Why is health care so expensive?
Health care costs more in the United States than anywhere else on earth. It's not even close. We spend almost twice as much as the average of developed countries, and almost forty percent more than the second most costly country, which is France. This would make sense, if we were healthier as a result. Unfortunately, we are not. We get chronic diseases at least as often as citizens of other countries, we rank 38th in life expectancy, and our infant mortality rate is number 33. The highest life expectancy in the world is in Japan, which spends about half per person what we do on health care. Something is driving up costs in the United States, and it is not an expense that gives us better health.
Why is health care so expensive?
Robert Field
By guest blogger Robert Field:
Health care costs more in the United States than anywhere else on earth. It’s not even close. We spend almost twice as much as the average of developed countries, and almost forty percent more than the second most costly country, which is France.
This would make sense, if we were healthier as a result. Unfortunately, we are not. We get chronic diseases at least as often as citizens of other countries, we rank 38th in life expectancy, and our infant mortality rate is number 33. The highest life expectancy in the world is in Japan, which spends about half per person what we do on health care. Something is driving up costs in the United States, and it is not an expense that gives us better health.
So, why does American health care cost so much? Experts point to a number of factors but do not always agree on which is most important. Technology is usually assigned most of the blame. Countless new machines, drugs and devices are introduced every year. They often improve care, but the prices tags can be astronomical. However, many European countries use as much technology as we do without spending anywhere near the same amount overall on health care.
There is also a lot of fraud, abuse and waste in the system. Each year, billions of dollars are lost due to lapses, both intentional and unintentional, in accurate billing and reimbursement. However, a few billion dollars is not even a drop in the bucket in a system whose total cost is over $2.5 trillion a year.
Many people point to malpractice liability as the culprit. We are definitely the most litigious country. However, direct costs of medical malpractice amount to only about one percent of total system expenses. The bill is higher if you also consider the cost of defensive medicine, which is the extra tests that some physicians order to try to protect themselves from lawsuits, but no one knows by how much. Even the highest estimates put the cost of defensive medicine at less than three percent of the total – a large number but hardly enough to account for the high system cost alone.
There is one other factor that is distinctive to American health care and that is increasingly thought to add the most costs of all. That is the disjointed nature of the system. There are hundreds of different insurance plans in the United States, each with its own network of providers and terms of coverage. This makes it extremely difficult to coordinate care. Providers often fail to communicate with one another, which can lead to repeated tests and redundant treatments. Lack of coordination is one reason we lag behind many other developed countries in using electronic medical records. Our system contains few, if any, incentives for providers or insurers to try to overcome this inefficiency.
No one knows exactly how much more we pay because of the disjointed nature of the health care system, but it is clearly a large amount. The health reform law contains provisions that encourage greater coordination, but any impact will take time. Whatever the solution, we need it soon, before health care costs place an insurmountable burden on individuals, government programs, and the overall economy. We can’t afford to keep paying premium prices and getting health outcomes that are mediocre at best.
Find earlier items by Robert Field here, including this examinaiton of the legal challenges of the Affordable Care Act (Obamacare).
To check out more Check Up items go to www.philly.com/checkup.
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@Fumo - You're cwazy to think Republicans want healthcare to be so expensive. Get somewhere else with that extreme lefty thinking and put down the pipe.— Tough* Juice*- Obama Remorse- You're exactly right. Couldn't agree with you more.— FlyersFan561
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- No other country has health insurance companies making record profits off of the sick and injured. They are complete parasites and serve NO purpose except to make themselves rich. Get rid of them and let's go single-payer. Medicare for all!— Blanketman
- Well, let's see - Pacificare, it was announced today, faces 9.9 BILLION DOLLARS in fines for violating California state law ONE MILLION TIMES BETWEEN 2006 AND 2008. I'm not sure what's so disgusting - the fact that a company like this is still allowed to exist, or that they HAVE THAT MUCH MONEY to pay the fine (which only comes from stealing your premiums and not paying for services). Now, you have to be backdooring a WHOLE LOT OF PEOPLE EVERY FRICKIN DAY to rack up those kinds of numbers.....And idiots in this country wonder why spend 3X per capita more than the rest of the civilized world for a 50th ranking in life expectancy and 27th ranking in infant mortality. Yeah, but government is BAD!— CiceroSpuriousDeodatus
- MVKrum - Responsible compared the US to Japan, not China, and because, if you read the article, so did the author. The article talks about our expensive healthcare and us being less healthy - but ResponsibleAmerican is right - its not a direct cause and effect. Americans are unhealthy because of our lifestyle, not the quality of our healthcare.— Gary Varsho
- you guessed right ya filthy blouse wearing, poodle walking hippie...just kidding, you seem ok...for a spendocrat....— boopity bobo
- Hmmm... could it have anything to do with insurance companies being free to abuse their customers, pharma companies being incentivized to create expensive drugs that treat life-long symptoms instead of cure diseases, a food industry that is incentivized to produce ever more highly processed and nutritionless food, and the Republican party making sure that nobody ever does anything to change the nature of those markets? I guess that's just dirty hippie talk...— jpb
- Well ResponsibleAmerican, that's because we can afford to get fat, unlike the impoverished in China. Nice comparison by the way, us and the Chinese. We're the fattest, dumbest, laziest people on the planet. You could have compared us to any other country in the World and we'd come up "large".— MVKrum
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- Let's be clear about 2 things. 1) In the United States over 30% of Americans are OBESE. Another third are overweight. In Japan only 3% of the population is obese. It is really that simple. 2) The health care law is not reform and it increases the cost of insurance forcing most companies into high deductible plans so those of that work will pay more and get worse coverage then those getting it for free from the taxpayers. Premiums for those who are healthy in Pennsylvania will go up almost double what they pay today...that's a fact when you compare the same coverage to Massachusetts which has all the ObamaCare mandates. That's hope and change for ya!— ResponsibleAmerican
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