Cost-Containment, Medical
Technology and Access to Care: A
Comparative Analysis of Health Policy
in the United States, the United
Kingdom And Canada
Emily Adrion
Economics 2003
Health System Structure
• Goals: Universal and equal
access, cost-containment,
efficiency.
• Financing: determines the
budget constraint and the
resource distribution/
allocation within the system.
• All industrialized nations,
excluding the U.S., have
national health services or
compulsory insurance
coverage.
Purpose of Research
• Exploding costs have been a major issue faced by
U.S. health policy makers
• Overuse of new medical technology is often cited as
one of the primary factors responsible for cost
growth.
• Have the more stringent cost-containment
strategies of nations with lower per-capita
spending inhibited the introduction and diffusion
of new medical technology?
• Greater control of costs neither limits the
introduction of medical technology nor results
in lower health outcomes.
Health Care in the United States
• Private health
insurance
• Traditional
Insurance
• Managed Care:
HMOs; PPOs
• Medicare, Medicaid
• 16% of the U.S.
population remains
uninsured (44 million
Americans)
Why the U.S. system suffers from
inefficiency and rising costs
• Market failures of health care:
• Information failures - Gov’t regulation
• Uncertainty- health insurance
• Problems with health insurance:
• Risk pooling => gaps in coverage
• Moral Hazard=> exploding costs
– The third party payment problem
• Managed Care as a Solution:
• LT effects on cost growth?
• Slower diffusion of new technology?
– RAND study (1981)
The Third Party Payment
Problem and Health Insurance
Traditional health insurance and the consumption of
health care in the United States
Canada: National Health
Insurance
• Universal coverage
• Single-payer plan financed through general
taxation
• Reimbursement: global budgets to hospitals;
negotiated fee-for-service to physicians
• Private production of health services
• With virtually no role for the market to set prices,
health care expenditure growth becomes almost
entirely a political decision made independently in
each province.
United Kingdom: National Health
Service
• Model of socialized health care
• Nearly universal coverage: small market for
private health insurance
• Single-payer plan financed through general
taxation
• Reimbursement: global budgets to hospitals;
Salaries and per-patient payments to physicians
• Public production of health services
Prices and quantities in a
controlled market
The Supply and Demand for health care in the UK
Theory: Technological Change and
Health Care Cost Growth
• Health insurance and the
bias towards costincreasing technological
change
– The Goddeeris Model
• Diffusion of new medical
technology
– Impact of regulation
and cost control
– Baker and Spetz
(1997)
Analysis: Overview of the Concepts
and Statistics
• Basic concepts:
• health vs. health care
• Outcome benefits vs. utility
benefits
• Statistical problems:
• Data not available for every
year for every country
• For many variables no data
could be found
• Differences in definitions of
variables
Regression Analysis
Quality of Health Care= f(total HC, R&D,
age, income, lifestyle, tech access)
• Regression Analysis
79
78.5
life expect
• Quality of Care
represented by:
infant mortality,
death rate, life
expectancy and
patient satisfaction
• Heteroscedasticity;
Multicollinearity
79.5
78
77.5
life expect
77
76.5
76
75.5
0
20
40
r&d per cap
60
80
The Raw Data
Canada
United Kingdom United States
Total Health Spending
(% GDP)
1999
Total per capita (US$ PPP):
1999
9.31
6.91
12.87
2428
1666
4373
30.857
11.03
61.5
1.7
3.4
7.7
8.1
6.3
13.4
1999
5.3
5.8
7.1
1999
79
77.4
76.7
Technology
health R&D per capita (US$):
1999
MRIs per million pop:
1999
CT scanners per million pop:
1999
Health Outcomes
Infant Mortality:
Life expectancy:
Analysis: Data from 10 Developed
Nations
life expectancy
life expect
80
79
78
77
76
75
74
73
72
71
70
life expect
0
100
200
300
400
angioplasty per 100000 pop
Plot of life expectancy and Angioplasty Procedures
per 100,000 pop.
Data from 10 Developed Nations,
(continued)
80
life expectancy
79
78
77
76
75
74
life expect
73
72
71
70
0
1000
2000
3000
4000
5000
HC spending per capita
Plot of life expectancy and health care spending
per capita.
Conclusions
• Theory: high costs and worse outcomes of US
system may be the result of insurance
• Without adequate control over total spending or total
quantity supplied the system may have inefficient
levels of cost-increasing technologies
• The raw data suggests the US may have inefficient
levels of high tech equipment (CT scanners, MRIs)
• Equally troublesome is that higher spending
has not resulted in greater health outcomes
• However, the effects of R&D are long term
• Outcome vs. Utility Benefits
Ways Forward
• Premium regulation
• Development of
standardized treatment
guidelines and protocols
• Medical Technology
Assessment
• To ensure costeffectiveness, safety
and efficacy of medical
innovations