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By Mark Stabile, Sarah Thomson, Sara Allin, Seán Boyle, Reinhard Busse, Karine Chevreul, Greg Marchildon, and Elias Mossialos

Health Care Cost Containment Strategies Used In Four Other High-Income Countries Hold Lessons For The United States

ABSTRACT Around the world, rising health care costs are claiming a larger share of national budgets. This article reviews strategies developed to contain costs in health systems in Canada, England, France, and Germany in 2000–10. We used a comprehensive analysis of health systems and reforms in each country, compiled by the European Observatory on Health Systems and Policies. These countries rely on a number of budget and price-setting mechanisms to contain health care costs. Our review revealed trends in all four countries toward more use of technology assessments and payment based on diagnosis-related groups and the value of products or services. These policies may result in a more efficient use of health care resources, but we argue that they need to be combined with volume and price controls—measures unlikely to be adopted in the United States—if they are also to meet cost containment goals.

T he past decade saw a considerable increase in health care spending in many high-income nations. De- spite efforts to contain health care costs, the most recent data from the

Organization for Economic Cooperation and Development show that average per capita spending on health among member countries increased by more than 70 percent between 2000 and 2010.1

In the countries we studied for this article, per capita spending increased during 2000–10 by 2.6 percentage points of gross domestic prod- uct (GDP) in Canada, 1.5 percentage points in France, 1.2 percentage points in Germany, 2.6 percentage points in the United Kingdom, and 3.9 percentage points in the United States. Although both per capita spending and the share of GDP spent on health care was highest in the United States in 2000 and 2010, the rate of growth in per capita spending between the two years was higher in the United Kingdom and Canada than in the United States (Exhibit 1). This article reviews the use of strategies devel-

oped to contain costs in Canada, England, France, and Germany over the past ten to fifteen years. It is based on a comprehensive analysis of each of the four countries conducted by the au- thors for the European Observatory on Health Systems and Policies.2–5 It also builds on work by Elias Mossialos and Julian Le Grand6 that docu- mented government strategies to contain health costs across the European Union from the 1970s to the end of the 1990s, as discussed below. The article has three components. First, we

update the earlier work by Mossialos and Le Grand for selected countries, coveringthe period from the late 1990s to 2012. Second, we identify what, if anything, changed in that period in na- tional approaches to managing health care cost growth, and we examine how effective these strategies have been. Third, we provide policy implications and lessons for other jurisdictions. The four countries chosen for our analysis rep-

resent a range of health system organizational structures, from Canada’s highly decentralized system of national and provincial payers to Germany’s system of competing health insur-

Mark Stabile (mark.stabile@ utoronto.ca) is a professor of economics and public policy in the Rotman School of Management and School of Public Policy and Governance, University of Toronto, in Ontario.

Sarah Thomson is a senior lecturer in health policy in the Department of Social Policy at the London School of Economics and Political Science (LSE), in the United Kingdom.

Sara Allin is an assistant professor in the School of Public Policy and Governance at the University of Toronto, in Ontario, Canada.

Seán Boyle is a senior research fellow in health and social care at LSE.

Reinhard Busse is a professor and the department head for health care management in the Faculty of Economics and Management, Berlin University of Technology, in Germany.

Karine Chevreul is deputy head of the Paris Health Economics and Health Services Research Units, in France.

Greg Marchildon is the Canada Research Chair in Public Policy and Economic History at the Johnson- Shoyama Graduate School of Public Policy, University of Regina, in Saskatchewan, Canada.

Elias Mossialos is the Brian Abel-Smith Professor of Health Policy in the Department of Social Policy at LSE.

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ance or “sickness” funds. The health system in France is dominated by noncompeting health insurance funds. In Canada the individual prov- inces are responsible for most decisions affect- ing the health sector. We focused on five prov- inces: Ontario and the western provinces of British Columbia, Manitoba, Saskatchewan, and Alberta. Responsibility for health care in the United Kingdom was devolved—that is, shifted from the central government to governing bodies in Northern Ireland, Scotland, and Wales—at the end of the 1990s. Our analysis covered developments in England only. Our review revealed that these four countries

continue to use budget setting and price controls to contain costs. However, we also found a shift away from strategies that simply shift costs to households—through across-the-board budget cuts, rationing of services, and higher user charges—toward policies aimed at changing the cost-benefit ratio by tailoring payment to value. These policies use technology assessment, funding based on “activity”—a diagnosis-related group is an example of an activity in this sense— and prices based on the value of products or services, all of which may result in a more effi- cient use of health care resources.

Analytical Framework This article adopts an analytical framework de- veloped by Mossialos and Le Grand in 19996 to

examine recent efforts at health care cost containment in Canada, England, France, and Germany. The framework categorizes cost con- tainment strategies according to whether they shift health care expenditure to an alternative budget, usually household budgets, by reducing coverage; set budgets—that is, impose upper lim- its on health spending in specific areas—from the national level to the patient level; or apply direct or indirect controls to the supply of health care (Exhibit 2). Applying this framework to Western European

countries in 1999, Mossialos and Le Grand showed how countries employed different ap- proaches to contain costs at different times.6

During the 1970s and early 1980s cost contain- ment strategies focused on direct and indirect controls of health care supply. From the mid- 1980s to the mid-1990s the focus switched to setting budgets. In the late 1990s the emphasis changed again,

as the shifting of expenditures from national to local or even to household budgets became more popular. This change was accompanied by the greater use of tools such as health technology assessment to identify priorities for public fund- ing and enable evidence-based purchasing. The framework raises some methodological

questions. First, what cost is being contained— overall health care spending, public-sector spending, out-of-pocket spending, or another measure of spending? Because the focus of our analysis is on cost containment by government, public-sector spending on health was the cost we examined. Second, what counts as a cost containment

strategy? Exhibit 2 lists health care cost contain- ment strategies (a more detailed list of strategies by country is presented in the online Appendix).7

We recognize that some of them may not in fact contain public or overall costs, even if they are introduced by policy makers with that goal in mind. Below we summarize the strategies that our

four subject countries now employ to contain health care costs.We also comment on the trends that emerged over the past ten to fifteen years and on evidence of each strategy’s effectiveness as a cost containment measure.

What Countries Do To Contain Costs Budget Shifting Budget shifting aims to con- tain costs in two ways: shifting costs onto house- holds or private insurers by reducing publicly financed health coverage, and shifting costs onto other parts of the government by moving finan- cial responsibility from one administrative level to another—such as from the nationalto the state

Exhibit 1

Total Health Care Cost Growth In Five Countries, 2000–10

Canada France Germany United Kingdom

United States

Growth of health spending (%) 76 56 62 87 72

Per capita health spending (US$)

2000 2,519 2,545 2,678 1,834 4,791 2010 4,445 3,974 4,338 3,433 8,233

Total health spending (% of GDP)

2000 9 10 10 7 14 2010 11 12 12 10 18

Public share of total health spending (%)

2000 70 79 79 79 43 2010 71 77 77 83 48

Out-of-pocket share of total health spending (%)

2000 16 7 11 11 15 2010 14 7 13 9 12

Drug spending per capita (US$)

2000 401 420 362 260 540 2010 741 635 640 —a 983

SOURCE Organization for Economic Cooperation and Development. OECD Health Data 2012 (Note 1 in text). NOTES The Organization for Economic Cooperation and Development reports data for the United Kingdom, not England. Percentages have been rounded. US dollars are purchasing power parity. GDP is gross domestic product. aThe most recent data for UK drug spending are from 2008.

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or local level. In some cases, budget shifting may simply reduce certain public expenditures but not reduce overall health costs. The four countries we studied have generally

approached coverage decisions with caution, showing some reluctance to create financial bar- riers to access and, increasingly, a desire to base decisions on evidence of value.

▸POPULATION COVERAGE (UNIVERSALITY): None of the four countries has opted to remove entitlement to publicly financed health care from specific groups of people. In fact, as the United States has done, France and Germany have in- troduced measures to secure universal coverage. France changed the basis for entitlement from

employment to residence in 2000, and Germany made health insurance mandatory for the whole population in 2009. Germany has also tried to protect the finances of public health insurance by prohibiting anyone who opts for private in- surance from returning to public coverage once he or she reaches age fifty-five.

▸SERVICE COVERAGE: Removing items from the publicly financed benefit package has been a common strategy across the four countries. All four have lowered coverage in service areas such as dental care. All four have also tried to be more systematic in defining benefits, refusing to in- clude new interventions that lacked evidence of effectiveness and cost-effectiveness or—less commonly—excluding previously accepted in- terventions without such evidence. It has proved politically difficult to remove

benefits from coverage. In France it took almost twenty years to delist drugs that had been as- sessed as ineffective. In Germany a policy to exclude dental care from coverage introduced

in 1998 was reversed the following year. At the same time, Germany has expanded its benefits package. For example, it has added hospice ben- efits, immunizations, and long-term care for people with dementia. ▸COST COVERAGE: Reducing the public share

of benefits’ cost by introducing or increasing user charges—that is, patient cost sharing—is a long-standing strategy adopted by all four coun- tries, particularly for pharmaceuticals. In the period under review, all four countries increased existing user charges. Three also introduced new user charges: France introduced deductibles cal- culated per service; Canada applied and in- creased user charges for prescription drugs; and Germany did the same for physician visits. The user charge policies of these four coun-

tries have mainly aimed to contain costs by de- terring use. In England and France the policies were also intended to raise revenue. However, the countries have tried to protect

people from the negative effects of user charges in a variety of ways. In Canada the province of Alberta abolished charges for the main client groups of the Alberta Drug Plan in 2004. England announced in 2008 that user charges would not rise faster than inflation. Germany introduced a cap on out-of-pocket

payments for health care, set at 2 percent of household income in general and at 1 percent for people with chronic conditions. Germany also abolished user charges for hospice care and expanded entitlement to long-term care for people with dementia. France removed entitlement to free care for

severe hypertension and raised caps on out-of- pocket spending. However, it also introduced

Exhibit 2

Health Care Cost Containment Strategies

Approach Strategies

Budget shifting Reducing population coverage: removing entitlement to some or all statutory benefits from specific groups of people

Reducing service coverage: excluding benefits, use of positive or negative lists Reducing cost coverage: introducing or increasing user charges Public budget shifting: moving budgets across level of government, moving from health to social services budgets, tax incentives for private health insurance

Budget setting Overall budget cap at government level Budget caps by health care sector Budgets at purchaser level Individual patient budgets Changes in provider payment methods: shifting to capitation or salary, linking payment to performance

Direct and indirect controls of health care supply

Price controls: setting prices, price or reimbursement rate cuts Volume controls: infrastructure, human resources, technology Health technology assessment to set priorities, influence coverage decisions, or guide clinical practice Practice guidelines

SOURCE Adapted from Mossialos E, Le Grand J. Health care and cost containment in the European Union (Note 6 in text).

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free complementary private insurance covering user charges for people with very low incomes, and it subsidized this private coverage for people with low incomes. Private insurance in France now covers approximately 94 percent of the population.4

Overall, there were small shifts in both direc- tions in the share of total health spending accounted for by out-of-pocket payments (Exhibit 1). In Canada and the United Kingdom out-of-pocket payments dropped two percentage points. In Germany they rose two percentage points, and in France they remained the same. ▸PUBLIC BUDGET SHIFTING: Each of the four

countries has moved financial responsibility for some health care services from one administra- tive level to another. France shifted responsibil- ity for subsidizing long-term care for older people from the central to local governments in 1997. The governments of many Canadian provinces

experimented with shifting their budgets for some services to regional health authorities. More recently, however, the provinces have re- duced the number of regional health authorities, and in the case of Alberta there is now just one such authority. In 2004 Germany moved the funding of in

vitro fertilization from statutory health insur- ance to the federal government. In 2012 England handed responsibility for public health budgets to local governments. Again, there is little evidence that any of this

budget shifting contained costs. Budget Setting Budget setting aims to create

an upper limit on third-party payer spending, either at the level of the health sector as a whole or for specific service areas. There is no clear pattern of budget setting across our study coun- tries, but all four have introduced payment for hospitals based on activity (diagnosis-related groups). Activity-based funding has probably softened budget constraints. Policies in England and France have empha-

sized linking provider payment to evidence of quality. ▸BUDGET CAPS: England has always used a

national budget cap to control public spending on health care, but it does not set budgets by sector. Instead, local purchasers are able to de- termine how to spend their own “soft” or target budgets—called target because the budget is sub- ject to review or renegotiation partway through the cycle. In 1997 France introduced a national cap on

statutory health insurance expenditure. This cap includes spending limits for six sectors. Germany has no national budget-setting proc-

ess. However, it has made extensive use of

sectoral budgets for hospitals and ambulatory care, the latter at the regional level. In recent years the constraints imposed by these budgets have been eased by the use of diagnosis-related groups to pay hospitals and by setting regional ambulatory care budgets based on prior use of services. Canadian policy has varied by province.

Generally, soft budget caps are used at the regional and hospital levels. ▸PROVIDER PAYMENT: All four countries have

introduced considerable changes to the ways in which providers are paid, moving toward activ- ity-based hospital payments, as discussed below. France and Germany have reformed the way in which pharmacists are paid, to give them incen- tives to dispense lower-cost drugs instead of more expensive ones. In countries that mainly pay primary or ambulatory care providers on a fee-for-service basis (all except England in our sample), there have been small shifts toward capitation payment. Linking payment to performance has been an

important development in England, mainly for general practitioners but increasingly for hospi- tals; in Ontario, for general practitioners; and in France, for office-based physicians. England and Germany have experimented with cash pay- ments or individual budgets, such as personal spending accounts, for long-term care. Such pay- ments or budgets enable people to choose or purchase services to meet their care needs. Direct And Indirect Controls Of Health

Care Supply Policy makers can attempt to con- tain costs by controlling the way in which pro- viders supply health care. Controls can be direct, in the form of rules or regulations, or indirect, such as practice guidelines that are not mandatory. All four countries have central mechanisms to

set prices for health care. Prices are set or agreed on through negotiation at the national or regional level instead of being determined by individual purchasers and suppliers. Controlling pharmaceutical prices is a priority

in each of the four countries we studied, as dis- cussed below. All four have used a range of strat- egies to try to control physician remuneration— including rate freezes, which France imposed between 1998 and 2005, England and Germany used in 2011 and 2012, and Ontario imposed in 2012. France, Germany, and Ontario have also used budget caps. Germany has used controls on the volume of

carethat will be reimbursed by third-party payers in the pharmaceutical sector. France has cut the number of hospital beds, encouraged early re- tirement to reduce the number of self-employed physicians, and increasingly tightened volume

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controls in the pharmaceutical sector. In the 1990s there was a general trend across

Canada to restrict the supply of human resources for health care. Since 2000, however, Canada has focused on increasing the supply of doctors and nurses through expanding places in medical and nursing schools and recruiting health workers internationally.8

Health technology assessment supports evidence-based decision making by summariz- ing information about health care interventions in a systematic, transparent, unbiased, and ro- bust way. A growing part of each country’s health spending determinations, health technology as- sessment aims to inform the development of safe, effective, and cost-effective health policies. All four countries develop and issue evidence-

based practiceguidelinesto helpinformdecision making, but there is variation across countries in the implementation, scope, and take-up of the guidelines.

Assessing A Decade Of Developments Our review reveals that all four countries have built on strategies employed in the 1990s and that budget and price controls continue to be used extensively. However, we also observed the increased use of policies intended to promote more efficient use of health care services.Within budget setting we observed a move toward activity-based funding for hospitals. Within di- rect and indirect control of supply, there has been an increase in health technology assess- ment and pharmaceutical spending controls. It is not possible to fully determine how effec-

tive the cost containment strategies were over this period since we cannot know how rapidly health care costs would have grown without them. Actual health care costs grew more slowly than would have been projected based on growth in theprevious decadein Franceand Germany,at about the same pace as in the previous decade in

the United Kingdom, and faster in Canada.7

There is, however, general evidence about the effectiveness of these strategies. Some strategies had multiple objectives, including improving quality and increasing volumes, so it is possible that although they had limited effects on costs, they met other objectives. Activity-Based Funding There was a move

toward funding based on activity or diagnosis- related group to replace global budgets for hos- pitals in England, France, and Canada and to replace per case and per diem hospital payments in Germany. In most jurisdictions activity-based funding had multiple goals, including increased efficiency, quality, and transparency. In some cases, it was also used to increase service vol- umes and lower waiting times.9 Not all of these goals are compatible in the short term with bringing costs down. There has been considerable research on the

benefits and costs of activity-based funding in European health systems.10 Evidence on the ef- fect of using diagnosis-related groups on overall system costs, as distinct from per unit costs, is more difficult to ascertain. However, there is some evidence of higher overall costs in France. The move to activity-based funding in Canada

has only just begun. It is therefore too early to determine the effect on costs in that country. Health Technology Assessment All four

countries have continued to develop and make more use of health technology assessment to in- form coverage decisions, provide recommenda- tions to policy makers, and guide clinical practice. Greater use of such assessments was expected to slow the rate of expenditure growth by prioritizing the uptake of technologies as- sessed as being cost-effective. Organizations conducting health technology or related assess- ments have also begun to tackle the issue of providing evidence-based guidelines for health care providers.2–5

The National Institute for Health and Clinical Excellence was established in England in 1999 to ensure that treatment decisions would be based on the best available clinical evidence. At first, the institute directed its attention to the use of new drugs. However, it soon began to develop guidelines for other forms of treatment, and in 2005 its role was extended to providing guidance on the promotion of good health and the preven- tion of ill health. Canada has created or expanded health tech-

nology assessment organizations since 2003, in- cluding the Canadian Agency for Drugs and Technologies in Health, a national body, and specialized provincial agencies in Alberta, Ontario, and Quebec. In France the National Health Authority was

All four countries have built on strategies employed in the 1990s, and budget and price controls continue to be used.

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established in 2004 as an independent agency to advise the Ministry of Health and public health insurers about the clinical value of services, goods, and procedures. It also audits and accred- itshealthcareprofessionalsand firms.Theuse of economic evaluation was explicitly added as a criterion in 2008, although it was rarely used until it became mandatory in 2012. Germany set up the Institute for Quality and

Efficiency in Health Care in 2004—another independent body reporting to government— to evaluate the quality, effectiveness, and efficiency of health services. The institute’s focus includes diagnostics, therapeutics, and pharmaceuticals.11

Evidence of the effectiveness of health technol- ogy assessment in England suggests that its potential for cost containment has not been real- ized. Few new technologies have received nega- tive appraisals in England. Fifteen percent, or 72 of 481, were rated “not recommended,” and 5 percent were recommended for use “only in research,” between March 2000 and January 2013.12

In cases where the National Institute for Health and Clinical Excellence has recom- mendedrestricting theuse of technologies, there have been some savings to the National Health Service. However, part of the cost has been shifted to patients, most controversially for cer- tain cancer drugs.13 Therefore, although the governmenthas encouraged the economic evalu- ation of new technologies and since 2002 has insisted on the use in England of the institute’s guidance—although it is a matter of some debate whether National Health Service providers ac- tually follow that guidance—there is little evi- dence that this approach has contained overall health care expenditure growth.14

Pharmaceutical Spending Although coun- tries have been concerned about pharmaceutical spending for many years, we observed some in- teresting changes in the way the four in our study managed these costs during 2000–10. All four have explicitly negotiated and worked with phar- maceutical companies and resellers—such as pharmacies—on prices, policies, and rebates. France had been pursuing these approaches

for some time. The other three countries ramped up their efforts at price control during the study period, experimenting not only through the ne- gotiations mentioned above but also through reference pricing, for example in Germany and British Columbia, Canada. In reference pricing the payer sets a maximum reimbursement (refer- ence) price for a cluster of interchangeable or similar prescription drugs, and patients pay the difference if they opt for drugs in the cluster that cost more than this price. Reference pricing thus

encourages users to choose lower-cost drugs. In addition to reference pricing, there was

movement toward other value-based approaches to pricing drugs, in which a drug’s clinical value and cost-effectiveness are used to negotiate its price or set reimbursement levels. France has refined its system of basing a prescription drug’s coinsurance rate on the relative clinical benefit it provides. And, beginning in 2013, England will replace its pharmaceutical profit control scheme and price cuts with value-based pricing.15

All four countries have embraced the promo- tion of generic drugs, but to varying degrees. Local purchasers in England use financial incen- tives and advisers to encourage generic prescrib- ing. In France office-based physicians have recently been given financial incentives to pre- scribe generics. Canada has adopted bulk phar- maceutical purchasing. And both France and Germany have adopted pharmacy payment re- forms that encourage pharmacists to dispense lower-cost drugs. The use of health technology assessment for

pharmaceuticals has become particularly promi- nent. All four countries now evaluate the addi- tional benefit of new pharmaceuticals relative to old ones, a process required for all new pharma- ceuticals in Germany. England and Germany use health technology assessment organizations to inform pricing. National evidence suggests that pharmaceuti-

cal cost containment strategies have had some success in reducing drug costs for public payers. The use of rebates and clawbacks—that is, efforts to recoup spending after certain thresholds have been exceeded—in England, Germany, and France have led to marginal savings.16 Evidence from Canada on the impact of reference pricing suggests modest cost savings in the province of British Columbia.17

Direct control of reimbursement rates for generic drugs appears to have had a slightly greater impact, with some estimates suggesting a 5 percent decrease in public expenditures in Ontario as a result of reforms.18 Drug coverage is not a universal entitlement in Ontario, but it is publicly financed for people over age sixty-five and people with low incomes. In Germany policies aimed at lowering prices

and the margins of drug distributors, restric- tions on physicians’ prescription practices and on pharmaceutical budgets, reference pricing policies, and increases in user charges such as coinsurance have all contributed to cost control.19

The effectiveness of France’s policy of channel- ing patients toward drugs of greater effective- ness through cost sharing has been questioned. The apparent lack of effectiveness has stemmed

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from the fact that private insurance covers cost sharing for 94 percent of the population, which blunts the signals created by tiered cost sharing.4

Policy Implications And Lessons For Other Countries The past decade has been one of relative afflu- ence for the countries we reviewed, particularly when compared to the budget scenarios they face over the next few years. It may not be surprising, therefore, that health care costs grew relatively quickly during 2000–10 and that there is limited evidence of the success of recent cost contain- ment strategies. That said, the four countries discussed here

continue to make use of public budgeting and price-setting mechanisms to contain costs in the health care sector, as they have in previous dec- ades. The greater use of public budgeting and price-setting mechanisms, along with the much higher public shares of health care financing in these countries, remain the greatest contrasts between them and the United States. Our review also revealed that in 2000–10 the

four European countries moved away from strat- egies that simply shifted costs to households through across-the-board budget cuts, rationing of services, and increases in user charges. We found a growing focus on the cost-benefit ratio through the greater use of health technology assessment, activity-based funding with cen- trally set prices, and value-based approaches to paying for drugs. Although these policies may not drive down costs, they are likely to produce more efficient use of health care resources in the future. An important caveat is that many of the strat-

egies reviewed here have multiple goals, includ- ing quality, efficiency, and cost containment. For example, most countries introduced activity-

based funding to improve efficiency, quality, transparency, and productivity—not necessarily to reduce costs, at least in the short term. A comprehensive review of the success or failure of such policies would need to consider their full impact across a variety of outcomes together with their original policy objectives. Such evi- dence should be an integral part of the policy- making process, but it is not readily available in many cases. Activity-based funding often represents a shift

from harder to softer budgets, at least within the sector it funds, because total payments cannot be fully known ahead of time. Countries embarking on hospital payment reforms should note, there- fore, that although evidence suggests activity- based funding has promoted more efficient use of health care resources, it is unlikely to contain costs without controls over volumes and prices. Similarly, although the establishment of or-

ganizations to conduct health technology assess- ments has been an important step, there is little evidence that it has produced substantial cost containment. This may be because health tech- nology assessment is primarily used to promote efficiency. However, these assessments can contribute to cost containment if they change practice patterns and result in disinvestment of services that are not cost-effective—goals that can be accomplished through greater use in the assessments of cost-effectiveness and cost- benefit analysis and broadening their use to go beyond new technologies alone. In addition, policy coordination and informa-

tion sharing across jurisdictions may help these four countries capture the potential benefits of health technology assessment. The European Network for Health Technology Assessment is one example of such coordination.20

Our review suggests that the four countries have hadsome success in usinga variety of public policy tools and that the United States may wish to emulate their policies to reduce the growth rate in drug spending. The policies include rel- atively simple levers such as large-scale negotia- tions with pharmaceutical manufacturers and sellers as well as budget caps. Our review also suggests that the United States may wish to use more challenging tools, such as cost-effective- ness analysis that sets prices for new technolo- gies based on the technologies’ relative value and value-based user charges. Finally, health care reforms in the United

States have focused on helping patients and pro- viders use resources more efficiently. In a num- ber of areas—such as the use of diagnosis-related groups and the development of quality, perfor- mance, and benchmarking indicators—the United States has provided valuable design les-

It seems unlikely that the US system will move toward the types of volume and price controls used in the countries examined here.

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sons for other countries. It seems unlikely, however, that the US system

will move toward the types of volume and price controls used in the countries examined here. Thus, although the United States is also moving

toward policies aimed at changing the cost- benefit ratio and promoting economic effi- ciency, it is likely that the large gap in health care spending between the four countries in our study and the United States will remain. ▪

A version of this article was presented at the Commonwealth Fund International Health Policy Symposium, Washington, D.C., in November 2012. Support for this research was provided by the

Commonwealth Fund. The views presented here are those of the authors and not necessarily those of the Commonwealth Fund or its directors, officers, or staff. The authors are very

grateful to Miraya Jun, of the London School of Economics and Political Science, for help in preparing the online Appendix and to two anonymous referees for helpful suggestions.

NOTES

1 Organization for Economic Cooperation and Development. OECD Health Data 2012 [Internet]. Paris: OECD; [cited 2013 Feb 21]. Available from: http://www.oecd .org/health/health-systems/ oecdhealthdata2012.htm

2 Boyle S. United Kingdom (England): health system review. Health Syst Transit. 2011;13(1):1–483.

3 Marchildon GP. Canada: health sys- tem review. Health Syst Transit. 2013;15(1):1–179.

4 Chevreul K, Durand-Zaleski I, Bahrami S, Hernández-Quevedo C, Mladovsky P. France: health system review. Health Syst Transit. 2010; 12(6):1–291.

5 Busse R, Bluemel M, Ognyanova D. Germany: health system review. Health Syst Transit. Forthcoming.

6 Mossialos E, Le Grand J. Health care and cost containment in the European Union. Aldershot (UK): Ashgate, 1999.

7 To access the Appendix, click on the Appendix link in the box to the right of the article online.

8 Hutchison BG, Glazier R. Ontario’s primary care reforms have trans- formed the local care landscape, but a plan is needed for ongoing im- provement. Health Aff (Millwood). 2013;32(4):695–703.

9 O’Reilly J, Busse R, Häkkinen U, Or Z, Street A, Wiley M. Paying for hospital care: the experience with implementing activity-based funding in five European countries. Health Econ Policy Law. 2012;7(1):73–101.

10 Busse R, Geissler A, Mason A, Or Z, Scheller-Kreinsen D, Street A, edi- tors. Supplement: diagnosis-related groups in Europe (EuroDRG): do they explain variation in hospital costs and length of stay across pa- tients and hospitals? Health Econ. 2012;21(Suppl 2):1–140.

11 Fricke FU, Dauben HP. Health technology assessment: a perspec- tive from Germany. Value Health. 2009;12(Suppl 2):S20–7.

12 National Institute for Health and Clinical Excellence. Technology appraisal recommendation summary [Internet]. London; NICE; 2010 [last updated 2013 Feb 6; cited 2013 Feb 28]. Available from: http:// www.nice.org.uk/newsroom/ nicestatistics/TADecisions RecommendationSummary.jsp

13 Richards M. Improving access to medicines for NHS patients: a report for the secretary of state for health [Internet]. London: Department of Health; 2008 Nov [cited 2013 Feb 28]. Available from: http:// www.dh.gov.uk/prod_consum_dh/ groups/dh_digitalassets/@dh/@en/ documents/digitalasset/dh_ 089952.pdf

14 National Institute for Health and Clinical Excellence. NICE and the NHS [Internet]. London: NICE; [last updated 2012 Oct 11; cited 2013 Feb 28]. Available from: http:// www.nice.org.uk/aboutnice/ whatwedo/niceandthenhs/nice_ and_the_nhs.jsp

15 Claxton K, Sculpher M, Carroll S.

Value-based pricing for pharma- ceuticals: its role, specification and prospects in a newly devolved NHS [Internet]. York (UK): University of York; 2011 Feb [cited 2013 Mar 1]. (Centre for Health Economics Research Paper No. 60). Available from: http://www.york.ac.uk/ media/che/documents/papers/ researchpapers/CHERP60_value_ based_pricing_for_ pharmaceuticals.pdf

16 Organization for Economic Cooperation and Development. Pharmaceutical pricing policies in a global market. Paris: OECD, 2008.

17 Grootendorst P, Stewart D. Impact of reference pricing on anti-hyperten- sive drug plan expenditures. Health Econ. 2006;15:735–42.

18 Law MR, Ystma A, Morgan SG. The short-term impact of Ontario’s generic pricing reforms. PLoS One. 2011;6(7):e23030.

19 Paris V, Docteur E. Pharmaceutical pricing and reimbursement policies in Germany [Internet]. Paris: Organization for Economic Cooperation and Development; 2008 [cited 2013 Mar 18]. (OECD Health Working Papers No. 39). Available from: http://www.oecd .org/germany/41586814.pdf

20 EUnetHTA [home page on the Internet]. Copenhagen: EUnetHTA Secretariat; [cited 2013 Mar 1]. Available from: http://www .eunethta.eu/

Lowering Costs

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ABOUT THE AUTHORS: MARK STABILE, SARAH THOMSON, SARA ALLIN, SEAN BOYLE, REINHARD BUSSE, KARINE CHEVREUL, GREG MARCHILDON & ELIAS MOSSIALOS

Mark Stabile is a professor of economics and public policy at the University of Toronto.

In this month’s Health Affairs, Mark Stabile and coauthors offer an analysis of cost containment strategies adopted by four high- income countries—Canada, England, France, and Germany—in 2000–10 and suggest that these hold lessons for the United States. Drawing on a comprehensive analysis compiled by the European Observatory on Health Systems and Policies, the authors identify trends in all four countries toward more use of technology assessments and payment based on diagnosis-related groups and the value of products or services, among other strategies. The authors write that these

policies may result in a more efficient use of health care resources, but they are unlikely to contain costs unless combined with volume and price controls. The authors acknowledge that there is little likelihood that such controls will be adopted in the United States. Stabile is founding director of

the School of Public Policy and Governance and a professor of economics and public policy in the Rotman School of Management, both at the University of Toronto. He is also a research associate at the National Bureau of Economic Research, in Massachusetts, and a visiting professor at the London School of Economics and Political Science (LSE). His recent work focuses on the economics of child health and development, child

mental health, health care financing, and tax policy and health insurance. Stabile received a master’s degree and a doctorate in economics from Columbia University.

Sarah Thomson is a senior lecturer in health policy at LSE.

Sarah Thomson is a senior lecturer in health policy in the Department of Social Policy at LSE. She directs a postgraduate course on financing health care. Her research focuses on health systems, health care reform, and health financing policy in high-income countries. Thomson is also deputy director of LSE Health, a large multidisciplinary research center, and head of the LSE hub of the European Observatory on Health Systems and Policies. She has a master’s degree in health policy and a doctorate in social policy from LSE.

Sara Allin is an assistant professor in the School of Public Policy and Governance at the University of Toronto.

Sara Allin is an assistant professor in the School of Public Policy and Governance at the University of Toronto and a senior researcher at the Canadian Institute for Health Information.

Her research interests include health policy, equity in health and health care, and comparative policy analysis. Allin received a master’s degree in health policy and a doctorate in social policy from LSE.

Seán Boyle is a senior research fellow in health and social care at LSE.

Seán Boyle is a senior research fellow in health and social care at LSE, where he researches and writes extensively on a range of policy and planning issues concerning the financing and provision of health care in the United Kingdom. Boyle earned a master’s degree in econometrics and mathematical economics from LSE.

Reinhard Busse is department head for health care management in the Faculty of Economics and Management, Berlin University of Technology.

Reinhard Busse is a professor and the department head for health care management in the Faculty of Economics and Management at the Berlin University of Technology. He is also associate head of research policy and director of the Berlin hub of the European Observatory on Health Systems and Policies. Busse is the editor-in-chief of Health Policy. He earned a master’s degree in public health

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from the Hannover Medical School and a medical degree from the University of Marburg, both in Germany.

Karine Chevreul is deputy head of the Paris Health Economics and Health Services Research Units and head of a Health Services Research Unit dedicated to mental health. She has also served as a technical adviser to the ministers of health and of social security, the elderly, the disabled, and family. Chevreul holds two master’s degrees, one in health services management from the London School of Hygiene and Tropical Medicine and one in public health in developing countries from Paris VI University. She also has a doctorate in social policy from LSE.

Greg Marchildon is the Canada Research Chair in Public Policy and Economic History at the University of Regina.

Greg Marchildon is the Canada Research Chair in Public Policy and Economic History at the Johnson- Shoyama Graduate School of Public Policy, University of Regina, in Saskatchewan. Previously, he was executive director of the Commission on the Future of Health Care in Canada. Marchildon earned a master’s degree in economics from the University of Regina, a doctorate in economic history from LSE, and a law degree from the University of Saskatchewan.

Elias Mossialos is the Brian Abel- Smith Professor of Health Policy at LSE.

Elias Mossialos is the Brian Abel- Smith Professor of Health Policy in the Department of Social Policy at LSE and the director of LSE Health. His research interests concentrate on health policy relating to health care systems. Mossialos earned a doctorate in health policy and a medical degree from the University of Athens and is a Fellow of the Royal College of Physicians.

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