Why U.S. spends 17% of GDP on health care

A comparison of health costs between Europe, Canada and the U.S. by Sue Davis, chair of the political science department at Denison University, Granville, Ohio, surfaced a major insight on why other countries spend far less on care as a percentage of GDP than America.

A fan of the universal coverage in the other four countries, she recently pointed out before a reunion audience that they enjoy more longevity and a high level of citizen satisfaction with their health care systems.

But the factor that caught my eye in her presentation was that Germany, France, the United Kingdom and Canada all rely on primary care teams as the major vehicle for delivering health care. Bingo!

We have learned in recent years that the U.S. health care system – more accurately described as a non-system or dysfunctional system on the economic side – is upside down. It relies mainly on care by expensive specialists, the only country in the world to do so.

Back 40 years ago, when the U.S. relied primarily on primary care doctors, our costs were not as far out of line. Now we spend 17.6% of the nation’s GDP on health care versus 10% or less for other advanced countries.

Back then, doctors delivered medicine in a holistic way for families and had a direct economic tie to their patients, even receiving bartered payments in chickens and cheese.

Corporations in America are returning to the good old days. There is stampede toward on-site primary care clinics. And that brand of proactive primary care has been reducing costs by as much as one-third.

That is an audited reduction at QuadMed, the on-site division of QuadGraphics, the nation’s second largest printer. It is now also supplies on-site clinics for MillerCoors, Northwestern Mutual Life, Briggs&Stratton and Kohler. The same trend is happening at other large corporations. QuadMed has a long waiting list for putting in new clinics.

It works so well because these corporations are 1. Regaining control of the front end of the health care supply chain and 2. Getting serious about managing chronic diseases, which account for 80% of the country’s health care bill.

As she made what amounted to a case for universal coverage, Professor Davis cited other factors in those countries that separate them from American medicine:

• Low administration costs of less than 5%, versus Davis’ number of 30% in the states. Some studies put the U.S. at 7%.
• Virtually no costs for malpractice or defensive medicine. Our litigious culture breeds one or two added points of cost.
• Heavy emphasis on preventive care in the four countries, versus a curative approach in U.S. Here, the big systems fix you after you are broken.
• Transparent prices in all four countries. Our incomprehensible pricing is done in a fog.
• Digital medical records in place, along with smart cards for personal health records. We have only partial implementation.

The Davis comparative analysis should be deepened and sharpened. She is onto something. Real reform of the cost structure of health care in the U. S. has to start at the bottom.

We need to pay primary care doctors more. We need to forgive student debts for new doctors who go into primary care, since only a small minority is going there now.

And we need to get back to office visits of 30 to 45 minutes, where the whole patient is treated, and eliminate the visits of 6 to 8 minutes in the big corporations that serve only as a gateway to the steeply priced specialist systems.

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