Analysis

Innovations to cut US healthcare prices

BMJ 2018; 361 doi: https://doi.org/10.1136/bmj.k1591 (Published 20 April 2018) Cite this as: BMJ 2018;361:k1591
  1. Dhruv Khullar, researcher1 2,
  2. Rahul Rajkumar, chief medical officer3
  1. 1Department of Healthcare Policy and Research, Weill Cornell Medical College, New York, NY
  2. 2Department of Medicine, Weill Cornell Medical College, New York, NY
  3. 3Blue Cross Blue Shield of North Carolina, Durham, NC
  1. Correspondence to: D Khullar Khd9010{at}med.cornell.edu

Efforts to limit healthcare spending should focus on lowering prices as well as reducing use, argue Dhruv Khullar and Rahul Rajkumar

Key messages

  • Healthcare spending is the product of usage and prices, but recent efforts to limit cost growth have focused almost exclusively on the former

  • Prices paid for healthcare goods and services are much higher in the US than in other developed countries

  • Substantial variation also occurs in price without clear relation to quality or outcomes

  • Various mechanisms to reduce prices are discussed

Americans pay higher prices for healthcare than people living in other developed countries. That is true of prices for doctors, especially proceduralists and specialists, and for non-physician goods and services such as drugs, imaging, and technologies. In the US, the price of inpatient medications is generally twice what it is in Canada; a magnetic resonance imaging (MRI) scan costs three times as much as in Australia; and the price of bypass surgery is four times higher than in the Netherlands.1 A recent international comparison found that, while Americans visit doctors and hospitals at similar rates to citizens of other high income countries, they pay a higher unit price for each intervention.2 This simple truth—often overlooked in health policy discussions—drives higher overall healthcare spending in the United States.34

As well as country differences, drug prices vary within the United States: some Americans pay much more than others for the same service. Spending for people with private insurance varies by a factor of three across US healthcare markets and is driven principally by disparities in prices.5 Prices for MRIs are 12 times higher in the most expensive markets than in the least expensive ones and can vary by a factor of nine even within the same area. The price of knee replacement surgery ranges from …

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