Healthcare costs in the U.S. might be of interest to many. The U.S. is an important non-European country for health economists and decision-analytic modelers because it is a large country in terms of its population size and an even larger market not just but also for health care services and goods. Also, much of not just basic but also translational research including HEOR comes out of the U.S. incl. the original idea for cost-effectiveness analysis. Regardless of whether you’re American or not, most people have pretty strong ideas about the U.S. Edvard de Bono, not the U2 singer but the originator of the term Lateral Thinking, famously said that the U.S. are not a country but an idea. This talk attempts to compare the United States’ health care expenditures and outcomes with others around the world; to highlight relevant recent controversies in the U.S. health policy debate related to costs; and to explore why U.S. care is so expensive (and what can be done about it).

1. Why Is Health Care in the
United States So Expensive?
Benjamin P. Geisler, M.D., M.P.H., F.A.C.P., M.R.C.P. (London), F.H.M.
Ph.D. Student

3. Objectives
1. To compare the United States’ health care expenditures and
outcomes with others around the world;
2. To highlight relevant recent controversies in the U.S. health
policy debate related to costs; and
3. To explore why U.S. care is so expensive and what can be
done about it
3/14/2024

4. 3/14/2024
U.S. Health Care System
In Comparison
Affordable Care Act of 2010 (“Obamacare”)
vs American Health Care Act (“Ryancare”/ ”Trumpcare”)
Why U.S. Care is so Expensive
Geographic Variation and Quality
Improvement/Patient Safety
Health Technology Assessment,
Cost-effectiveness Analysis, and
Cost-conscious Care
Conclusion

5. 3/14/2024
U.S. Health Care System
In Comparison
Affordable Care Act of 2010 (“Obamacare”)
vs American Health Care Act (“Ryancare”/ ”Trumpcare”)
Why U.S. Care is so Expensive
Geographic Variation and Quality
Improvement/Patient Safety
Health Technology Assessment,
Cost-effectiveness Analysis, and
Cost-conscious Care
Conclusion

6. U.S. Health Care Spending an Anomaly
3/14/2024
2019 Health Care Expenditures as Proportion of GDP
Source: WHO, Global Health Observatory (2022) – processed by Our World in Data

7. U.S. Health Care Spending an Anomaly
3/14/2024
2019 Health Care Expenditures as Proportion of GDP
Source: WHO, Global Health Observatory (2022) – processed by Our World in Data

8. U.S. Health Care Spending an Anomaly
3/14/2024
2019 Health Care Expenditures as Proportion of GDP
Source: WHO, Global Health Observatory (2022) – processed by Our World in Data

9. U.S. Health Care Spending an Anomaly
3/14/2024
2019 Health Care Expenditures as Proportion of GDP
Source: WHO, Global Health Observatory (2022) – processed by Our World in Data

10. U.S. Health Care Spending an Anomaly
3/14/2024
2019 Health Care Expenditures as Proportion of GDP
Source: WHO, Global Health Observatory (2022) – processed by Our World in Data

11. U.S. Health Care Spending an Anomaly
3/14/2024 Source: OECD 2015
0
5
10
15
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Percentage
of
Health
Expeenditured
by
GDP
Year
Australia
Canada
Germany
Japan
Luxembourg
Norway
Switzerland
United Kingdom
United States

12. U.S. Health Care Spending an Anomaly
3/14/2024 Source: OECD 2015
0
5
10
15
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Percentage
of
Health
Expeenditured
by
GDP
Year
Australia
Canada
Germany
Japan
Luxembourg
Norway
Switzerland
United Kingdom
United States

13. U.S. Health Care Spending an Anomaly
3/14/2024 Source: OECD 2015
0
5
10
15
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Percentage
of
Health
Expeenditured
by
GDP
Year
Australia
Canada
Germany
Japan
Luxembourg
Norway
Switzerland
United Kingdom
United States

14. 3/14/2024 Source: OECD 2015
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
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[CELLRANGE]
[CELLRANGE]
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
15,000 25,000 35,000 45,000 55,000 65,000 75,000 85,000 95,000 105,000
Total
health
expenditure
(USD,
current
prices,
current
PPPs)
GDP per capita (USD, current prices, current PPPs)

15. 3/14/2024 Source: OECD 2015
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
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1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
15,000 25,000 35,000 45,000 55,000 65,000 75,000 85,000 95,000 105,000
Total
health
expenditure
(USD,
current
prices,
current
PPPs)
GDP per capita (USD, current prices, current PPPs)

16. 3/14/2024 Source: OECD 2015
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
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[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
15,000 25,000 35,000 45,000 55,000 65,000 75,000 85,000 95,000 105,000
Total
health
expenditure
(USD,
current
prices,
current
PPPs)
GDP per capita (USD, current prices, current PPPs)

17. 3/14/2024 Source: OECD 2015
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
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[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
15,000 25,000 35,000 45,000 55,000 65,000 75,000 85,000 95,000 105,000
Total
health
expenditure
(USD,
current
prices,
current
PPPs)
GDP per capita (USD, current prices, current PPPs)
U.S. HC costs are 44%
higher than Norway’s
a despite slightly
lower GDP per capita

18. Proportion of Households’ HC Spend of Disposable
Income Exceeds GDP
3/14/2024 Source: Bureau of Economic Analysis 2017
0%
5%
10%
15%
20%
25%
30%
1930 1940 1950 1960 1970 1980 1990 2000 2010
Personal
Consumption
Expenditures
by
Function
Food
Housing
Clothing
Health Care

19. 3/14/2024

20. 3/14/2024

21. 3/14/2024 Himmelstein Am J Med 2009
Medical Bankruptcies

22. 3/14/2024
U.S. Health Care System
In Comparison
Affordable Care Act of 2010 (“Obamacare”)
vs American Health Care Act (“Ryancare”/ ”Trumpcare”)
Why U.S. Care is so Expensive
Geographic Variation and Quality
Improvement/Patient Safety
Health Technology Assessment,
Cost-effectiveness Analysis, and
Cost-conscious Care
Conclusion

23. 2007 CBO Projection: in 75yrs,
100% of the GDP will be HC Expenditures
3/14/2024 Congressional Budget Office 2007

24. Consequence: Federal Deficit Grows
3/14/2024 Source: Business Insider 2009

25. Patient Protection and Affordable Care Act of 2010
(“Obamacare”)
Goals
1. To increase health insurance quality and
affordability
2. To lower uninsurance rate
3. To reduce costs of health care
Provisions
• Guaranteed issue (≠pre-existing
conditions)
• Individual/business mandate
• Exchanges for non-employer-based
subsidized coverage
• Medicaid expansion; State waivers
• Accountable Care Organizations; bundled
payments
• Excise (“cadillac”) tax; medical devices tax
• Insurance standards
3/14/2024

26. Patient Protection and Affordable Care Act of 2010
(“Obamacare”)
Goals
1. To increase health insurance quality and
affordability
2. To lower uninsurance rate
3. To reduce costs of health care
Provisions
• Guaranteed issue (≠pre-existing
conditions)
• Individual/business mandate
• Exchanges for non-employer-based
subsidized coverage
• Medicaid expansion; State waivers
• Accountable Care Organizations; bundled
payments
• Excise (“cadillac”) tax; medical devices tax
• Insurance standards
3/14/2024
• Essential benefits incl. contracept-
tives, free preventive visits/services
• No lifetime caps for expenditures
• Prohibits discontinuation when sick
• Children can stay until age 26
• Coverage tiers; max out-of-pocket cap
• Admin cap 25%; risk management

27. Largest Drop of Uninsured Patients Since the
Inception of Medicare
3/14/2024
Source: Council of Economic Advisers 2015
,

28. Largest Drop of Uninsured Patients Since the
Inception of Medicare
3/14/2024
Source: Council of Economic Advisers 2015,
Congressional Budget Office 2016
“exchanges”: 12 mio.
(subsidized): 10 mio.
Medicaid expansion: 11 mio.
27 mio. (8-9%) remain
without insurance

29. Health Care Cost Curve Bent?
3/14/2024 Source: Gallup 2016

30. Health Care Cost Curve Bent?
3/14/2024
Source: Urban Institute 2016,
Centers for Medicare and Medicaid Services

31. Health Care Cost Curve Bent?
3/14/2024
Source: Kaiser Family Foundation,
based on Bureau of Labor Statistics data

32. Number of Insurers (in a Region)
NOT Associated with Lower Premiums
• Marginally positive relationship
between average monthly
premiums and number of insurers
per area (+$5.71 in monthly
premiums per additional insurer,
p<0.001, R2<0.01)
• Identical plans tend to be offered
with marginally higher premiums in
areas with more insurers (+$3.18 in
monthly premiums per additional
insurer, p=0.002, R2=0.97)
3/14/2024 Source: Cohen et al. F1000 Research 2015

33. Public Divided in Views of the ACA
3/14/2024 Source: Kaiser Family Foundation

34. Majority Wanted the Trump
Administration Make the ACA Work
3/14/2024 Source: Kaiser Family Foundation

35. American Health Care Act
(“Ryancare”/”Trumpcare”)
• Repeal mandates, health insurances standards, prevention and
public health
• Replace income-based tax credits with flat tax credits adjusted
for age, encourage health savings accounts
• Retain guaranteed coverage, non-discriminatory premiums,
children until 26, exchanges
• Convert Federal Medicaid funding to per-capita allotment with
growth limit; States make rules
3/14/2024

36. American Health Care Act
(“Ryancare”/”Trumpcare”)
• Repeal mandates, health insurances standards, prevention and
public health
• Replace income-based tax credits with flat tax credits adjusted
for age, encourage health savings accounts
• Retain guaranteed coverage, non-discriminatory premiums,
children until 26, exchanges
• Convert Federal Medicaid funding to per-capita allotment with
growth limit; States make rules
3/14/2024

37. 3/14/2024

38. 3/14/2024

39. Uninsured Rate Would Have Gone Up,
Federal Deficit Down
3/14/2024 Source: Congressional Budget Office

40. Exchange Premiums Expected to Rise Under
Obamacare.. Along w/ Subsidies
3/14/2024
Source: Kaiser Family Foundation,
Example: 40-year old with $30,000 income

41. Exchange Premiums Expected to Rise Under
Obamacare.. Along w/ Subsidies
3/14/2024 Source: Kaiser Family Foundation
60-year old, $100,000 income 20-year old, $20,000 income

42. Most Who Will Lose >$6K Government Assistance
Voted for Trump
3/14/2024
Sources: LA Times, Kaiser Family Foundation,
Associated Press, Alaska Division of Elections

43. 3/14/2024

44. What Ended Up Happening…
• Republicans gave up their formally efforts to repeal & replace the
ACA in a dedicated bill
• However,
– the individual & business mandates have been scrapped in the 2017/18 tax
bill for 2019 onwards
– operation of the Federal exchange frequently derailed
– cost-sharing reductions to health insurance companies are ended; this will
drive up costs of Obamacare insurances
– despite high popularity, the Trump administration is trying to abolish
coverage for the pre-existing conditions
– Medicaid expansion prevails mostly (where enacted)
3/14/2024

45. 3/14/2024
U.S. Health Care System
In Comparison
Affordable Care Act of 2010 (“Obamacare”)
vs American Health Care Act (“Ryancare”/ ”Trumpcare”)
Why U.S. Care is so Expensive
Geographic Variation and Quality
Improvement/Patient Safety
Health Technology Assessment,
Cost-effectiveness Analysis, and
Cost-conscious Care
Conclusion

46. Better Outcomes?
3/14/2024 Source: Ortiz-Ospina and Roser: OurWorldInData.org 2017
based on OECD and World Bank data

47. Better Outcomes?
3/14/2024 Sources: Ortiz-Ospina and Roser: OurWorldInData.org 2017
based on OECD and World Bank data; and CDC

48. Better Outcomes?
3/14/2024 Sources: Ortiz-Ospina and Roser: OurWorldInData.org 2017
based on OECD and World Bank data; and CDC

49. Better Outcomes?
3/14/2024 Sources: Ortiz-Ospina and Roser: OurWorldInData.org 2017
based on OECD and World Bank data; and CDC

50. Better Outcomes?
3/14/2024 Sources: Ortiz-Ospina and Roser: OurWorldInData.org 2017
based on OECD and World Bank data; and CDC

51. Better Outcomes?
3/14/2024 Sources: Ortiz-Ospina and Roser: OurWorldInData.org 2017
based on OECD and World Bank data; and CDC

52. Better Outcomes?
3/14/2024 Sources: Ortiz-Ospina and Roser: OurWorldInData.org 2017
based on OECD and World Bank data; and CDC

53. Better Outcomes?
3/14/2024 Source: Ortiz-Ospina and Roser: OurWorldInData.org 2017
based on OECD and World Bank data

54. Better Cancer Outcomes?
3/14/2024
Source: Chow et al. JAMA Health Forum 2022

55. Better Cancer Outcomes?
3/14/2024
Source: Allemani et al. Lancet 2018

56. Better Cancer Outcomes?
3/14/2024
Source: Allemani et al. Lancet 2018

57. Physician Density and Annual Visits?
3/14/2024 Source: OECD 2015

58. Number of Beds and Hospital Stays?
3/14/2024 Source: OECD 2015

59. Imaging?
Installed Imaging Imaging Exams
3/14/2024
Source: Commonwealth Fund International Health Policy
Survey 2017
0
20
40
60
80
100
120
CT MRI PET
0
50
100
150
200
250
300
350
400
CT MRI PET

60. Administrative Costs?
3/14/2024
Source: Securities and Exchange Commission, Medical
Group

61. 3/14/2024
Himmelstein et al. Health Affairs 2014 and
Centers for Medicare and Medicaid Services 2007
$-
$100
$200
$300
$400
$500
$600
$700
$800
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Central Admin
Hospital Admin
Expenditures per capita (2010 USD, PPP-adj)
7%
5%
3%
7%
14%
2%
1%
13%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Proportion of Administrative Costs
U.S. Canada

62. 3/14/2024
Administrative Costs?

63. Administrative Costs?
3/14/2024
Source: Securities and Exchange Commission, Medical
Group

64. Prescription Drugs?
3/14/2024
Source: Commonwealth Fund International Health Policy
Survey 2017

65. 3/14/2024
Kesselheimer, Avorn & Sarpatwari
JAMA 2016

66. 3/14/2024
Kesselheimer, Avorn & Sarpatwari
JAMA 2016

67. 3/14/2024
Kesselheimer, Avorn & Sarpatwari
JAMA 2016

68. 3/14/2024

69. Putting It All Together: The Commonwealth Fund’s Rankings
3/14/2024 Source: Commonwealth Fund 2021

70. Putting It All Together: The Commonwealth Fund’s Rankings
3/14/2024
Source: Commonwealth
Fund 2014

71. Putting It All Together: The Commonwealth Fund’s Rankings
3/14/2024 Source: Commonwealth Fund 2021

72. Putting It All Together: The Commonwealth Fund’s Rankings
3/14/2024 Source: Commonwealth Fund 2021

73. Putting It All Together: The Commonwealth Fund’s Rankings
3/14/2024 Source: Commonwealth Fund 2021

74. 3/14/2024
U.S. Health Care System
In Comparison
Affordable Care Act of 2010 (“Obamacare”)
vs American Health Care Act (“Ryancare”/ ”Trumpcare”)
Why U.S. Care is so Expensive
Cost Variation and Quality
Improvement/Patient Safety
Health Technology Assessment,
Cost-effectiveness Analysis, and
Cost-conscious Care
Conclusion

75. Who Spends the Money
and What is it Spent on?
3/14/2024 Source: Centers for Medicare and Medicaid Services

76. Concentration on High Spenders
Might Yield Best Results
3/14/2024
Source: Schoenman 2012
National Institute of Health Care Management

77. 3/14/2024 Berwick & Hackbarth JAMA 2012
21-47% of all HC spending “waste”
0
50
100
150
200
250
300
350
400
450

78. Geographic Variation and Spending/Outcomes
3/14/2024 Source: Dartmouth Atlas 2014

79. Geographic Variation and Spending/Outcomes
3/14/2024
Dartmouth Atlas 2006
Tsugawa et al. JAMA Int Med 2017

80. • New graduates from high-cost
regions spent 29% more
• Spending persisted after moving
to low-cost regions for years
– Trainees of high-cost region still
billed 7% more 8-15 years after
moving
– Differences disappeared only after
15 years
3/14/2024 Chen et al. JAMA 2014;31(22)2385-93

81. HC Quality Notoriously
Difficult to Measure
3/14/2024 Source: Institute of Medicine 1999 & 2001

82. HC Quality Notoriously
Difficult to Measure
3/14/2024 Source: Institute of Medicine 1999 & 2001
2.9-3.7% admissions -> DEATH
98,000/year, 5th most frequent cause of death?

83. HC Quality Notoriously
Difficult to Measure
3/14/2024 Source: Institute of Medicine 1999 & 2001
2.9-3.7% admissions -> DEATH
98,000/year, 5th most frequent cause of death?

84. HC Quality Notoriously
Difficult to Measure
3/14/2024 Source: Institute of Medicine 1999 & 2001

85. HC Quality Notoriously
Difficult to Measure
3/14/2024 Source: Institute of Medicine 1999 & 2001

86. HC Quality Notoriously
Difficult to Measure
Institute of Medicine (IOM) Domains
• Safe: Avoiding harm
• Effective: evidence-based, avoiding under- and
misuse
• Patient-centered: respectful of and responsive to
individual patient preferences, needs, and values;
patient values guide all clinical decisions
• Timely: reducing waits and sometimes harmful
delays for both those who receive and those who
give care
• Efficient: avoiding waste, incl. waste of
equipment, supplies, ideas, and energy
• Equitable: care does not vary in quality because
of personal characteristics such as gender,
ethnicity, geographic location, and
socioeconomic status
3/14/2024 Source: Institute of Medicine 1999 & 2001

87. HC Quality Notoriously
Difficult to Measure
Number of Quality Metrics by IOM Domain
0
200
400
600
800
1000
1200
1400
1600
1800
In use Pilot
What to Measure?
Example
Structure Critical care specialist 24/7?
Process Proportion of pts receiving
colonoscopy
Outcome Survival rate for heart attack
Patient
Experience
Treatment options explained in a way
easy to understand?
3/14/2024 Source: National Quality Measures Clearing House

88. HC Quality Notoriously
Difficult to Measure
Distributions of Stars on CMS’
Hospital Compare Website
0
10
20
30
40
Percent
0 1 2 3 4 5
stars
Hospital Rankings Incongruent
1. Mayo Clinic 
2. Cleveland Clinic 
3. Massachusetts General Hospital 
4. Johns Hopkins
5. UCLA 
6. NY-Presbyterian Columbia and Cornell 
7. UCSF Medical Center 
8. Northwestern 
9. U of Pennsylvania 
10. NYU Langone Medical Center 
11. Washington University 
12. U Pittsburgh 
13. Brigham and Women's 
14. Stanford 
15. Mount Sinai Hospital 
16. Duke 
17. Cedars-Sinai 
18. U of Michigan 
19. Houston Methodist 
20. U of Colorado 
3/14/2024
Source: Centers for Medicare and Medicaid Services,
US News & World Report

89. 3/14/2024
U.S. Health Care System
In Comparison
Affordable Care Act of 2010 (“Obamacare”)
vs American Health Care Act (“Ryancare”/ ”Trumpcare”)
Why U.S. Care is so Expensive
Geographic Variation and Quality
Improvement/Patient Safety
Health Technology Assessment,
Cost-effectiveness Analysis, and
Cost-conscious Care
Conclusion

90. 3/14/2024
Neumann et al. Value Health 2005 and
Elsevier 2017 (unpublished)
0
50
100
150
200
250
300
Value in Health First author's Country 2012-17

91. Cost-effectiveness Analysis
“Under the Radar”
• Published CEAs a “powerful focal
point for debate”
• Decision-makers (are) engaged at
“arm’s length”
– Via clinical guidelines, at which
ages/frequencies
– CMS indirectly uses CEA
– Private payors run tech assessment
centers
– USPSTF found it “useful”
3/14/2024 Neumann 2005

92. Cost-conscious Care: Choosing Wisely
3/14/2024 Source: Choosing Wisely

93. Cost-conscious Care: Choosing Wisely
3/14/2024 Source: Choosing Wisely

94. 3/14/2024
U.S. Health Care System
In Comparison
Affordable Care Act of 2010 (“Obamacare”)
vs American Health Care Act (“Ryancare”/ ”Trumpcare”)
Why U.S. Care is so Expensive
Geographic Variation and Quality
Improvement/Patient Safety
Health Technology Assessment,
Cost-effectiveness Analysis, and
Cost-conscious Care
Conclusion

95. Conclusions (i)
• U.S. health care spending – compared to other countries – is
an anomaly
– Not explained by higher GDP, insurance rate, better outcomes
– Explained by higher prices, admin burden, overuse
• Affordable Care Act (ACA, “Obamacare”) attempted to address
costs and quality problems (which are linked) comprehensively,
focusing on access to insurance
– Even under a new Trump administration, it is unlikely that the ACA
will be repealed
3/14/2024

96. Conclusions (ii)
• Approaches to solutions include
– Generally quality improvement to increase effectiveness/efficiency, in
particular “cost-conscious care” endeavors such as Choosing Wisely
– Concentration on hospitalizations and high spenders
– Explicit HTA/CEA use currently politically not feasible
3/14/2024