Health Care Expenditures in the United States and Other Countries, Part 2

Flashcards covering key concepts related to health care expenditures in the United States and comparisons with other countries, persistent spending growth, administrative costs, and the role of technology and insurance.

What is the purpose of the premium paid to a private health insurer?

To receive medical coverage regardless of whether the person receives any medical care.

What are common forms of patient cost-sharing in U.S. private health insurance?

Deductibles (e.g., first $1,000 of medical care) and co-payments ($20 per visit).

How is the Medical Care Ratio (or Medical Loss Ratio) for a health insurer calculated?

Enrollees' Medical Expenses divided by Premium Revenue.

According to experts, what are the four main factors that converge to cause persistent growth in U.S. health care spending?

Technology/Innovation, Health Insurance Expansion, Fee-for-service Reimbursement, and Cost Sharing.

How does 'fee-for-service reimbursement' contribute to persistent growth in U.S. health care spending?

Physicians and hospitals are paid to provide services rather than produce health, incentivizing them to adopt new medical technologies and perform more procedures.

How does limited patient cost-sharing at the point of care contribute to persistent growth in U.S. health care spending?

Patients do not face the full price of medical care, making them more willing to use new, often expensive, medical technologies.

What trend has been observed regarding the importance of Medicare and Medicaid in paying for medical technology since the early 1960s?

Medicare and Medicaid have become increasingly important, signifying a growing role of public insurance programs.

What is identified as the largest proportional cause of growth in real per capita medical spending in the U.S. between 1970-2019?

Technology (specifically new drugs, procedures, devices, and increased "intensity" of care), accounting for 38%.

What are the two key questions to consider when determining if the U.S. is spending 'too much' on medical care?

1) What are the benefits/gains from current spending? 2) What is the U.S. giving up by allocating so much money to medical care (opportunity cost)?

What is the recommended approach to address concerns about U.S. health care spending, according to Baicker and Chandra (2020)?

Redirect medical spending to high-value care and direct innovation toward high-value care, making it accessible to all, rather than simply reducing overall spending.

What trend has been observed in the average annual real growth rate in National Health Expenditures (NHE) per capita over the last three decades (1990-2023)?

The growth rate has slowed down substantially, from over 5% in earlier decades to 1.8% in 2010-2023.

What are three possible explanations for the recent slowdown in the growth of U.S. health care spending?

A change in technology's role (e.g., cost-saving tech), value-based care initiatives (e.g., ACA 2010), and the rise of Medicare Advantage plans.

How does U.S. health care spending as a percentage of GDP compare to other high-income countries like France, Germany, and Canada?

The U.S. spends a significantly higher percentage of its GDP (16.5% in 2023) compared to these countries (e.g., France 11.9%, Germany 11.8%, Canada 11.2%).

What is the simple accounting formula for medical spending, breaking it down into its core components?

Medical Spending = (Quantity of Medical Care * Price) + Administrative costs.

Despite a high obesity rate, how might the U.S. compare in terms of quantity of health care services needed/used, relative to other high-income countries, based on other demographics and health behaviors?

The U.S. has a relatively lower percentage of population over 65 and comparable smoking rates, which might reduce health care costs compared to some peers if not for other factors.

How does the U.S. compare to other OECD countries in terms of the number of hospital admissions, physician office visits, and prescription drugs per capita?

The U.S. has a relatively low number of hospital admissions, physician office visits, and prescription drugs per capita.

Why is overall medical spending in the U.S. so high compared to other developed countries, despite lower quantities of care?

The U.S. has much higher prices per unit of care, including hospital spending per discharge, greater use of expensive technologies, and higher physician fees.

How do the earnings of physicians and nurses in the U.S. compare to those in other high-income countries?

Physicians and nurses in the U.S. earn significantly more than their counterparts in countries like Canada, France, Germany, and the UK.

How do drug prices in the U.S. compare to those in peer countries?

Drug prices in the U.S. are much higher than in peer countries.

What is a key contributor to higher administrative costs in the U.S. health care system compared to countries like Canada or the UK?

The presence of multiple health insurers in the U.S. creates greater complexity and higher administrative burdens.

What are the top two components that contribute most significantly to the U.S.'s excess health spending, according to a recent analysis?

U.S. administrative costs of insurance (~15% of excess spending) and providers spending more on administrative activities (~15% of excess spending).

What are the four primary reasons summarized for why U.S. health care is more expensive than in other countries?

High U.S. Prices (per care unit), Multiple Insurers (creating complexity/administrative costs), greater Ability to Pay (higher GDP per capita), and Limited Rationing (more use of expensive medical technology).