U.S. health care still lags on affordability

By Jack Bernard

Many years ago, I had lunch with Dr. Uwe Reinhardt, a distinguished health care economist, who was a speaker at a national conference for hospital CEOs put on by the organization employing me.

In a good-humored way, he made clear to me that the United States did not have the best health care in the world, no matter what our politicians liked to say.

Obviously, the troubled situation of our health care system start did not start with the Covid-19 pandemic, as extraordinary an upheaval as that was. Pre-Covid, there were numerous excellent studies and reports regarding the excessive costs plaguing the U.S. system.


A Journal of the American Medical Association (JAMA) article, written before the pandemic, said the U.S. “spent approximately twice as much as other high-income countries on medical care, yet utilization rates in the United States were largely similar to those in other nations.”

The article also said that administrative costs were a major factor. In addition, U.S. prices were significantly higher for medical devices and goods, labor, and pharmaceuticals

Just how bad off are we in spending compared to the other 10 wealthiest nations? For example, we were spending 18% of our GDP on health care versus 10% in Australia in 2016. And virtually everyone in Australia has health coverage, while in our country — even more than a decade after passage of the Affordable Care Act — there are still 28 million uninsured, or about 9% of the population.

Further, our life expectancy was the worst among the 11 nations studied, while our mortality rate for infants was also the worst.

Another article written last year found the same cost problems (https://jamanetwork.com/journals/jama/fullarticle/2785479). Insurance, billing, coding and physician administrative costs were all cited as key factors. If there were standardization in billing and claims forms, for example, much of this waste could be cut. Also, EMR (electronic medical records) standardization would improve patient care, as well as lowering costs.

A 2019 report by colleagues of Reinhardt (https://www.healthaffairs.org/doi/10.1377/hlthaff.2018.05144 ) used international data to show that higher prices are the driver behind the U.S. being so much more expensive than other developed nations. It went on to say that we have fewer physicians, nurses and hospital beds per capita. We just pay more.

Another report stated similar findings regarding the performance of our system, which spends excessively, versus other high-income countries (https://www.commonwealthfund.org/publications/fund-reports/2021/aug/mirror-mirror-2021-reflecting-poorly).  The U.S. ranked last while Norway, the Netherlands and Australia were ranked the best. There were four areas where we were found to be deficient. Specifically, we were found to have poor access to care; inequitable primary care; high administrative costs; and inadequate social services.

A 2019 report also looked at the cost problem in detail (https://www.americanprogress.org/article/excess-administrative-costs-burden-u-s-health-care-system/ ), citing “unnecessary administrative complexity.”

Again, the study cites health insurance inefficiencies (claims submission, reconciliation, processing) and marketing overhead as important factors. It refers to a 1999 study showing that 31% of health care expenditures were going toward administrative costs, a much higher percentage than in other nations. The report also refers to a 2010 National Academy of Medicine study, which determined that 50% of provider costs and 66% of private insurer costs were “excess.”

If we can reduce health care costs, lowering Medicare, Medicaid and VA expenditures, the federal and state governments will have more money to spend on other priorities, such as education, clean energy and infrastructure. In turn, individuals Americans will wind up with more money, which they can use to improve their lives as they see fit.

Standardization is an established fact in other developed nations, making their health care financing and delivery more effective than in the United States. Standardization can be accomplished here, if we make a sincere, objective, bipartisan effort to change our current inefficient system.

Jack Bernard, former Georgia Director of Health Planning, is a retired senior vice president with a national health care corporation and a Fayette County Board of Health member.