U.S. Healthcare: Why It Costs So Much

U.S. healthcare costs are the highest in the world, it is disclosed, largely because it doesn’t properly address the problem of chronic disease.

American healthcare costs are the highest in the world. “Adjusting for inflation and purchasing power parity, total per capita health expenditures in the U.S. averaged $356 in 1970, $1,091 in 1980, $2,810 in 1990, $4,703 in 2000, and $7,538 in 2008. The next closest nation, Switzerland, averaged $344 in 1970, $1,013 in 1980, $2,028 in 1990, $3,221 in 2000, and $4,627 in 2008.” Health care costs in other European countries exhibit “similar trajectories to that of Switzerland.” What accounts for U.S. healthcare costs being the highest in the world?

According to Carl F. Ameringer, Professor of Government and Public Affairs at Virginia Commonwealth University, the blame reposes on the inability of the U.S. healthcare system to properly address chronic disease. Chronic disease is disease “often defined as lasting more than three months.” Examples include “cancers, diabetes, hypertension, stroke, heart disease, asthma, and mental disorders.” In 2004, about 133 million people (44 percent of the U.S. population) “experienced at least one chronic condition.” This number is expected to rise to 171 million by 2030. Worse, as they get older, more of those people are expected to suffer from multiple chronic conditions. “Indeed, about two-thirds of those older than age 64 are afflicted with two or more chronic illnesses.” Chronic disease in Europe, by contrast, is “substantially lower.”

So what explains the lower health care costs of and the lower incidence of chronic disease in Europe? The reason, according to Ameringer, is the preponderance of primary care physicians (PCPs) in Europe who experts agree “are better than specialists at managing people with chronic conditions.” By contrast, specialists predominate in the U.S. To see how this increases healthcare costs, consider that a Medicare patient with only one chronic condition consults annually, research reveals, with an average of four physicians. Those “with five or more chronic conditions average 14 different physicians.” Worse, this latter case is the rule rather than the exception: “the vast majority of Medicare’s annual expenditures, upwards of 76 percent, go toward patients with five or more chronic conditions.”

So why this preponderance of specialists rather than PCPs in the U.S. The reason, according to Ameringer, has to do with the following: predisposition “by medical school training”; hospital and insurer “demand” for “board certification”; and insurer “payment practices.”

The last deserves elaboration. Insurers pay PCPs less because  the services they discharge “for treating, managing, monitoring, and coordinating care for patients with chronic diseases” are less easy to define and itemize (because these services have to do with intangibles and imponderables, including the judgment, experience, and commitment of the physician) and to therefore assign a dollar value to. Further, the dollar assignments are done by a committee dominated by specialists! By contrast, the services discharged by specialists (e.g. ordering a test, performing a specific medical procedure or intervention) are, because they are less subtle and therefore easier to itemize, assigned top dollar by the specialist-dominated committee charged with the task.

It might therefore be said that it is the intolerance of the U.S. healthcare system for the subtleties and interlocking complexities of cumulative effect, over time, that constitute chronic disease (which require similarly subtle and complex engagement, over time) and its preference for the relative and immediate life-and-death simplicities of acute disease (because it lends itself to easy monetization) that is largely responsible for soaring U.S. healthcare costs. Further, since the U.S. healthcare system doesn’t exist in a vacuum, this same intolerance for complex , subtle effect, over time, might be extended to U.S. culture in general: Don’t Americans have a maxim that goes: “If it ain’t broke, don’t fix it.”

(Reference: Ameringer, Carl F. 2012. “Chronic Diseases and the High Price of U.S. Healthcare.” Phi Kappa Phi Forum. Spring, Vol. 92, No. 1, pp. 4-6.)

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