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Frugal Aussies show US how it’s done

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The efficiency and effectiveness of Australia’s health system has been highlighted by figures showing Americans have more chronic illnesses and worse life expectancy than Australians despite spending more than double the amount on care.

Although the United States spent $US9086 per person on health care in 2013, compared with $US4115 in Australia, the average American was likely to live about two years less and be burdened with more chronic diseases, a study by The Commonwealth Fund has found.

As the Federal Government looks to use the Medicare Benefits Schedule Review to cut health spending, the Commonwealth Fund report shows Australia gets good value for its health dollar, achieving high life expectancy and low rates of infant mortality despite one of the smallest outlays among its rich-world peers.

The investigation found the US spent 17.1 per cent of its national output on health care in 2013 – far more than any of the other 12 high-income countries included in the survey. The next biggest spender was France, where the health bill amounted to 11.6 per cent of gross domestic product.

By comparison, Australia’s health care was a bargain. Its total expenditure was the second-lowest among the 13 countries examined – just 9.4 per cent. This was on a par with Norway and only slightly more than the smallest spending nation, Great Britain (8.8 per cent).

Despite this, Australians can expect to live longer than the average American, and in better health. US life expectancy was 78.8 years in 2013, the lowest among the 13 countries examined and considerably less than the 80.1 years for Australian men and 84.3 years for women recorded at the time.

Not only did Americans live shorter, on average, but they were also sicker. The Commonwealth Fund’s 2014 International Health Policy Survey found that 68 per cent of Americans aged 65 years or older had at least two chronic illnesses, compared with 54 per cent of Australians in the same age group. Just 13 per cent had no chronic conditions, compared with 32 per cent of older Britons.

America’s big spending ways are being driven by the adoption of advanced technology and higher service charges rather than because they are constantly rushing to the doctor.

The Commonwealth Fund found that in the US almost 107 MRI exams are conducted for every 1000 people, compared with a rich world average of 50.6 per 1000 and just 27.6 per 1000 in Australia. Similarly, Americans are more than twice as likely to have a CT or PET scan as an Australian.

Not only were they having more scans, they were paying higher prices for them.

Americans also paid the highest prices for medical procedures and prescription drugs. Data from the International Federation of Health Plans indicates that in 2013 bypass surgery in Australia cost an average of around $US42,130, compared with $US74,345 in America, and drugs in Australia were around 50 per cent less expensive.

Not surprisingly, given the relative expense of seeing a doctor in the US (average out-of-pocket costs were $US1074, second only behind Switzerland), Americans were relatively reluctant to seek care. On average, in 2013 they saw a doctor just four times a year, compared with an average 7.1 times among Australians, and the number of hospital discharges per 1000 people in the US was 126 – well below Australia (173 per 1000).

The consequences of America’s heavy health spending are far-reaching, the Commonwealth Fund concluded, not only driving people into bankruptcy and government budgets into deeper deficit, but holding down wages as health insurance eats further into salary packages.

It added that the imbalance in Government spending caused by America’s burgeoning health bill may actually be making the situation even worse.

The Commonwealth Fund warned that American governments were spending so much on health care it was crowding out other areas of expenditure that could actually improve health, particularly social programs and support.

“In the US, health care spending substantially outweighs spending on social services,” the Fund said. “This imbalance may contribute to the country’s poor health outcomes. A growing body of evidence suggests that social services play an important role in shaping health trajectories and mitigating health disparities.”

It suggested one way to redress the imbalance could be through funding arrangements in which providers are rewarded for health outcomes could make it sensible for insurers, hospitals and others to invest in social services and other interventions.

The Commonwealth Fund study can be viewed at: http://www.commonwealthfund.org/publications/issue-briefs/2015/oct/us-health-care-from-a-global-perspective

Adrian Rollins