March 17, 2013


Why an MRI costs $1,080 in America and $280 in France (Ezra Klein, March 15, 2013, Washington Post)

There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher. [...]

There are many possible explanations for why Americans pay so much more. It could be that we're sicker. Or that we go to the doctor more frequently. But health researchers have largely discarded these theories. As Gerard Anderson, Uwe Reinhardt, Peter Hussey and Varduhi Petrosyan put it in the title of their influential 2003 study on international health-care costs, "it's the prices, stupid."

As it's difficult to get good data on prices, that paper blamed prices largely by eliminating the other possible culprits. They authors considered, for instance, the idea that Americans were simply using more health-care services, but on close inspection, found that Americans don't see the doctor more often or stay longer in the hospital than residents of other countries. Quite the opposite, actually. We spend less time in the hospital than Germans and see the doctor less often than the Canadians.

"The United States spends more on health care than any of the other OECD countries spend, without providing more services than the other countries do," they concluded. "This suggests that the difference in spending is mostly attributable to higher prices of goods and services."

...but we do know how to drive down the prices of goods and services : make consumers pay for them out of their own pockets.  If my insurer is footing the bill I don't care what it costs.  If the money comes out of my savings account I suddenly do.

Importantly, this difference remains even if government funds the entire health care system.  The difference is between funding the benefit and funding the contribution.

Posted by at March 17, 2013 5:46 AM

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