of confusion because the 50 euro wasn't the copay -- it was the full-freight amount. Getting a single 15 minutes with a doctor, let alone the prep with the nurses and bloodwork being rushed would be far more than that in USA.
> I am interested to understand what makes the "raw" costs so wildly different.
There are a number of reasons. One big one is simply that doctors in the US command a much higher salary than their counterparts elsewhere in the world:
Another big reason is that the US is unique in that it's one of the only countries in the world where you get your healthcare through your employer. What we're seeing in healthcare costs is analogous to what you might see happen to airline ticket costs if we all got our air tickets through our employers: the vast majority of us would fly business class, while the unemployed would be simply unable to pay for business class fares out of pocket. Employers (especially medium-to-large businesses) have a much higher purchasing power (and hence, willingness to pay) than individuals.
Now, if you take this behavior and combine it with the fact that health insurers' profit margins are capped by law by percentage, insurers pay more for treatments (which doctors happily accept), charge more to employers (who are generally less price conscious vs individuals), thus bring in more absolute revenue, and therefore more profit because a capped profit percentage of a higher revenue is higher than a capped percentage of lower revenue. It's somewhat counter-intuitive, but the policy combination of an employer mandate and insurance profit cap results in the mother of all local optima.
Disclaimer: I work on health pricing in the US and sometimes adjust claims myself.
> doctors in the US command a much higher salary than their counterparts elsewhere in the world
Yes, but salaries are also linked to huge debts to pay in their first years, a permanent state of fear to be sued by negligence (losing their license and seeing their only possibility of income vanished). It seems that suicide and depression are too common among young students. They also work too many hours in irregular schedules (working in sundays, holidays or passing one on each three weekends at the hospital is not uncommon. This will add a lot of stress for parents with small children trying to having a normal life. And is a emotionally charged work.
... So either you provide a particularly high reward in form of a golden salary, or perhaps nobody would wanted to be a doctor.
Now you're starting to follow the thread to the root cause: onerous medical licensure and onerous medical university accreditation.
In the US, the barrier to become a doctor is higher than it is anywhere else. Nowhere else in the developed world are you forced to do 4 years of undergraduate study unrelated to medicine, followed by 4 years of Medical school, followed by 4 years of residency.
Also, one doesn't require huge debts to pursue a PA or NP degree, but many States disallow PAs and NPs from practicing basic medicine.
Not everyone needs to go through the same level of schooling as a brain surgeon.
That's what I find so depressingly hilarious about the US vs the rest of the developed world [1]: that even when they super-apologetically hit you with the full, no-mercy price, it's less than what you'd way with (already overpriced) insurance in the US.
[1] Well, also developing, but super-low prices aren't as surprising or embarrassing to the US in that case.
> I am interested to understand what makes the "raw" costs so wildly different.
In the US, hospitals lose a lot of money on patients who don't pay at all or pay pennies, and in order to not make a loss at the end of the year they charge those who can pay more money.
Also, insurances have an incentive in having hospitals set high "sticker prices" because then they can claim "higher savings" for their members.
Contrast to that, in Germany as long as a patient has any insurance (and 99.9999% of Germans do) the hospitals and doctors will get their services paid (so no need to overcharge for financial reasons), and both the mandatory insurance scheme and the private insurance companies pay fixed, government-regulated fees (https://de.wikipedia.org/wiki/Einheitlicher_Bewertungsma%C3%... for the government insurance, https://de.wikipedia.org/wiki/Geb%C3%BChrenordnung_f%C3%BCr_... for the private insurance system).
The "administrative costs" in that analysis are misleading. "Administrative costs include spending on running governmental health programs and overhead from insurers but exclude administrative expenditures from healthcare providers." I don't think the blue bar is representative of the "raw cost" of care.
This study says over one-third of all US healthcare costs are administrative.
I want to be able to make a case for a single payer system in the U.S., but I think to be effective it's a comparison of costs and outcomes that needs to be had. In the data linked above, we're told that the 'inpatient and outpatient care' is significantly higher than in 'comparable countries.'
I believe it. But isn't 'inpatient and outpatient care' just about .. everything that goes into a health care system aside from the paper pushing and insurance pieces? And are hospitals really breaking that stuff out ?
Someone in favor of the U.S. system would say, ah hah, that's because we in the U.S. have access to better care, and more sophisticated technology, than in France or Germany, and also we don't have long waiting lists. I don't know the technology claim, but I've seen the wait list claim and I do think it's true when comparing the U.S. with Canada or the UK (the latter two have long waits for essential surgeries compared to the U.S.)
Given that inpatient + outpatient = 100% of the category, I have to agree. Lumping the cost of "Medical Care" into a single metric in a breakdown of spending on, well, medical care, doesn't offer much insight. Showing exactly the same data in 4 different graphing methods doesn't add anything but clutter. The lack of effort honestly makes me question this organization's mission.
I think the most useful bit is the reference to the OECD data source. For those not already aware, OECD has far more detailed data available to browse [0], and heaps of more informative and competent presentations [1].
"Wait times for cancer treatment -- where timeliness can be a matter of life and death -- are also far too lengthy. According to January NHS England data, almost 25% of cancer patients didn't start treatment on time despite an urgent referral by their primary care doctor. That's the worst performance since records began in 2009.
And keep in mind that "on time" for the NHS is already 62 days after referral.
Unsurprisingly, British cancer patients fare worse than those in the United States. Only 81% of breast cancer patients in the United Kingdom live at least five years after diagnosis, compared to 89% in the United States. Just 83% of patients in the United Kingdom live five years after a prostate cancer diagnosis, versus 97% here in America."
Yes, I know Forbes has a bent. And I'm generally in favor of single-payer options and not defending the U.S. However I have seen the Wait Time stat over the years in the context of cancer patients, and this is one data point. Canada is apparently worse.
Five year survival rates don't give you much information, because the US engages in massive over testing. You need to know all cause mortality, and the US does worse here than the UK.
The US over tests people and over treats cancer; that costs a lot of money and isn't pleasant for people but it doesn't make them live longer.
If hypothetical Beth dies age 82 does it matter if she is told she has cancer at age 75 or age 79?
I'm always willing to learn more - do we have a one-stop-shop apples to apples comparison of U.S. vs. UK and other countries' healthcare models with stats and explanations, one that is free from strong biases ? I struggled to find a non-political, but still meaningful comparison data site online via Google.
You're right that it's a useful starting point, but I think that it's even more complicated than "single payer is better".
First of all, it isn't obvious that single payer is the best system, because there are many countries in the world that have exemplary health care systems that are not "single payer". You cited Germany as an example, but Germany doesn't have a single payer system, it has a public-private mix. It's a universal multi-payer system. Netherlands has a purely private universal healthcare system, Switzerland has a purely private universal healthcare system, Australia has a public-private mix (44% choose private), Singapore has universal catastrophic coverage but everything else is driven by savings accounts and private insurance among the upper-middle class, etc etc — Belgium, South Korea (technically "single payer" but only covers 60% of costs, private insurance fills in the gaps), Japan, etc.
From where I sit, the most apples-to-apples A/B test of single-public-payer vs private insurance is actually being run in the US, as we speak. When you turn 65, you have the option to enroll either in "Original Medicare", which is what we usually think of when we talk about "single payer healthcare in America", or you can enroll in Medicare Advantage (aka Medicare "Part C"), where the premiums that would go to the CMS instead go to private insurers like Humana, United, Oscar Health, Aetna, Clover, etc. These plans replace Original Medicare, also cover Part D prescription drug benefits, and often include supplemental benefits that Original Medicare doesn't already cover. There are some interesting findings so far:
- 39% of Medicare beneficiaries are on private Medicare Advantage plans instead of the public "Original Medicare". Because everyone is entitled to "Original Medicare", this is purely voluntary. This number has been growing so rapidly, that we expect by 2025, more seniors to be on a private plan than the public one. There's also great variance by State. In Florida, Pennsylvania, Wisconsin, Michigan, Minnesota, Oregon, Alabama, Hawaii, and Connecticut — nearly 50% of beneficiaries are on Medicare Advantage. By 2022, we expect more seniors in those States to be on a private plan than a public one. https://www.kff.org/medicare/issue-brief/a-dozen-facts-about...
- In Urban areas, Medicare Advantage costs less per capita to administer than Medicare — and that's not including the extra Medicare Part D insurance that you would have to buy if you're on the Original Medicare plan. https://www.commonwealthfund.org/publications/issue-briefs/2... From this same research, public "Original Medicare" is still cheaper in rural areas, but not by a whole lot.
So to make things more complicated, we're not just talking about whether "Medicare For All" is better than the status quo, we also need to litigate if private-insurance driven "Medicare Advantage For All", is even better.
Looking at the article, it's pretty hard to understand what what's actually costing more. "Inpatient and outpatient care" is a pretty enormous bucket and probably accounts for a whole lot of salaries, services, and such of pretty much any job title with "medical" in it.
Admin, does in fact represent the largest % difference... but it's not clear what's grouped into it. I assume it means government departments, insurance firms, external legal/finance services. I don't think the data refers to a salary-bysalary breakdown of costs.
Sometimes it's best to look at these things from the ground up. Doctors, nurses. How many? How much are they paid? Is the diff more or less than mean diff? If no, move on, If yes, dig deeper.
You really can't even rely on price data to tell you much. Most of these markets have a broken or absent price system. The underlying answer though, inevitably will likely be "because they're run differently."
Inpatient care refers to any treatment where the patient is required to be admitted to a hospital or health care facility facility. On the other hand, the OECD defines outpatient care as care that "comprises medical and ancillary services delivered to a patient who is not formally admitted to a facility and does not stay overnight." Thus, studies like this try to break out "inpatient and outpatient care" as an attempt to represent the "real" service in question, while isolating things like administrative costs.
I think outpatient care mean you don't stay in the hospital overnight. So you could have a surgery and leave within an hour in the recovery area and that is outpatient.
https://www.healthsystemtracker.org/brief/what-drives-health...
The vast majority of the difference comes from just the raw cost of inpatient and outpatient care. Even if you were to completely zero out the administrative costs per capita, you'd hardly make a dent in bridging the gap.