US Health Care Spending Is High Because We Pay More For Everything

A team of researchers has made use of granular OECD data to dig into the reasons why we spend so much on health care in the United States. First off, here are the things that don’t account for our high spending:

The main findings of this comparison were that, contrary to some explanations for high spending, US social spending and health care utilization were relatively similar to other high-income nations….The data also suggest that some of the more common explanations about higher health care spending in the United States, such as underinvestment in social programs, the low primary care/specialist mix, the fee-for-service system encouraging high volumes of care, or defensive medicine leading to overutilization, did not appear to be major drivers of the substantially higher US health care spending compared with other high-income countries.

So what’s the problem?

Instead, the data suggest that the main driving factors were likely related to prices, including prices of physician and hospital services, pharmaceuticals, and diagnostic tests, which likely also affected access to care. In addition, administrative costs appeared much higher in the United States.

I’m not making fun of the researchers when I say, “duh.” I’m all in favor of obliterating the private insurance industry in the US, but they aren’t the core reason for high costs. They might even help to keep costs down in some places. The reason that health care costs are high is because doctors, nurses, hospitals, pharmaceuticals, and equipment are all far more expensive than they are in other countries.

And why is that? Because other countries set those costs and we don’t. If you’re so opposed to government control of pricing that you’re willing to pay twice as much as the rest of the world for your health care, then fine. You’ve put your money where your mouth is. But I think most of us believe this tradeoff has gone too far.

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