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Doctors on High Care Costs: We Didn't Do It

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So, why are U.S. health care costs so much higher than health care costs in Europe or in the rich countries in Asia?

Docors are trying to refute allegations that they might be the culprits.

Doctors, hospitals and others tend to blame the health insurance companies, but America’s Health Insurance Plans, Washington, points out that care is two or three times more expensive in the United States than in other rich countries, and that, for commercially insured people, health insurance administrative expenses account for less than 15% of the total. And some countries with much lower costs, such as the Netherlands and Switzerlands, also have large health insurance industries.

Some point to the cost of malpractice insurance, lawsuit judgments and defensive medicine, but the Congressional Budget Office has suggested that malpractice-related costs account for less than 2% of health spending, and that limiting malpractice awards and discouraging defensive medicine would cut costs by just 0.5%.

Miriam Laugesen and Sherry Glied, two Columbia University researchers, looked at costs in a paper published in September in Health Affairs, a health care finance and delivery journal, and concluded that high U.S. costs are due largely to high U.S. spending on physician services.

The researchers compared physicians’ fees paid by public and private payers for primary care office visits and for hip replacements in Australia, Canada, France, Germany, the United Kingdom and the United States.

The researchers also compared physicians’ incomes net of practice expenses, differences in financing the cost of medical education, and the relative contribution of payments per physician and of physician supply in the countries’ national spending on physician services.

Private payers paid 70% more for primary care office visits in the United States than in other countries and 120% for the orthopedic physician office visits, the researchers reported.

Now physicians are countering the Laugesen-Glied paper with letters to the editor.

Richard Lord Jr., a faculty member at the Wake Forest University medical school, notes in a letter that, even U.S. physicians worked for free, the care analyzed by Laugesen and Glied would have still cost twice as much in the United State as in the other countries included in the comparison paper.

“Laugesen and Glied did control for costs of education, but they did not account for the opportunity costs of the extra years of training required in the United States compared to the other countries,” Lord says. “The authors also did not control for relative pay of other professionals in these countries.”

Physicians in all countries have done well in school, and they must be compensated for giving up opEarthportunities to enter other fields, Lord says.

Daniel Berry of the American Academy of Orthopedic Surgeons, Rosemont, Ill., writes in another letter that physician fees account for only 12% of federal health care spending, and that the percentage of health care spending going to physicians has dropped over the past 10 years.

“For example, the Medicare payment for hip replacement surgery has decreased by 7% in nominal dollars and 32% in real dollars since 2000, while total Medicare expenditures have almost doubled in the same time period,” Berry says.

Getting true apples-to-apples comparisons is difficult because of differences in the ways physicians in different countries are paid, Berry says.

“For instance, a U.S. orthopedic surgeon’s fee for hip replacement surgery includes all day-of-surgery care, all in-hospital care, discharge management, and postoperative evaluation and care for up to 90 days,” Berry says. “Based on a review of the fee schedules, compensation for surgery performed by Canadian and Australian surgeons is limited to care provided in the hospital setting or to the day of the procedure.”


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