Shopping car with health suppliesAccording to researchers, “Lowering prices in the U.S. will need tostart with private insurers and self-insured corporations.” (Photo:Shutterstock)

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It doesn't seem to matter how many new health care regulationsand policy initiatives, Americans continue to outspend their peerson health care.

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Just like earlier 2003 research found, higher prices continue to the primary reasonwhy the U.S. spends more on health care than any other country, according to a new studypublished in Health Affairs, “It's Still The Prices, Stupid: Why The US Spends SoMuch On Health Care and a tribute to Uwe Reinhardt” (the latterreferring to one of the co-authors of the original study whorecently died).

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This is so despite the implementation of health policy reforms and the restructuring ofhealth systems that have occurred in the U.S. and otherindustrialized countries since the 2003 article's publication,conclude the researchers, Gerard F. Anderson, a professor at JohnsHopkins Bloomberg School of Public Health in Baltimore; PeterHussey, vice president and director of healthcare at theBoston-based RAND Corp.; and Varduhi Petrosyan, professor and deanin the Turpanjian School of Public Health at the AmericanUniversity of Armenia.

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Related: This is how a health care premium dollar isspent

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The researchers used health statistics from the Organization forEconomic Cooperation and Development to update their 2003 research.The updated analysis found that the U.S. still providessignificantly fewer health care resources per capita compared tothe OECD median country on, including for hospital beds, physiciansand nurses.

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“Since the U.S. is not consuming greater resources than othercountries, the most logical factor is the higher prices paid in theU.S.,” the researchers write.

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Because the differential between what the public and privatesectors pay for medical services has grown significantly in thepast fifteen years, U.S. policy makers should focus on prices inthe private sector, according to the researchers. “Becausethe U.S. is still not devoting more real resources to medical carethan the typical OECD country, we believe that the conclusion that'it's the prices, stupid,' remains valid.”

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“What is different between 2003 and 2016 is that thedifferential between what public and private insurers pay forhealthcare services has become wider,” they conclude. “Loweringprices in the U.S. will need to start with private insurers andself-insured corporations.”

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Not surprisingly, reactions to the Health Affairs study wasvaried.

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“There is no market solution to this problem,” commented oneperson. “The simplest solution is a regulatory limit on the ratioof commercial payer rates to Medicare payment rates. Serious studyis required to determine the appropriate limit and it requiresestimating what rate will support an efficient providerorganization. This is a very complex task in that the industry hasbecome operationally sloppy where increased prices can be reliedupon to achieve margins (versus the hard work of making operationsmore cost effective).

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“So, current costs cannot be the baseline,” the person writes.“Perhaps the best baseline can be established by looking at costsin truly competitive markets, which are becoming increasingly rare.But, it is doable and the sooner we embark on this strategy, thebetter off we will all be.”

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Another person has a different take:

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“Such flawed analysis is why we have struggled to bring asemblance of logic to healthcare economics,” the second personcommented. “While the prices matter, the more important reason forcost is “who pays?” Because the user of service pays a fraction ofthe cost, does not have a say in setting the price and essentiallyis “an incidental” to all transactions, the price has becomeirrelevant. When using other peoples' money, most humans care lesswhat a service or product costs. Healthcare is no different. Whatthe authors are really suggesting is a socialist government-paidhealth system.

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“The U.S. spends more on health care because of, not despitehealth policy reforms and health systems restructuring,” thecommenter concludes.

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Katie Kuehner-Hebert

Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.