US Gets Less for Its Healthcare Buck Than Other Nations

From Medscape Medical News

Robert Lowes

August 11, 2011 — Despite outspending 18 other developed nations on healthcare as a percentage of gross domestic product (GDP) in 2005, the United States posted the highest mortality rate among its peers, according to a study published online last month in the Journal of the Royal Society of Medicine Short Reports.
Although the United States reduced its mortality rate from 1979 to 2005, 15 of the other developed countries, including the United Kingdom, did the same thing at a faster clip.
In short, the American healthcare system is one of the least cost-effective, whereas the system in the United Kingdom is the second most cost-effective, doing more with less, write Colin Pritchard, PhD, a professor of psychiatric social work at Bournemouth University in Bournemouth, United Kingdom; and Mark Wallace, BSc, who teaches economics, politics, and philosophy at the Latymer School in London.
Pritchard and Wallace paid particular attention to the United Kingdom's performance because they conducted their study in response to frequent references to the "apparent failings" of the National Health Service during the ongoing healthcare reform debate in the United States.
 The other countries in the study are Austria, Australia, Canada, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, and Switzerland.

In 1980, public and private healthcare expenditures in the United States as a percent of GDP amounted to 8.8%, ranking it second behind Sweden at 9%. By 2005, the United States had vaulted to first place with 15.3%, Switzerland placing a distant second at 11.6%.
The United States also ranked number 1 in average GDP healthcare expenditures — 12.2% — during the entire 25-year time frame.
The authors extrapolated mortality rates per million (PM) from data compiled by the World Health Organization for 2 time frames — 1979 to 1981, and 2003 to 2005 — with separate rates for individuals aged 15 to 74 years, 15 to 34 years, 35 to 54 years, and 55 to 74 years.
The mortality rate in the United States for the comprehensive 15- to 74-year-old age group decreased from 9158 deaths PM to 6660 PM, or by 27% during the roughly quarter-century span, but the nation nevertheless posted the highest mortality rate in 2005 among the 19 developed nations.
All but Portugal, Spain, and Switzerland saw their mortality rate decrease at a slower pace.
The United Kingdom had the fifth highest mortality rate — 5471 PM.
Likewise, the United States topped the mortality-rate list for the 55- to 74-year-old age groups, whereas the United Kingdom came in at number 6.
 
Too Many Guns in the United States?
The authors calculated a cost-effectiveness ratio for each country by dividing the level of reduced mortality rates — in the case of the United States, 9158 PM minus 6660 PM or 2498 PM — by average GDP healthcare spending from 1980 to 2005. According to this measure, the United States ranked third from the bottom for the 15- to 74-year-old age group with a ratio of 1:205 vs 1:557 for the United Kingdom, which ranked second behind Ireland. The same pecking order for the 3 countries held true in the 55- to 74-year-old age group.
Several characteristics of the United States might help explain the country's high mortality rate among the 19 nations, according to Pritchard and Wallace. They point to the country's "considerable variation" on a range of socioeconomic and health factors, especially regarding ethnic groups. In addition, the availability of firearms here "impacts upon mortality rates such as homicide and suicide, far more than any other Western country."
The authors attempt to answer the question of why the United States performs so poorly on healthcare cost-effectiveness when the market forces of a largely private healthcare system are assumed to foster efficiency. The US system, Pritchard and Wallace write, has "inherent market failures" such as adverse selection, in which individuals with greater health risks are more likely to obtain coverage from private insurers than individuals with lesser risks, driving premiums upward and discouraging the "better bets" from getting coverage in the first place. Another market failure stems from private insurers charging everyone higher premiums to hedge against "a few individuals that require unexpectedly very expensive medical treatment."
Nations with mostly public healthcare systems, such as the United Kingdom, avoid these pitfalls, according to the authors.
The study authors have disclosed no relevant financial relationships.
 
J R Soc Med Sh Rep. 2011;2:60. Full text