Cablayan LNHA, MHA

Healthcare Systems

Welcome to Erwin Cablayan’s Blog.

Germany vs. United States – A Health Care Cost Analysis

July 14, 2014Erwin Cablayan0 Comments

“Whether measured relative to its population or its economy, the United States spends by far the most in the world on health care”, states Mark Pearson, head of the Division on Health Policy at the Organization for Economic Co-operation and Development mentioned in an interview with PBS NewsHour, summing up the issue of American health care costs in comparison with other the costs of other countries around the world.

According to Organization for Economic Co-operation and Development (OECD) data released in 2012, the U.S. spends $8233 per year per person on health care. That’s a massive difference between the U.S. and runner-up Norway, which measures in at $5388, as shown in NewsHour’s graph. The graph shows that our contender, Germany, spends nearly half per person in health care at $4338.

However, according to Exberliner magazine, Germany’s health care system is in a difficult situation with rising costs as well due to having both a private and a public system, in the editor’s opinion, who states “Inefficiency is as big a problem as injustice. Keeping Germany healthy is chronically expensive: this country has the fourth highest health expenses in the world and the compulsory individual fees, be they state or private, carry on rising faster than inflation.”

On the U.S. front, many explanations are offered. Harvard’s Dr. David Cutler’s recipe for high costs in the United States is administrative costs due to varying insurance systems, high pay for doctors, supplies, and pharmaceuticals, and patients receiving more medical care, as stated in an interview with NewsHour. He explains the additional coverage in the U.S. as compared to Canada: “Sometimes [Canadians] wait longer. What’s much more common is that there’s a lot of gray area where it’s not clear if you need the open heart surgery or not, and in the U.S., people will get it and in Canada, they don’t,” and goes on to explain that life expectancy is comparable between the two countries following a heart attack.

In an article written for Forbes, contributor Todd Hixon cites the issues of high rates of private payers for specialists, high Medicare and Medicaid pay rates, higher per capita income in the U.S., high referral rates for advanced care such as hospitalizations, CAT scans, and MRIs, administrative costs, and costs from the tort system. He concludes, “The data I found says the dominant problem with U.S. health care costs is a labor problem with medical professionals. Wages and work rules (i.e. referral decisions leading to over-utilization, staffing levels in hospitals) have driven costs to a level that is now unbearable.”

One main issue we in the health care field can focus on is the level of necessity for discretionary treatments such as surgeries and CAT scans. As we focus more on personalized care for the individual, I believe we can make better decisions and eliminate some of the excessive costs for care which, in turn, drive up insurance rates. This just gets to the tip of the iceberg on costs and ramifications of different health care systems in the bigger picture beyond the short-term bottom line, but I’d love to hear your thoughts!