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September 19, 2019

America's health care system is 'a real outlier' on costs. Why?

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    The U.S. health care system is unique, but what makes it truly distinct from other health care systems around the globe is the amount patients—including those who are insured—pay out of pocket for care, Noam Levey reports for the Los Angeles Times.

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    Why the US health care system is costlier than others

    Jonathan Cylus, a former economist at HHS who currently is examining patient costs internationally at the World Health Organization (WHO) and European Observatory in London, said, "The United States likes to see itself on par with other high-income countries. The truth is, it's a real outlier."

    According to Levey, often when people compare U.S. health care spending with those of other countries the debate focuses on the question of whether the coverage is public or private. But Levey suggests that the key difference between the United States and countries like Britain and Canada, where patients have access to government health plans, and Germany and the Netherlands, where patients have private health insurance, is how they regulate out-of-pocket costs. Those other health systems, Levey writes, strictly limit out-of-pocket costs, while in the United States, the Affordable Care Act (ACA) set much higher thresholds.

    Thomas Rice, a University of California-Los Angeles health economist who has examined global health insurance systems, said, "There isn't one system that works. Lots of different kinds of systems can protect patients from high costs."

    In the United Kingdom, for instance, the National Health Service (NHS) typically allows patients to receive care without a medical bill, and copayments for prescription drugs are capped at a price of about $12, regardless of the drug's price.

    In Germany, where patients enroll in private health plans, patients pay no costs for physician visits and their medication copays are capped at about $11. In Australia, Canada, and other countries, similar models exist for provider care and medications.

    In comparison, in the United States, health insurers can require patients who enroll in individual health plans to pay up to $7,900 in out-of-pocket costs before their care is covered in full. That rate is set to rise for 2020 coverage.

    According to Levey, many other countries also strictly regulate the cost of insurance. For instance, Australia, Britain, and Canada finance basic health insurance through taxes and do not charge premiums. In Germany and Japan, premiums are lower because they are based on a percentage of workers' wages.

    The result, according to Levey, is that tens of millions of insured Americans must make tradeoffs to balance their medical expenses with their other living costs—which would be "largely unthinkable for patients in Western Europe, Japan, and Australia."

    For instance, a nationwide survey conducted by the Times and the Kaiser Family Foundation (KFF) found one in six Americans with employer-sponsored health coverage had to make a sacrifice in the past year—including working extra hours or reducing their spending on food, clothes, or other essentials—to cover their health care costs.

    By contrast, a recent WHO analysis found fewer than one in 35 households in France, Germany, Great Britain, Ireland, Japan, and Sweden encounter medical bills that would affect their financial stability, Levey reports. In the Netherlands, it is one in 90.

    What lower health care costs have meant for other countries

    While other countries' cost-control efforts have led to lower health care costs than are seen in the United States, they have had to make tradeoffs, too.

    For example, hospitals in Britain sometimes are overcrowded and in need of renovations. Meanwhile, patients in Canada often experience long wait times for care. A recent survey by the Commonwealth Fund found 18% of Canadian patients said they waited four months or longer to receive an elective nonemergency surgery, compared with 4% of U.S. patients.

    According to Levey, there also is evidence the U.S. health care system provides patients with better care. For instance, data shows American patients are less likely to die after they have been hospitalized following a heart attack when compared to patients from most high-income countries.

    But, according to Levey, "Beyond better health outcomes, residents of most other wealthy countries simply enjoy more peace of mind" knowing their health care costs are capped (Owens, "Vitals," Axios, 9/13; Levey, Los Angeles Times, 9/12).

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