Luca Lorenzoni

Health-care expenditure and health policy in the USA versus other high-spending OECD countries

The USA has exceptional levels of health-care expenditure, but growth has slowed dramatically in recent years, amidst major efforts to close the coverage gap with other countries of the Organisation for Economic Co-operation and Development (OECD). We reviewed expenditure trends and key policies since 2000 in the USA and five other high-spending OECD countries. Higher health-sector prices explain much of the difference between the USA and other high-spending countries, and price dynamics are largely responsible for the slowdown in expenditure growth. Other high-spending countries did not face the same coverage challenges, and could draw from a broader set of policies to keep expenditure under control, but expenditure growth was similar to the USA. Tightening Medicare and Medicaid price controls on plans and providers, and leveraging the scale of the public programmes to increase efficiency in financing and care delivery, might prevent a future economic recovery from offsetting the slowdown in health sector prices and expenditure growth.

Harnessing the private health sector by using prices as a policy instrument: Lessons learned from South Africa

Governments frequently draw upon the private health care sector to promote sustainability, optimal use of resources, and increased choice. In doing so, policy-makers face the challenge of harnessing resources while grappling with the market failures and equity concerns associated with private financing of health care. The growth of the private health sector in South Africa has fundamentally changed the structure of health care delivery. A mutually reinforcing ecosystem of private health insurers, private hospitals and specialists has grown to account for almost half of the countrys spending on health care, despite only serving 16% of the population with the capacity to pay. Following years of consolidation among private hospital groups and insurance schemes, and after successive failures at establishing credible price benchmarks, South Africas private hospitals charge prices comparable with countries that are considerably richer. This compromises the affordability of a broad-based expansion in health care for the population. The South African example demonstrates that prices can be part of a structure that perpetuates inequalities in access to health care resources. The lesson for other countries is the importance of norms and institutions that uphold price schedules in high-income countries. Efforts to compromise or liberalize price setting should be undertaken with a healthy degree of caution.