Healthcare Business News
George Halvorson, chairman and CEO of Kaiser Permanente

Health costs significantly higher in U.S., report finds

By Melanie Evans
Posted: March 26, 2013 - 3:00 pm ET

Private insurers in the U.S. last year paid significantly more—up to 26 times as much in one case—for common procedures, hospital and doctor visits and prescriptions when compared with private and public insurers in 10 other countries, a report shows.

The report, by the International Federation of Health Plans (PDF), did find a few instances where average prices paid in other countries mostly matched those of the U.S., but such occurrences were rare. Instead, U.S. private insurance prices widely exceeded those of other countries.

“It means, to us, that apparently the difference in the cost of healthcare is not so much about utilization,” said Tom Sackville, CEO of the IFHP. “They seem to be more about the actual unit cost of items of care.”

Health spending in the U.S. easily exceeds that of other countries and has for years, as measured by healthcare costs as a percentage of gross domestic product for countries in the Organization of Economic Cooperation and Development. Health spending totaled 17.6% of the U.S. GDP compared with 11.6% in France, the next-closest country, for 2010, the most recent year available.

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One day in the hospital cost U.S. private insurers $4,287, on average, compared with $1,472 for private Australian insurers—the next closest country in price. Meanwhile, public and private insurers in Argentina paid $429 a day, and a private insurer in Spain paid $476.

The report also offered a snapshot of the wide variation of prices in the U.S. by including prices at the 25th and 95th percentiles for specific goods and services. A day in a U.S. hospital totaled $1,514 at the 25th percentile and $12,537 at the 95th percentile.

“The U.S. prices, we have a very wide range and the range is stunning,” said George Halvorson, chairman and CEO of Kaiser Permanente, and a member of the International Federation of Health Plans' board.

Halvorson said too few Americans know of the price variation inside and outside the U.S. Health plans in the U.S. largely shield patients from prices, he said. Without more awareness of the nation's widely fluctuating prices, efforts to address U.S. healthcare prices would be “confusing and annoying.”

David Auerbach, a RAND health economist, said the report called attention to a poorly understood but fundamental reason for the nation's rising healthcare costs. “We just don't know what prices are,” he said. “It's a big mystery to most people. It's not out on the public. You can't look up the price.”

Auerbach said the U.S. lacks a strong buyer, such as the government, or patients who comparison shop. Patients with insurance are buffered from prices, he noted. That could change somewhat as consumers who enter health insurance exchanges created by the 2010 health reform law shop on price for health plans, he said. Insurers who enter into contracts with lower-cost hospitals and doctors may be more competitive in the exchanges.

Physician fees for a routine office visit, on average, totaled $95 in the U.S. compared with $38 in Chile, the next closest country, and $10 in Argentina.

An angiogram cost $35 for the public sector insurer in Nova Scotia, Canada, the least costly price reported for the procedure. That's 26 times less than the $914 paid by U.S. private insurers.

The report for the first time included colonoscopies, one of the most common procedures and one identified by the Choosing Wisely campaign as a source of overuse in the U.S. Sackville said the prices included the cost of associated services.

It also included for the first time prices for hip prosthesis, knee replacements and four medications: Celebrex, Vytroin, Cymbalta and Nasonex.

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