In a much discussed post, Ezra Klein produced a series of graphs showing that Americans pay more for office visits, scans and imaging, drugs, and other aspects of health care — often, far more — than is the case in Canada or Western Europe.
There is a simple explanation for why American health care costs so much more than health care in any other country: because we pay so much more for each unit of care. As Halvorson explained, and academics and consultancies have repeatedly confirmed, if you leave everything else the same — the volume of procedures, the days we spend in the hospital, the number of surgeries we need — but plug in the prices Canadians pay, our health-care spending falls by about 50 percent.
In other countries, governments set the rates that will be paid for different treatments and drugs, even when private insurers are doing the actual purchasing. In our country, the government doesn’t set those rates for private insurers, which is why the prices paid by Medicare, as you’ll see on some of these graphs, are much lower than those paid by private insurers. You’ll also notice that the bit showing American prices is separated into blue and yellow: That shows the spread between the average price (the top of the blue) and the 90th percentile (the top of the yellow). Other countries don’t have nearly that much variation, again because their pricing is standard.
Bernard Finel, recalling a series of posts and comment threads from a while back, observes,
James Joyner has argued that in order to reduce health care expenditures we need to make a choice — we can’t have it be better, faster, and cheaper. Yes, we can. The reason we can is that the choice isn’t simply between better, faster, and cheaper, it is between better, faster, cheaper, and more profitable. If you cut profits — for medical insurance providers, for medical malpractice insurance providers, for med-mal attorneys, for doctors, for hospitals, and for drug companies — you can have better, faster, and cheaper. The problem is that our system is essential optimized for profits — our goal is not to make people healthy but to make people wealthy.
That’s true up to a point, although some of this is simply the Find The Umbrella phenomenon combined with arbitrary itemizing of costs. (Maybe the scans are $900 because they can bill that much for it while something that they’d otherwise bill more for is capped because the insurance companies won’t reimburse above a certain rate.)
Beyond that, as Dave Schuler points out, there’s no good reason to think OUR government is going to hold down costs in the same way the social democracies have.
I see no reason to believe that even if we went to a single-payer system that the federal government would be willing to lower healthcare prices so that we’re spending what France, Germany, or the Netherlands is. Despite the legislative mandate to do so that’s been around for about ten years they haven’t lowered Medicare reimbursement rates. Every year they postpone that painful choice and, indeed, they’re preparing to do so again.
And, indeed, as Kevin Drum acknowledges, nothing in the bills before Congress will do anything at all to reduce costs.
