Reevaluating “Made in America” — Two Cost-Containment Ideas from Abroad

Source: Gerard F. Anderson, Amber Willink, and Robin Osborn, New England Journal of Medicine, Vol. 368 No. 24, June 13, 2013

Per capita spending on health care in the United States is more than double that in most other high-income, highly industrialized countries, yet performance on indicators of health status is often worse. The Institute of Medicine recently reported that there is a “strikingly persistent and pervasive pattern of higher mortality and inferior health” in the United States than in other high-income countries. We believe that this poor correlation between spending and outcomes should prompt a reevaluation of current cost-containment efforts…. For many years, articles have been written about the high prices that the United States pays for medical services and how all-payer rate setting, reference pricing, and global budgets could reduce the prices the United States pays for services. We examined two additional cost-containment pricing strategies that could be adapted to the U.S. health care context: a bundled-payment system from Germany and volume-driven pricing adjustment from Japan. These promising policies could be introduced as technical adjustments to the existing payment system rather than requiring large-scale reform — a possibility that renders the “uniqueness” argument moot. In addition, the international experiences could provide guidance on what the likely effects and unintended consequences would be if these approaches were adopted in the United States….