Why is health care so expensive in the United States

The International Federation of Health Plans publishes an international cost comparison of common medical services and its most recent compilation looked at prices in 2017. The result answers the question asked by the NYT:

Why does health care cost so much more in the United States than in other countries? As health economists love to say: “It’s the prices, stupid.”

Most procedures cost less than half as much abroad compared with what Americans pay.

On top of these prices, Americans also pay higher insurance administrative costs than people in other countries, but that only adds a few percentages to the kind of inflated prices shown here.

The UAE does pay more for Kalydeco than Americans pay, but that is one of those rare outliers. The UAE pays less than half what Americans pay for most drugs.

Many people think that Americans pay more for healthcare due to high administrative costs, and it is true that we pay higher prices for healthcare administration than anywhere else, but that is still only about 8% of healthcare spending (according to the OECD), so it is only a tiny part of the overall problem.

As you can see in the graphic, only Mexico and Costa Rica had a higher administrative burden than the US, but because they spend a lot less on healthcare in those countries, the gross administrative burden in the US is still much bigger.  

admin-cost

At the bottom of the graphic are Turkey, Norway and Finland which spend hardly anything on healthcare administration.  

Posted in Health

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