Health Justice CT

Health Justice CT Blog

When Paying More Means Getting Less

This guest post is written by Lauren Bennett

istock photo_1954186556587899In the United States, we spent $2.8 trillion on health care in 2012. That is trillion with a “T”. That is a lot of money. So what is the driving force behind this $2.8 trillion spending habit of ours? How does this happen?

There are many different reasons, but for starters, we spend so much in the US because medical products and services cost more here. To put this into perspective, let’s take a look at how we compare to other industrialized countries:

  • In the U.S., the average cost for a day in the hospital is about $4,200 compared to $850 in France.
  •  It costs an average of $10,000 for a normal birth in a hospital in the U.S., but only around $2,600 in the U.K.
  • A knee replacement costs over $25,000 in the U.S., while it costs only about $12,500 in Switzerland.
  • Americans spend $947 per capita on prescriptions while Canadians spend $692 and Australians spend $503.

These high costs create a problem for those who can’t afford it, but need the care like whether one must choose between necessary medication or buying groceries to feed his or her family.

But, we have to pay more because we are receiving the best care in the world. In essence the more something costs, the better the product, right? Unfortunately, that is far from the truth. Even though we are outspending other countries, Americans are not seeing better outcomes. Among industrialized nations, we rank #1 in spending but 39th for infant mortality and 36th for life expectancy. In fact, the US spends about $3,000 more per person than Norway, the second highest spending country, but our average life expectancy is 2.7 years less.

Aside from our medical services costing more, we also suffer from problematic incentives. Right now, an overwhelming majority of our healthcare system runs on fee-for-service (FFS), meaning that providers are paid per service regardless of the value it has to a patient’s overall well being (think quantity over quality). So every MRI, blood test, office visit or any other medical procedure means payment for the provider. To the patient, the more tests the better because it is assumed that the doctor is doing everything to make sure their medical issue is being address while every test the provider orders means more money for the facility. This leads to the issue of overuse of service not based on need, which equates to about $750 billion wasted each year on unnecessary tests and procedures.

So what are some possible solutions to getting our health costs under control and in turn, addressing health disparities? It really takes a combination of proposed solutions, but a good place to start is price transparency. Price transparency means that providers would be required to publish the price for each medical good or service so people would be able to compare doctors or hospitals and make an informed decision, much like we do with electronics or vehicles.

The Health Care Incentives Improvement Institute (HCI3) and Catalyst for Payment Reform (CPR), released the annual Report Card on State Price Transparency Laws in March which looked at the laws each state had on price transparency, but also whether or not it was enforced through the implementation of consumer-friendly public websites. An overwhelming majority of the country received a failing grade.

ReportCardMap

It’s clear that states must do more to promote price transparency in health care.  However, making medical prices public isn’t enough on its own. If you really want to make the best decision for your health, you will also want to know the quality of the provider of choice. Choosing a high quality, low cost provider ensures you are not only making the right move for your health, but for the overall system as it rewards those doctors who doing their part to provide the best care possible for the most cost-effective price. Unfortunately, finding out the quality of your doctor is almost as hard as finding out prices.

HCI3 Physician Quality Report Map  (1)

Another answer in addressing the high cost of health care in the US is to restructure the current incentives of the system from fee-for-service to pay-for-performance, which focuses on quality of the patient’s well being rather than the quantity of services performed on a patient.  This type of payment reform financially rewards providers by making sure that each patient is receiving the best care possible based on nationally recognized quality measures. So instead of paying the provider for each service, the doctor is paid based more on outcomes.

As you can see, there is work to be done and until we have a clear understanding of the cost and quality of our care up front and reward those hospitals and doctors who are focused on performing high value care, our medical costs will only continue to rise.

As someone who has or may be a user of our healthcare system, you can play a part in this change by advocating for price and quality transparency in your community: start a petition, write your congressman or congresswoman, attend town hall meetings. It may seem like a small part, but every movement starts somewhere. Why not in your town?


Lauren BennettLauren Bennett is the Communications Leader for the Health Care Incentives Improvement Institute (HCI3), a national organization working to improve the quality and decrease the cost of health care in our country. Connect with HCI3 on Twitter at @HCI3_org. Learn more about HCI3 at www.hci3.org

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Image credit: (top) iStock Photos, (maps) Health Care Incentives Improvement Institute

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