California State University Bakersfield Healthcare Prices Discussion

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please answer this question from the files attached:
Please answer the following questions in the “International Comparisons” Discussion Board.
Anderson, Reinhardt, Hussey, & Petrosyan: ( I attached the file) 

The U.S. spends more on healthcare than any other developed country. This means that healthcare PRICES in American healthcare MUST be higher.
Laugeson and Glied : ( I attached the file) 

We know that doctors are paid more in the U.S. than in the OECD. What do the authors find may explain this difference in physician pay?

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H E A L T H
S P E N D I N G
It’s The Prices, Stupid: Why
The United States Is So
Different From Other Countries
Higher health spending but lower use of health services adds up to
much higher prices in the United States than in any other OECD
country,
by Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey, and
Varduhl Petrosyan
PROLOGUE: In Fall 1986 Health Affairs published the first of nearly two decades’
worth of reports summarizing the state of health care spending in industrialized
countries that are members of the Organization for Economic Cooperation and
Development (OECD). In that first report, featuring 1984 data, the United States
led the way in per capita health care spending at $1,637, nearly double the OECD
mean of $871 (in purchasing power parities based on the U.S. dollar). In the latest
offering, featuring data from 2000, the situation is much the same, although the
absolute numbers are much higher (U.S. per capita spending of $4,631, compared
with an OECD median of $1,983).
Over the years the OECD has refined its methodology to improve the comparability of data from vastly different health care systems. The analysis published in
Health Affairs has greatly expanded from those early reports to examine underlying
trends in spending differentials and to examine what the different countries get
for their health care dollar in terms of population health indicators. In the current
report, the authors look in depth at factors contributing to higher health care
prices in the United States, which they contend are responsible for much of the
difference between the U.S. spending levels and those of the other countries.
Lead author Gerard Anderson has been on the faculty of the Johns Hopkins
University since 1983. He is a professor in the Department of Health Policy and
Management, Johns Hopkins Bloomberg School of Public Health, and serves as
that department’s associate chair. He holds a doctorate in public policy analysis
from the University of Pennsylvania. Uwe Reinhardt is the James Madison Professor of Political Economy at the Woodrow Wilson School, Princeton University.
He holds a doctorate in economics from Yale. Peter Hussey is a doctoral candidate
in the Department of Health Policy and Management. He serves as a consultant to
the OECD Social Pohcy Division/Health Policy Unit. Research assistant Varduhi
Petrosyan is also a doctoral candidate at Hopkins. She will become an assistant
professor at American University of Armenia in May 2003.
HEALTH AFFAIRS – Volume 21, Nufflfier 3
I N T E B N A T I O N A L
C O M P A R I S O N S
ABSTRACT: This paper uses the latest data from the Organization for Economic Cooperation and Development (OECD) to compare the heaith systems of the thirty member countries in 2000, Total health spending—the distribution of public and private health spending
in the OECD countries-Is presented and discussed, U.S, public spending as a percentage
of GDP {5,8 percent) is virtually identical to public spending in the United Kingdom, Italy,
and Japan (5,9 percent each) and not much smaller than in Canada (6,5 percent). The paper also compares pharmaceutical spending, health system capacity, and use of medicai
services. The data show that the United States spends more on health care than any other
country. However, on most measures of health sen/ices use, the United States is below the
OECD median. These facts suggest that the difference in spending is caused mostly by
higher prices for health care goods and services in the United States.
VERY YEAR the Organization for Economic Cooperation and Development
(OECD) publishes data that allow for comparisons of health systems across
thirty industrialized countries. Over the years Health Affairs has published
papers on a wide range of topics using these data.’ This paper, the latest installment in an annual series, uses the most recent OECD data to present a series of
snapshots of the health systems in the thirty OECD countries in 2000. Together
these snapshots show that the United States spends more on heaith care than any
of the other OECD countries spend, without providing more services than the
other countries do. This suggests that the difference in spending is mostly attributable to higher prices of goods and services. This same story is told in earlier,
more in-depth studies by other researchers, including Mark Pauly, Victor Fuchs
and James Hahn, and Pete Welch and colleagues.-^ Our paper updates these earlier
studies with more recent data and more countries.’ The story is particuiarly relevant given the recent increases in U.S. health care prices.
E
The Overall Spending Picture
Exhibit 1 presents selected data on total national health spending per capita in
2000, its average annual growth rate during 1990-2000, private health spending as
a percentage of total health spending in 2000, and the change in the percentage of
private health spending during 1990-2000. It also includes data on gross domestic
product (GDP) per capita, a rough indicator of a country’s ability to pay for health
care, and on the fraction of the population over age sixty-five, an important factor
influencing the demand for health care services. All of the data on per capita
spending and GDP have been translated into U.S. dollar equivalents, with exchange rates based on purchasing power parities (PPPs) of the national currencies. The annual growth rates, on the other hand, are calculated from data expressed in the 1995 constant-value units of each country’s own currency, adjusted
for general inflation using each nation’s GDP price deflators.
• Total heatth spending pe» capita. US. per capita health spending was $4,631
in 2000, an increase of 6.3 percent over 1999 (Exhibit I).*” The U.S. level was 44 percent higher than Switzerland’s, the country with the next-h^hest expenditure per
Mgy/June 2003
EXHIBIT 1
Heatth Spending In OECD Countries, 1990-2000
Total health spending,
2000
OWper
capita,
2000(US$
PPP)
Per capita
(USS PPP)
$26,497
26,864
26.049
27.963
14,236
$2,211
2,162
2.269
2.535
1,031
Denmark
Finland
29,050
25,078
Germany
Greece
Hungary
Iceland
Ireland
Italy
Japan
As percent
of GDP
Averagesnnual growth
rate, 1990-2000
GDP par
capHa
Health
spending
PMcsplta
Private health spending,
2000
Aspercent
Oftotel
health
spending
2.6
4.8
12,3%
5.5
1.7.0
2,6
L3.8
0.6
5.8
5.0
4.9
2A.9
44.5
2.2″
7,2
L6.4
L7.6
24,3
15.6
24.2
26,3
23,3
13,4=
2,2
-4.7
5.6
0.9
L4,6
1.7
1.3
,8.1
L7.2
7,4
4.1e
3.7
2.4
2,9
55.6
7,1’>
53,6
32.5
22,0
-7.8
D.2«
-5.6
-0,4
4.4
7.1
,4,4
4,7
,3.7
11.7
5.3*
5.3
28.9″
28.7
20,6*
-5.8
12.1
15.6
2,4
3,9
30,1
8,8
17,0
1,4
0.2
1,8
1,9
2,3
-0,046
2,5
6 IS
3.8
3.2
16,2*
44.4
28,1′
19,0
55.7
6, IE
13.8
-10.96
2.6
-4.7
17,4
L6,0
5,8
15,8
12.3
1.9
3,1
25.6
2.2
14.8
8,3%
8.0
8.7
9.1
7,2
2,4%
1,8
1,8
1,7
0.1
3,1%
3,1
3,5
1,8
3,9
27,6%
30.3
28.8
28,0
8,6
2,420
1,664
8,3
6,6
1,9
1,8
1.7
0,1
17.9
24.9
16.950
1.399
8.3
1.9
2,8
12,423
29,323
29,066
25,206
25,937
841
2,608
1.953
2,032
2,012
6,8
8,9
6.7
8,1
7,8
2.7=
1,6
6,4
1.4
1,1
2,0^
2.9
6.6
1,4
3.9
Korea
Luxembourg
Mexico
Netherlands
New Zealand
15.045
46,960
9,136
27,675
20,262
S93
2,701«
490
2,246
1.623
5.9
6.0«
5,4
8,1
8,0
5.1
4,5
1,6
2,3
1.5
Norway
Poland
Portugal
30.195
9.580
17,638
2.362
576″
1.441
7,8
6.2^airs (Winter 1988): 6-16; J.V Tu et aL, “Use of Cardiac Procedures and Outcomes in Elderly Patients with Myocardial Infarction in the United States and
Canada,” New Er^landjourvd ofMcdidnc (22 May 1997): 1500-1505; and C M . Bell et aL, “Shopping Around
for Hospital Services: A Comparison of the United States and Canada,” JtHjmalo/the American MedtcdAssodation 279, no, 13 (1998): 1015-1017
23. M. Walker and G. Wilson, Waitii^ Your Turn Hospital Waitir^ Dsts in Canada, llth ed., September 2001,
www.fraserinstitute.ca/shaied/readmore.aspfsNav-pb&id=206 (15 September 2(X)2).
24. Part of Canada’s expense is, of course, driven by its proximity to the even more expensi« U.S. maricet,
which functions as an implicit benchmark for Canada’s markets of health professionals.
25. A country’s GDP represents the market value of all goods a r d services produced wiriiin the country^
boundaries and traded in the marketplace. What if the providers of health care spend the money they receive on goods and services produced in other countries? These otlsr countries would thereby earn a
claim on die GDP of the providers’ country.
26. U.E. Reinhardt, “Resource Allocation in Health Care: The Allocation of Lifestyles M Providers,” MiJixmk
^mrtcdy 65, no, 2 (1987): 153-176.
27 Pauly,-US. Healdi Care Costs.”
28.
29.
30.
31.
Ibid
Fuchs and Hahn, “How Does Canada Do It?”
Welch et al,. “A Detailed Comparison.”
McKinsey Global Institute, Heairfi Care Productivity, Exhibit 5.
32.
33.
34.
35.
Ibid.
TH. Rice, T k Economics ofHcaldi Reconsidered (Chicago: Health Administration Press, 1998).
Fuchs and Hahn, “How Does Canada Do It?”
M.L. Katz and H.S. Rosen, Microeconomics (Homewood. IlL: Invin, 1991), 524-527.
36. Pauly, “U.S. Health Care Costs,” 155.
37. R.J. Blendon et aL, “Who Has the Best Health System? A Second Look,” Health Affairs (Winter 1995):
220-230; and R.J. Blendon, M. Kim, and J.M. Benson, “The Pubhc versus the World Health Organization
on Health System Performance.” Health y^oirs (May/June 2001): 10-24.
HEALTH AFFAIRS •
Dimensions Of The Problem
By Miriam J. Laugesen and Sherry A. Glied
Higher Fees Paid To US Physicians
Drive Higher Spending For
Physician Services Compared
To Other Countries
Miriam J. Laugesen (ml3111@
columbia.edu) is an assistant
professor of health policy and
management at the Mailman
School of Public Health,
Columbia University, in
New York City.
Higher health care prices in the United States are a key reason
that the nation’s health spending is so much higher than that of other
countries. Our study compared physicians’ fees paid by public and private
payers for primary care office visits and hip replacements in Australia,
Canada, France, Germany, the United Kingdom, and the United States.
We 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. Public and private
payers paid somewhat higher fees to US primary care physicians for office
visits (27 percent more for public, 70 percent more for private) and much
higher fees to orthopedic physicians for hip replacements (70 percent
more for public, 120 percent more for private) than public and private
payers paid these physicians’ counterparts in other countries. US primary
care and orthopedic physicians also earned higher incomes ($186,582 and
$442,450, respectively) than their foreign counterparts. We conclude that
the higher fees, rather than factors such as higher practice costs, volume
of services, or tuition expenses, were the main drivers of higher US
spending, particularly in orthopedics.
ABSTRACT
P
hysician spending per capita in the
United States is much higher than
in other countries. In 2008 per capita spending on physician services
in the United States was $1,599
(Exhibit 1), while per person spending for these
services across all other Organization for Economic Cooperation and Development (OECD)
countries averaged just $310 per person (in
US dollars, adjusted for purchasing power
parities)—81 percent below the US figure.1,2
The differential in spending on physician services is greater than the overall difference in total
health spending between the United States and
other nations.2 One potential reason for this is
that physicians are paid more per service in the
United States than elsewhere.
10.1377/hlthaff.2010.0204
HEALTH AFFAIRS 30,
NO. 9 (2011): 1647–1656
©2011 Project HOPE—
The People-to-People Health
Foundation, Inc.
doi:
Sherry A. Glied is a professor
of health policy and
management at the Mailman
School of Public Health. She
is currently on leave at the
Department of Health and
Human Services (HHS), where
she is assistant secretary for
planning and evaluation. This
paper was written prior to her
appointment at HHS and does
not reflect the official views
of HHS.
In general, higher prices are said to be the
primary reason for higher US health spending.
As Gerard Anderson and others have observed,
“It’s the Prices, Stupid!”3,4 Yet some analysts in
the United States have suggested that the prices
for some kinds of services, such as primary care,
are not high enough.5
Building on the work of Anderson,4 Mark
Pauly,6 Victor Fuchs and James Hahn,7 and the
International Federation of Health Plans, we
sought to produce a finer-grained and updated
analysis of spending, fees, and earnings among
physicians in different countries. While recognizing that full comparability is close to impossible, we compared fees, incomes, and spending
for a subset of physicians. We focused on two
areas of medicine and two specific physician
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by Rachel McCartney
Health Affa irs
1647
Dimensions Of The Problem
services: basic office visits provided by primary
care physicians, and hip replacements provided
by orthopedic surgeons, in Australia, Canada,
France, Germany, the United Kingdom
(England), and the United States.
We compared the price of these services in the
United States with the prices paid by national or
price-regulated insurance plans and by private
insurers—where these exist—in the comparison
countries. To address confounding factors, the
study also compared physicians’ incomes net of
practice expenses (thus adjusting for differences
in practice costs). We also took into account differences in the sources of financing of the cost of
physician education. Finally, the study assessed
the relative contribution of payments per physician and of physician supply in the countries’
national spending on physician services.
Challenges And Approaches
Challenges Understanding and comparing
data on physician services is challenging because
the category of physician services spending includes an array of physicians whose day-to-day
work varies tremendously, even within countries. Likewise, the bundles of services included
in fees may vary across countries.
Data must be pieced together from disparate,
often conflicting sources. In many countries,
physicians may be paid different fees by different
patients, and prior studies do not separate these.
Even if data were comparable, higher fees per
service might reflect differences in practice expenses, such as malpractice costs, which vary
across countries. Higher incomes might reflect
differences in the level or source of financing of
medical education.
In spite of these challenges, developing estimates of differences in public and private prices
for physician services is useful. Although the
point estimates are imprecise, evidence of the
general direction and magnitude of differences,
and of the sources of these differences, can provide a better understanding of the reasons for
cross-national spending differences.
Physician And Country Selection Primary
care physicians were chosen because they provide the largest share of medical care in all countries. Using the OECD’s 2008 definition of a
generalist physician, this study defined a primary
care physician as one who does not limit practice
to certain disease categories. In the United States
this definition includes family practice, general
practice, internal medicine, obstetrics and gynecology, and pediatrics.8
Services provided by primary care physicians
are broadly comparable, but there are some differences across countries. The scope of primary
1648
Health Affa irs
S ep t e m b e r 20 1 1
30 : 9
care practice varies across countries; it is narrower in the United States than in Australia or
the United Kingdom.9
The main cost factor associated with primary
care practice is the length of the physician visit.
In general, physician visits in the United States
are somewhat longer than in most other countries. Differences in primary care fees between
the United States and other countries may, in
part, reflect this difference in visit length.10
Orthopedic surgery was selected from among
all the surgical subspecialties for three reasons.
First, the main procedures performed by orthopedic surgeons are relatively standardized and
are performed in similar ways across the
countries under study. Second, the practice of
orthopedic surgeons includes a large component
of elective surgery. In countries where the
government or health insurers ration access to
elective surgery, the supply of orthopedic surgeons is often limited. Thus, this is an area where
differences in supply may be an important contributor to differences in total expenditures.
Third, because orthopedic surgery is elective
and the supply is often constrained in the
public sector, in countries where physicians
are allowed to charge private payers more than
the government health plan pays (in so-called
two-tier practices), orthopedic surgeons constitute a large share of physicians who elect to do so;
see the online Appendix.11 Therefore, both private and public fees across countries can be
readily compared.
The comparison countries chosen all have
populations in excess of twenty million and have
a per capita gross domestic product (GDP) that is
70–84 percent of the US level (Exhibit 1).
System Characteristics And Physician Reimbursement Information on US and comparison-country health care systems and payment
practices was available from the OECD database2
and through a broad variety of other sources
described below.
The health care systems of the six countries
considered differ in many respects (Exhibit 2).2
Yet there is surprisingly little systematic variation in the structure of physician payment between the United States and the comparison
countries.
Although the use of fee-for-service payment is
often singled out as a source of higher US costs,
all of the comparison countries except the
United Kingdom continue to rely primarily on
this payment method, particularly in the outpatient setting. Most other countries, however,
have moved further away from fee-for-service
than the United States has, by incorporating
elements of quality-related bonuses, incentive
pay, or bundling in their national insurance
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by Rachel McCartney
Exhibit 1
Health Care Spending, Physician Supply, And Demographic Characteristics In Six Countries, 2008
Canada
France
Germany
United Kingdom
United States
Total health spending
Spending per capita
$3,353
Spending as percent of GDP
8.4%
Percentage of total health spending, by source
Australia
$4,079
10.4%
$3,696
11.2%
$3,737
10.5%
$3,129
8.7%
$7,538
16.0%
Ambulatory care
Percent provided in physician offices
Hospital services
Pharmaceuticals
37.7%
14.6
39.9
14.3
28.9%
14.7
28.9
17.2
28.4%
11.7
35.0
16.4
30.8%
15.8
29.4
15.1
—a
—a
—a
11.8%
36.0%
21.2
32.9
11.9%
Professionally active physicians per 1,000
Population and wealth
3.2
2.3
3.4
3.9
2.6
2.6
Total population (thousands)
Percent over age 65
Percent under age 14
Per capita GDP
21,432
13.3%
19.3%
$39,439
33,095
13.9%
16.7%
$39,288
61,840
16.6%
18.3%
$33,134
82,110
20.3%
13.7%
$35,436
60,520
15.8%
17.8%
$36,128
304,483
12.8%
20.2%
$47,193
Physician supply
SOURCE Organization for Economic Cooperation and Development. Health data 2010: statistics and indicators for 30 countries (see Note 2 in text). NOTES US dollars,
adjusted for purchasing power parity. For Australia, all data are from 2007 except services provided in physician offices. There were no data for the United Kingdom for
professionally active physicians, so data from practicing physicians were substituted. GDP is gross domestic product. aData were not available.
Exhibit 2
Health System And Physician Payment Features In Six Countries, 2008
Primary care
Orthopedic surgery
Country
Universal
coverage?
Payment
mechanism
May charge above the
public fee schedule?
Payment
mechanism
May charge above the
public fee schedule?
Private insurance
covers portion of fees
above the public
schedule?
Australia
Yes
Fee-for-service
Yes—about 20% do
Fee-forservice
Yes
Yes
Canada
Yes
Fee-for-service/
salary
No
Fee-forservice/
salary
No
No
France
Yes
Fee-for-service
Some, but rare—some
limits on rates
Fee-forservice
Yes—some limits on
rates
Yes
Germany
Yes
Fee-for-service,
but some
bundled
payments
Yes—for privately
insured patients
Salary
No—but some top
specialists may
receive extra pay
Yes
United Kingdom
Yes
Salary with
incentives
Some—no limits on
rates
Salary
Yes—no limits on rates
Yes—
sometimes
negotiated with
providers
United States
Seniors
only
Fee-for-service/
mixed
No for publicly insured
patients; otherwise,
private insurance
rates differ from
public rates; no limits
on charges for
privately insured
patients outside
insurer contracts
Fee-forservice/
mixed
No for publicly insured
patients; otherwise,
private insurance
rates differ from
public rates; no limits
on charges for
privately insured
patients outside
insurer contracts
Public and privately
negotiated rates
differ
SOURCE See the Appendix. To access the Appendix, click on the Appendix link in the box to the right of the article online.
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Health A ffairs
1649
Dimensions Of The Problem
physician payment systems, particularly for patients with chronic illnesses.
The other important structural difference is
the role of private insurance in relation to
government-established fee schedules. In the
United States, private insurers are not required
to use Medicare rates. In the comparison countries other than Canada, physicians may charge
fees higher than those set by the government to
some or all of their patients.
In France and Germany, there are limitations
on the additional fees that may be charged; however, some physicians can charge higher fees to
at least a subset of patients (all patients in
France, privately insured patients in Germany)
for outpatient services. Where physicians may
charge fees above the national schedule, the
practice is consistently more common among
orthopedic surgeons than among primary care
physicians, regardless of country.
Analysis And Findings
Under fee-for-service payment, total expenditures on physician services are the product of
physician fees per service, the number of services
provided by each physician, and the supply of
physicians. These expenditures, in turn, compensate for practice expenses and for the time
and skill of physicians. Expenditures must also
compensate for the costs physicians incur in the
course of receiving their education.
Physician Fees Exhibit 3 provides information on the first piece of this equation: the public
and private fees received for selected procedures
across countries.
Public-sector physician payment rates are
readily available from government websites in
most countries. Wherever possible, rates for office visits reported below refer to a standard
eleven-to-fifteen-minute office visit for an
“established patient” (typically this would be a
patient a physician had seen previously). However, not all countries provided this level of
granularity in data.
Overall, publicly established fees for basic
primary care office visits ranged from $34 in
Australia to $66 in the United Kingdom. The
US Medicare program paid at the mid-to-high
end of this scale for a comparable visit: above
the level in many countries, about equal to the
level in Canada, but below the level in the United
Kingdom.
Public program fees for uncomplicated, initial
hip replacement surgeries (not revision surgeries) ranged from $652 in Canada and $674
in France to $1,634 in the United States. The
difference in public program fees is roughly comparable to the difference in national health
spending across these countries.
Exhibit 3
Primary Care And Orthopedic Surgery And Fees In Six Countries, 2008
Primary care
Country
Public payer
fee for office
visits ($)a
Relative to
US (public)
Australia
Canada
34
59
0.57
0.98
France
Germany
32
46
UK
US
66
60
Private payer
fee for office
visits ($)a
Relative to
US (private)
Office visits
per capitaa
Relative
to US
45
—b
0.34
—b
6.1
5.8
1.61
1.53
0.53
0.77
34
104
0.26
0.78
7.0
7.4
1.84
1.95
1.10
1.00
129
133
0.97
1.00
5.1
3.8
1.34
1.00
Country
Public payer
fee for hip
replacement ($)a
Relative to
US (public)
Private payer
fee for hip
replacement ($)a
Relative to
US (private)
Hip replacements
per 100,000a
Relative
to US
Australia
Canada
1,046
652
0.64
0.40
1,943
—b
0.49
—b
152.1
119.7
0.94
0.74
France
Germany
674
1,251c
0.41
0.77
1,340
—b
0.34
—b
215.6
270.3
1.33
1.67
UK
US
1,181c
1,634
0.72
1.00
2,160
3,996
0.54
1.00
170.1
161.9
1.05
1.00
Orthopedic surgery
SOURCE See the Appendix. To access the Appendix, click on the Appendix link in the box to the right of the article online. NOTES All fees were converted to 2008 dollars
using national Consumer Price Indices and converted to US dollars and adjusted for purchasing power parity. Data for office visits per capita and hip replacements per
100,000 are from 2006. aSee Technical Appendix, as indicated above. bNot available. cEstimate based on global fee.
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by Rachel McCartney
In countries that permit physicians to charge
amounts other than the public fees (all except
Canada), the market for private primary care
physician consultations is relatively small, and
the private fee mark-up is likewise limited. Data
on private fees are more difficult to obtain than
data on public fees are, and private payment
rates typically vary within each country.
In Australia, the Australian Medical Association recommended a fee of US$45 (2008 dollars)
for an office visit (in 2004), although most private practice physicians did not charge this
much.12 Private-practice physicians in France
typically charge about 5 percent over the public
schedule. In the United Kingdom, private primary care practices, which exist in large centers,
require an enrollment fee (of about £30) and
then charge a per visit fee.13 Physicians in
Germany may charge privately insured patients
for each separate service they render during an
office visit.
In the United States, data on private insurance
payment rates are proprietary and, therefore,
almost impossible to obtain. They vary greatly
among markets and among payers in a given
market.14
Many physicians are paid under contracts negotiated with private insurers. A recent review of
these rates by specialty type (not service) paid by
four large national insurers in six markets found
that primary care fees averaged about one-third
above Medicare rates, while fees for orthopedic
surgeons averaged about 50 percent above Medicare rates.14 Smaller health plans may have less
negotiating power than large national insurers
and therefore the amounts they pay physicians
may be higher. Also, physicians may see patients
who are covered by insurers with which they do
not have contracts.
The data reported here were obtained from
HealthGrades (http://www.healthgrades.com),
which collected and disseminated information
from eighty health plans by service type at the
regional level during much of 2009.
Private insurers in the United States pay
higher rates for primary care office visits in
the United States than in other countries. However, private-insurer rates for primary care visits
reported on HealthGrades for the United States
are only slightly higher than private-insurer
rates in the United Kingdom. Rates reported
by Paul Ginsburg14 are below private-insurer
rates in some other countries.
The market for private orthopedic services is
larger overall, but it varies from country to country. In Germany, surgeons are salaried, and there
is only a small market for private orthopedic
surgery practice. In Australia and France, physicians may charge beyond the government fee
schedule for private hip replacement surgery.
Orthopedic surgeons in Australia often charge
rates suggested by the Australian Medical Association, but these rates are not publicly available.
In France, surgeons negotiate rates with patients. They “may charge €400–€3,000 [US$560–
$4,198] in extra fees, and this is often the subject
of tense debate” (personal communication from
Michel Naiditch, Institut de Recherche et Documentation en Economie de la Santé, 2009). In
both Australia and France, a portion of these
extra fees is generally paid by supplementary
insurance.
The United Kingdom has a thriving market in
private orthopedic surgery. In some cases, private insurers negotiate rates with surgeons and
private hospitals (or private units in public hospitals). There are also web-based services (for
example, http://www.privatehealth.co.uk) that
offer directories of private surgery providers,
often with price information. In many instances,
hospitals offer a bundled price for the surgery,
including room fees, surgeon fees, and anesthesiologist charges.
Private health insurance fees for hip replacement surgery in the United States reported by
HealthGrades are nearly $4,000 per procedure—
about twice as high as the private rate in any of
the comparison countries. The orthopedic surgeon payment rates reported by Ginsburg14 also
exceed those everywhere else.
Overall, fees paid by Medicare to US physicians for office visits are comparable to those
paid by public insurers in several other countries, and fees paid by US private insurers are
slightly higher than those paid by private insurers in other countries. In contrast, fees paid by
public payers to orthopedic surgeons for hip replacements in the United States are considerably
higher than comparable fees for hip replacements in other countries, and fees paid by private
insurers in the United States for this service
are double the fees paid in the private sector
elsewhere.
Volume Of Services Provided The second
element in generating physician expenditures
is the number of services provided per physician.
As an approximation of this figure, Exhibit 3
reports the number of services provided per capita (column 6).15 There is somewhat less variation in the volume of services received by patients across countries compared to the
variation in fees.
As an indication of primary care practice volume, data on the number of office visits per capita were used. The median number of office visits
per capita was 5.95, with the United States well
below the average across countries at 3.8.
The number of hip replacements per capita
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by Rachel McCartney
H e a lt h A f fai r s
1651
Dimensions Of The Problem
was used as an indication of orthopedic surgery
volume. Hip replacement rates per 100,000 people ranged from a low of 119.7 in Canada (which
has a limited supply of surgeons and a relatively
young population) to a high of 270.3 in Germany
(where the population is older and supply is not
restrictive). In general, Americans are very low
users of office visits and relatively high users of
hip replacement surgery.
Physician Income Volume and price combine
to generate physician revenue, and subtracting
practice expenses from this total yields net physician income. Exhibit 4 reports differences in annual pretax earnings net of practice expenses for
primary care physicians and orthopedic surgeons (in US dollars, converted using purchasing power parity rates).
US primary care physicians earned the highest
incomes ($186,582), while French ($95,585)
and Australian ($92,844) primary care physicians had the lowest. Although payments to primary care physicians were greater in the United
States than elsewhere, the differential was
smaller than would be expected given the costliness of the overall US health care system.
Among