Why we pay so much more for health care

Via Kevin Drum I came across this graphic that shows that health care costs in the US are much higher than those in other developed countries. This should, of course, come as no surprise to anyone.

health care costs

But why is this the case? Many of the easy answers don’t quite cover it. This article by Elisabeth Rosenthal from which the graphic is taken looks at possible explanations.

Whether directly from their wallets or through insurance policies, Americans pay more for almost every interaction with the medical system. They are typically prescribed more expensive procedures and tests than people in other countries, no matter if those nations operate a private or national health system. A list of drug, scan and procedure prices compiled by the International Federation of Health Plans, a global network of health insurers, found that the United States came out the most costly in all 21 categories — and often by a huge margin.

Rosenthal looks at the case of colonoscopies., which provides an excellent case study of how in it seems like we in the US tend to go with the most expensive option for treatment.

Largely an office procedure when widespread screening was first recommended, colonoscopies have moved into surgery centers — which were created as a step down from costly hospital care but are now often a lucrative step up from doctors’ examining rooms — where they are billed like a quasi operation. They are often prescribed and performed more frequently than medical guidelines recommend.

The high price paid for colonoscopies mostly results not from top-notch patient care, according to interviews with health care experts and economists, but from business plans seeking to maximize revenue; haggling between hospitals and insurers that have no relation to the actual costs of performing the procedure; and lobbying, marketing and turf battles among specialists that increase patient fees.

While several cheaper and less invasive tests to screen for colon cancer are recommended as equally effective by the federal government’s expert panel on preventive care — and are commonly used in other countries — colonoscopy has become the go-to procedure in the United States. “We’ve defaulted to by far the most expensive option, without much if any data to support it,” said Dr. H. Gilbert Welch, a professor of medicine at the Dartmouth Institute for Health Policy and Clinical Practice.

All those other countries that have cheaper health care costs have some form of universal, government-run, single payer health systems. It is crazy that the US is the one holdout on this issue among all the developed countries and many of the developing countries.