Complexity in the Us Healthcare System

Healthcare in the United States is at a crossroads regarding cost. The US spent approximately $5267 per person on health care in 2002. Switzerland, the second most expensive health system, spent $3445 per person on healthcare, representing two thirds of the U.S. amount. Norway, Canada, and Germany, representing the third, fourth and fifth spent less than 60% that of the United States according to their 2002 health expenditures per capita (1).

Health care costs have also been on an upward trajectory. In 2016, U.S. health care costs were $3.3 trillion representing one of the biggest industries in the US with 17.9 percent of gross domestic product (GDP). In comparison, in 1960, health care cost $27.2 billion, a mere 5 percent of GDP. On an individual metric, in 2016, individual annual health care cost was $10,348 versus just $146 per person in 1960(2). Underlying this increase in healthcare spending is the rapid growth in cost in prescription drug cost which represented $326bn in 2016, a 1.3 percent increase from 2015. Additionally, physician and clinical related expenditures have been growing; representing $665bn in 2015, a 5.4 percent increase from 2015(2).

Despite the cost of healthcare in the US, population health outcomes are subpar(3). According to a Harvard population health study, the US had the poorest population health outcomes lowest life expectancy among organization for Economic Cooperation and Development (OECD)countries 78.8 years compared with a mean of 81.7(4). Additionally, outcomes varied across states with life expectancy across the United States ranging from 81.3 years in Hawaii to 75 years in Mississippi(4).

The United States also had the highest infant mortality at 5.8 deaths per 1000 live births compared with an OECD average of 3.6(4). The United States spent approximately twice as much as other OECD countries on health care, yet had similar utilization rates compared to other OECD countries(4). Clearly, something is amiss in the system and various stakeholders are embarking on initiatives to reengineer the healthcare system to reduce excessive spending and improve patient outcomes.

COMPLEXITY IN THE US HEALTHCARE SYSTEM

Understanding the key players and challenging dynamics within the US healthcare system is imperative to solving the problem of high cost and low value. Firstly, each dollar spent on health-related services is an expense to payers and revenue to providers. Payers are incentivized to reduce the dollars they pay for healthcare services and to maximize profit(5). Providers and suppliers want to increase the dollar amount of healthcare services and are less concerned about profit and adhering to business models in healthcare. Patients want to receive adequate care while reducing wait times and administrative or insurance hassle. In summary, payers aim to contain costs while providers and the pharmaceutical industry resist cost containment (5). Balancing this dynamic is the fundamental battle in the US health care economy.

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