15 July 2005

Health Care Costs

This news isn't a surprise to me. But, it does provide good evidence to support something I've argued for a long time. Health care costs are high in the United States primarily because providers get paid more here, not primarily because of factors like medical malpractice claims or high health insurance company profits.

In a report on U.S. health spending in the journal Health Affairs, Gerald F. Anderson and colleagues, all affiliated with the Bloomberg School of Public Health at Johns Hopkins, compared U.S. spending with that of nations in the Organization for Economic Cooperation and Development.

The authors said neither supply issues such as waiting lists for services in other countries nor the cost of malpractice explain higher health care costs in the U.S.

Rather, they said, Americans pay more because health care workers, doctors, nurses and technicians, are paid more here than in other nations and the price tag on health services from hospital beds to prescription drugs is significantly higher here.


The difference is significant. Americans pay $5,267 per capita for health care, while the runner up, the Swiss, pay $3,455 per capita, and the average industrialize country resident pays even less. Yet, American outcomes from its health system are not better, and in some cases are worse. Only about 3% of American health care costs can be attributed to fewer waiting lists for procedures, defensive medicine and malpractice cases (with medical malpractice case accounting for only about 0.46% of the total).

It also bears mentioning that almost every other industrialized country in the world provides universal health care to its citizens, while the United States, which pays 53% more per capita, still leaves 14% of its citizens uncovered.

We pay doctors, pharmacutical companies and other health care providers too much, because our fragmented system for paying providers bargains with them ineffectively. For example, Medicare, which provides a large share of all health care services in the United States and essentially all of the highly expensive end of life care for elderly persons, is basically forbidden from bargaining over price with providers. Until we fix the problems with the United States health care system, we will continue to have the worst health care system in the industrialized world, despite having some of the best paid professionals in the system and some of the highest technology equipment.

1 comment:

Anonymous said...

Healthcare costs can be extremely high, although health insurance is a major aspect to many lives and we all need it.