Costs And Competition Around The World

PROLOGUE: The norm in international health system comparisonsis to recognize the achievements of technology in the UnitedStates but to focus on the unflattering gap between the extravaganceof the U.S. system and its relatively weak showing on many measuresof performance. Critics who advocate a stronger role for thepublic sector have feasted on these comparisons. But the followingreports from a sampling of industrialized countries with muchlower per capita health care costs than in the United Statesreveal discontent on all sides, and extensive experimentationwith market-oriented approaches to improving performance inother systems. At the same time, though, dissatisfaction withthe cost and quality of the U.S. system continues to increase,and reputable observers have begun to question how far marketforces can be relied upon to correct its defects.

While most of the differences in health spending can be explainedby overall wealth, several unique factors contribute to highU.S. spending, Uwe Reinhardt and colleagues find in the firstessay of this section. Fragmented financing arrangements "allocaterelatively greater market power to the supply side" and increaseprices above levels in other industrialized countries, theyexplain, and they suggest that practical rather than ideologicalreasons justify policies that concentrate purchasing power andoffset the unique market leverage of providers.

Government-imposed price controls and increased cost sharingallowed Japan to reduce health spending in 2002 for the firsttime in its history. But Naoki Ikegami and John Creighton Campbellreport that consumers and policymakers are dissatisfied withthe system’s efficiency and continue to debate marketideology and experiment with reforms, including prospectivepayment and insurance restructuring. Meanwhile, Britain’sNational Health Service (NHS) has apparently succeeded too wellin controlling cost growth, with per capita spending in 2000totaling just 40 percent of U.S. levels that year. The UnitedKingdom raised taxes in 2003 and embarked on a "catch-up" programthat will increase total health spending 43 percent over fiveyears, Simon Stevens reports.

In the Netherlands, the single-minded pursuit of a highly regulatedmarket system—managed competition—enters its fifteenthyear with continuing efforts to refine the Dutch risk-adjustmentmethodology, ably described by Wynand van de Ven and colleagues.In Germany, the system of state-sanctioned sickness funds hasnot escaped the woes of adverse selection that afflict privateinsurance elsewhere. Reinhard Busse describes how Germany hasattempted to reduce inequities in enrollees’ contributions.But these efforts have been only partially successful, and persistentcost increases have now driven the health system to experimentwith U.S. models of disease management for chronically ill patients.

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Costs And Competition Around The World