US spends most on healthcare for worst results; and why Walmart is latest argument for single-payer universal healthcare

1. US leads the league in healthcare spending -- by Stuart Qualtrough

The United States continues to spend significantly more on health care than any country in the world. In 2002, Americans spent 53% per capita more than the next highest country, Switzerland, and 140% above the median industrialised country, according to new research from the Johns Hopkins Bloomberg School of Public Health.

The study authors analysed whether two possible reasons — supply constraints and malpractice litigation — could explain the difference in health care costs. They found that neither factor accounted for a large portion of the US spending differential.

“It is commonly believed that waiting lists in other countries and malpractice litigation in the United States are major reasons why the United States spends so much more on health care than other countries. We found that they only explain a small part of the difference,” said Gerard Anderson, PhD, lead author of the study and a professor in the Bloomberg School of Public Health’s Department of Health Policy and Management.

The study authors reviewed health care spending data on 30 countries from the Organization for Economic Cooperation and Development (OECD) for the year 2002. US citizens spent US $5,267 per capita on health care. The country with the next highest per capita expenditure, Switzerland, spent $3,446 per capita. The median OECD country spent $2,193 per capita.

One of the commonly cited reasons why US citizens spend more on health care than other countries is that these other countries have waiting lists, especially for elective surgery. The procedures with waiting lists in these other countries, however, represent only 3% of spending and therefore cannot explain much of the cost differential.

Another perceived cause of higher health care costs in the United States is that malpractice suits increase the prices charged by doctors and cause them to practice defensive medicine, which occurs when doctors order extra tests or procedures to reduce their risk of being sued. The researchers compared the number of malpractice claims and awards in the United States, Canada, Australia and the United Kingdom and found that while US citizens sue more often, the actual settlements from all four countries were comparable.

According to the study authors, defensive medicine probably contributes more to higher health spending than malpractice premiums, but determining which tests and second opinions should be defined as defensive medicine is less clear. The highest estimate for costs of defensive medicine in the United States is only 9% and many experts believe this number is too high.

“We can’t blame the United States’ higher health care costs on limiting procedures in other countries or the elevated number of law suits filed in the United States,” said Peter S. Hussey, PhD, co-author of the study and a recent graduate of the Bloomberg School of Public Health’s Department of Health Policy and Management.

“As in previous years, it comes back to the fact that we are paying much higher prices for health care goods and services in the United States. Paying more is okay if our outcomes were better than other countries. But we are paying more for comparable outcomes,” said Anderson, who is also the director of the Johns Hopkins Centre for Hospital Finance and Management.


2. NY Times editorial: Inside Wal-Mart, a Larger Debate

After a peek behind the curtain at Wal-Mart, the world's largest retailer, one thing is certain: the company is listening to its critics. Predictably, management's responses are about window dressing as much as substantive change, but there is still a lot we can learn from them.

The week began with a series of unusual announcements from Wal-Mart: it called on Congress to raise the minimum wage and announced that it would expand health care access for hourly workers and improve its environmental record. But the wary applause has died down. An article in The Times on Wednesday described an internal memo sent to the company's board about plans to hold down the cost of benefits.

The 26-page memo (PDF) is required reading for all legislators, business people and advocates for change in the country's health and retirement systems. Prepared by the company's executive vice president for benefits with the help of McKinsey & Company for the Wal-Mart board, this memo injects much-needed honesty into the national debate over health care and retirement.

At times it can make for difficult reading. It confirms that 46 percent of the children of Wal-Mart's employees are uninsured or on Medicaid. In their drive for a healthier and therefore cheaper work force, the drafters recommend adding physical activity, like rounding up shopping carts, for all employees, simply to discourage the weak and the sick from seeking jobs there. But it can also be surprisingly forward-thinking. The internal analysis raises the prospect of increasing discounts on healthy foods to cut down on obesity among workers and putting health clinics into stores.

The changes in the Wal-Mart health plan announced on Monday would allow an employee to see a doctor three times a year for a $20 co-payment per visit and to receive three generic prescription drugs for $10 each before hitting the high deductibles that many employees cannot afford. While that may be cold comfort for those with chronic or serious illnesses, it could help encourage checkups and preventive care. We cannot blindly throw out the good along with the bad as we sift through the retailer's dirty laundry.

As a publicly traded company, Wal-Mart has no incentive to spend additional money on employee benefits. Investors have hammered its share price over the last year because of rising costs. Wal-Mart's approach is a symptom of economic forces: cold, logical conclusions based on the set of rules society has given the company to play by. Wal-Mart is a mirror image of the health care triage affecting all Americans. It isn't pretty, but we have to look.