Although Americans don't use more health care than citizens of other high-income nations, they pay much higher prices for it. Or has policy experts sometimes say, It's the price, stupid.
"That central insight remains as true today as when it was first articulated," according to a new report in Health Affairs. "Across services, drugs and inputs, the United States consistently pays substantially higher prices than its peers for comparable services, drug and inputs."
This insight has been used to draw attention to the mechanisms that lead Americans to pay more for their care and to inform policy efforts to bend the cost curve, including payment design, market power and regulatory arrangements.
The National Health Expenditures team at the Centers for Medicare & Medicaid Services attributes 2.5 percentage points of the 6.1% per capita spending increase in 2024 to medical prices, with notable cost increases in sectors such as hospital care. Even if there had been a slower price growth in 2024, when applied to an already elevated price level, prices remain a substantial policy concern, particularly for affordability, public budgets and household financial burden.
Health care spending reflects the interaction of prices and volume in practice. Volume typically encompasses both the use and intensity of care delivered, with intensity referring to changes in the mix or complexity of services per episode. Empirically, disentangling the contribution of prices and volume often is performed by measuring one component directly and inferring the other based on total expenditures.
Erroneously focusing policy attention on the use and intensity of care as the driver of exorbitant expenditure growth has real consequences, the report said. By suggesting the use and intensity of care as the culprit, decision makers may perceive coverage reductions and higher co-payments as the solution to reduce demand. This will result in less access to care and worsen outcomes, when the real cause of high spending growth is that the prices paid for care exceed the value they provide.
"Reframing spending growth away from prices may be appealing, but it does little to change the underlying economics of U.S. health care," the authors concluded. "While utilization is undeniably part of the equation, prices -- whether labeled explicitly or embedded in measures of intensity -- remain central to understanding why U.S. health spending levels are high and why spending continues to grow."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.