Why Are American Health Care Costs So High?

From YT: In which John discusses the complicated reasons why the United States spends so much more on health care than any other country in the world, and along the way reveals some surprising information, including that Americans spend more of their tax dollars on public health care than people in Canada, the UK, or Australia. Who's at fault? Insurance companies? Drug companies? Malpractice lawyers? Hospitals? Or is it more complicated than a simple blame game? (Hint: It's that one.)

For a much more thorough examination of health care expenses in America, I recommend this series at The Incidental Economist: http://theincidentaleconomist.com/wor...
The Commonwealth Fund's Study of Health Care Prices in the US: http://www.commonwealthfund.org/~/med...
Some of the stats in this video also come from this New York Times story: http://www.nytimes.com/2013/06/02/hea...

This is the first part in what will be a periodic series on health care costs and reforms leading up to the introduction of the Affordable Care Act, aka Obamacare, in 2014.
siftbotsays...

Self promoting this video and sending it back into the queue for one more try; last queued Tuesday, August 20th, 2013 4:21pm PDT - promote requested by original submitter RFlagg.

Trancecoachsays...

I don't think he's correct in how much things cost. Different hospitals in different locations in the U.S. charge considerably different amounts for say a hip replacement. You can't accurately generalize costs like this.

It's interesting to note that he says Americans go to the doctor less frequently than Europeans. It'd be interesting to find out the reasons why, if this is in fact the case. This goes along with what he says that Americans are not "sicker" than Europeans or "other people."

Also, to say Americans pay more for healthcare does not take into account how much Europeans pay in taxes in order to get whatever healthcare they get. So it's not clear where he gets that Americans pay more for healthcare or how he measures that.

Also, in places like Italy, you get "discounts" on healthcare if you don't ask for a receipt, pay in cash, etc., bringing costs down as the providers can then avoid having to report that income. For similar reasons, the statistics on how much people actually spend on healthcare doesn't reflect this underground economy.

He's correct that doctors are paid more in the U.S. There's also the IP/patent problem and the FDA and other trade restrictions that limit the availability of drugs which jacks up prices in the U.S.

He's also advocating cronyism here as a good way to lower prices, which, I assure you, is not a good way to go. I can tell you that doesn't lower any prices in the long run. But in the short run, it's like giving all government business to Walmart so that they can keep prices low. That works until ... they put competitors out of business. Then they jack up prices again, once their monopoly is ensured.
He, of course, advocates centralized planning to keep costs low. That's why Cuba has "cheaper" healthcare. That's also why Cubans are mostly poor.

The reason you can't negotiate effectively, as he says, is not because healthcare is different from any other service or good, but because of all the burdensome regulations and protectionism that surrounds it.
Basically he either doesn't know what he's talking about or he has some other agenda -- like, for example, being "hip."

I think he's also not talking about average individual healthcare costs, but how much the "country" as a whole, spends on healthcare, which is quite different.

RedSkysays...

It is simple, lack of competition at the pharmaceutical, private hospital and insurance provider level with localized monopolies that jack up prices because of a lack of market pressure.

Yossariansays...

Individually health care cost in the UK average around £2000 per person per year. Average earnings for salaried employees is £26,500
So we pay health care tax of approximately 7.5% of an average income.

In the US the average health care spend per person, per year is around $8000 (£5000). Average per captia income was $28,000 in 2011 (which I was surprised by).
This makes health care costs 28% of income. And that can't right. I mean really can't be right - I must have sum wrong somewhere...
Even if we use the average household income instead: $53,000 it's still 15%. Double that of the UK.

With that level of spending I would expect the US to have by far the highest level of health care to be found anywhere on the planet.

chingalerasays...

Emergency services are all I care about-Bone-sets, stitches, wound care and antibiotics should be free of charge to all citizens of planet Babylon, worldwide. So should general dentistry. The machine (a type of prison) now requires that we play the societal-shuffle according to their economic rules (which are violated with impunity daily by the rule-makers) should not the slave-masters keep their labor force from breaking-down too soon?? Inmates in prisons in the United States receive free emergency and necessary dental maintenance, eh?

Yogisays...

And they absolutely don't, we have horrible healthcare for what we're paying. Which is why a majority of the public was in favor of single payer socialized health care. Until Obama introduced his stupid version and the propaganda machine geared up to make people fucking stupid in this country.

Yossariansaid:

Individually health care cost in the UK average around £2000 per person per year. Average earnings for salaried employees is £26,500
So we pay health care tax of approximately 7.5% of an average income.

In the US the average health care spend per person, per year is around $8000 (£5000). Average per captia income was $28,000 in 2011 (which I was surprised by).
This makes health care costs 28% of income. And that can't right. I mean really can't be right - I must have sum wrong somewhere...
Even if we use the average household income instead: $53,000 it's still 15%. Double that of the UK.

With that level of spending I would expect the US to have by far the highest level of health care to be found anywhere on the planet.

chingalerasays...

@Yogi-stupider and stupider by the day, and more addicted to the technology which enslaves them, the slow-drip intravenous velvet of all media corps'. propaganda (not only Fox, MSNBC, CNN, et all), and an unrealistic and programmed desire to aspire to economic heights attainable only by those who run the game.
House always wins or it burns to the ground-You can't ignore the beast, it will not go away, but it can be abruptly altered...

A "healthy" fear of death is part of the Babylonian package, and fear IS the mind-killer-How about take an aspirin and stop thinking about which designer disease to get yourself tested for peeps, doctors are in on the ruse as well.

Unless yer just one of those types of robots who can't seem to keep a doctor's preventative hand out of yer rectum in which case, you have problems and it may be YOU ( and your neurosis) who are driving-up the cost of health care for all.

direpicklesays...

Can't stand this guy, so not watching, so maybe this was already covered. I think a big aspect of it is that nobody in the US knows how much anything costs.

Doctors order tests with no idea how much they cost. Even the billing departments don't know how much things cost, because they're priced outrageously with the assumption that the insurance company will haggle them down some amount.

And then the insurance company doesn't really care too much, because they'll just pass it on to their own customers, ultimately. There is no downward pressure anywhere in the system on costs. There's no pressure to only do the cost-effective tests. It is impossible to shop around and price-comparison.

I had shoulder surgery last fall, and despite repeated requests to everyone I came in contact with, not a single damn person could give me any idea of what it was going to run me in the end.

Edit: Worth noting: this runaround was pretty much my only complaint about it. Doctor did a good job, had no trouble at the hospital, insurance company did what they were supposed to do, I didn't have to wait longer than a week or so to get it scheduled, and it healed properly.

evilspongebobsays...

Pharmac (go look it up) here in NZ has a big part to play in our overall lower health costs for medicines.

It's a crown owned entity that works out what drug is the best for a particular purpose and then says, "hey big pharma wanna have all the NZ'ers get cured of shitty disease x with your magic pill number 4? Well then gives us the generic brand and here's what we will pay." And then drives a sweet deal for all us kiwis.

It's that big of a thing that it's upset all the corporate fuckers that are driving the whole Trans Pacific fuck the little guy Partnership.

Then there is the ACC (Accident Compensation Corporation) - It's not perfect by any means. But say for example you are playing football on the weekend and your blow your hamstring, well you rock on up to the local A&E, afterhours or medical centre etc, pay a fee of around $30-50nz, get checked over, if you need xrays/scans these maybe fully subsidised or again you may have to pay up to $50-80, get cheapo drugs from the pharmacy (thanks Pharmac) and go home and put your feet up. You're in the system now buddy!

Now have to put your foot up at home for the next 4 weeks, - what about work? I gotta get paid dog!! Don't worry homie ACC has got your back.

If your claim is approved (they pay first and ask questions later, after all you need to get better) you'll be paid 80% of your income while your at home working on your TV tan! ACC was created for workplace injuries, but falling of the ladder home still gets covered.

ACC works by all employers paying into the scheme via levies based on your wage/salary, also the higher risk of injury the workplace is the higher the levy the employer has to pay.

The pay off for ACC is that no-one is allowed to be sued. The govt will drop the hammer on the company, you get looked after by ACC. This has caused the odd issue here and there but overall. Sweet!

Disclaimer - This may all be a complete bunch of ass, but it's pretty close to the way it is.

BicycleRepairMansays...

No, the US spends MORE TAX MONEY per capita than, say, Sweden and all those other countries with "free" healthcare.(except for 3 of them) Swedes do pay more taxes, yes, but its not because of healthcare.
ON TOP of all those taxes, Americans pay private insurance or bankrupt themselves in order to actually get healthcare when they need it.

http://danieljmitchell.wordpress.com/2013/02/23/which-nation-has-the-most-per-capita-government-spending-on-healthcare-france-italy-the-united-states-
sweden-canada-greece-or-the-united-kingdom/

Trancecoachsaid:

Also, to say Americans pay more for healthcare does not take into account how much Europeans pay in taxes in order to get whatever healthcare they get. So it's not clear where he gets that Americans pay more for healthcare or how he measures that.

Trancecoachsays...

You have to look at how much individuals pay for healthcare, all hidden costs included, proportional to the amount of money they earn and get to keep.

The US government pays a lot for healthcare. When you work for a major university (as I have you), you became acquainted with how much funding their university hospital gets for research from the government. And in countries like Canada, where you can't even find a doctor and have to wait months to see one, of course the spending will be less as they have fewer medical providers and fewer variety of services. But your point is well taken. The US government does spend more "tax" dollars per capita than many of these other socialist healthcare utopias.

I agree with this from the article you posted:

"So what’s the moral of the story? Simple, notwithstanding the shallow rhetoric that dominates much of the debate, the United States does not have anything close to a free-market healthcare system."

Because we have just a partially socialized system, we have only a partial healthcare clusterfuck. But it can get much worse. Ask my colleague why he came to the US for cancer treatment (like Canadian politicians and the rich do) and didn't stay in Canada.

The US government has more money than other governments, so it can spend more. But I was referring to how much individuals pay, not how much a government pays. So, I'm not entirely sure I understand your question fully since I don't equate "Americans" to the US government. Not one and the same.

And look at what's included under "healthcare" costs. Is paying the overpaid humongous US "healthcare" bureaucracy a "healthcare" cost? What about Congressional medical insurance? Or military hospitals?
It's really hard to know, given the lack of economic calculation involved in government spending.

But you can see both sides use the same "US spends more per capita" to come to opposite conclusions. One says, it spends more but because it is not more socialist, it sucks more (not true, though). The other says, it spends more, so it means it is too socialist compared to other countries.

See if you can find data on where exactly the money is spent and the breakdown, more specifically than "healthcare."

BicycleRepairMansaid:

No, the US spends MORE TAX MONEY per capita than, say, Sweden and all those other countries with "free" healthcare.(except for 3 of them) Swedes do pay more taxes, yes, but its not because of healthcare.
ON TOP of all those taxes, Americans pay private insurance or bankrupt themselves in order to actually get healthcare when they need it.

http://danieljmitchell.wordpress.com/2013/02/23/which-nation-has-the-most-per-capita-government-spending-on-healthcare-france-italy-the-united-states-
sweden-canada-greece-or-the-united-kingdom/

Bruti79says...

This is a false or misleading statement. The reasons for some Canadians having to wait or not being able to have a doctor are different. Canada has had a terrible drain on it's medical system with doctors and nurses going down to the US, because they make more money there. This has lead to new programs to entice them to stay in Canada. It looks like they have been working, but it's a 10 year study and we need to see the numbers.

As a Canadian who has been though the healthcare system in Ontario, and had family members who've had been through health care in Quebec, Manitoba, Alberta, British Columbia, Halifax and Newfoundland.Labradour, I can tell you the parts that work and the parts that don't.

I'm a type I diabetic and I've had cancer twice. I've had a sarcoma in my saliva gland and as a result of radiation therapy, I've had melanoma skin cancer crop up on my body as well. I've had four major surgeries on my body. Two of them were serious complicated nervous system surgeries or lymphatic resecctions. I've been through my fair share of Canadian health care.

First things first. It's not a national healthcare. Anyone saying national healthcare doesn't know what they're talking about. The provinces and territories have their own health care. Granted, the territories get a lot more help from the Federal Gov't, but the health needs of people in Ontario are different from those in Manitoba.

Let's get into the brass taxes. I've had the nerve surgery and radiation therapy that was done on my face evaluated at a hospital in West Virgina as part of a study to compare American HC vs. Canadian HC. For my first surgery, I got to choose my doctor, I was given a list. They recommended one doctor, who was an expert in North America for nerve surgery, but he was recovering from a surgery of his own. They suggested I wait for him to be ready, but if I wanted to proceed, I could wait if I wanted.

I waited and surprise, no facial paralysis. I then had to do 30 days of intense radiation therapy in my parotid bed, to make sure they got it all.

I paid a total of $300 dollars in parking. I also have private health insurance for diabetic supplies, which means any medication I had to get to deal with the after effects of radiation had an 85% payback.

Years later when the effects of radiation had settled and I had a tumour form from the radiation, I had gone to my family doctor, saw a specialist the next day and then within the week I had an excision done. It came back positive and within a week of that, I was given a sentinel node biopsy to see if it had spread.

It had.

Within a month of the first examination, I had a full lymphatic ressection of my left leg and groin done. This wasn't as complicated as the facial nerve surgery, so I got a list and a suggestion of who to do the surgery.

That came back clean, but I now deal with a lot of complications from that.

That surgery cost me nothing.

In West Virgina at a hospital (they didn't tell me which one they used.) The total for all the exams (CT, MRI, etc.) the surgery and the radiation therapy came out to $275,000. Give or take.

This is why it drives me nuts when I see people get things wrong about Canada. We have problems, oh yes we do. For example, don't be over the age of 65 in BC or Quebec. The diagnostics training in Nova Scotia or Newfoundland if pretty terrible. But, I got to choose my doctor, and I saw everyone really quick. Why? Because you don't fuck with melanoma.

So, I'm sorry Trancecoach, I saw that video you linked. The guy lost a lot of credibility at "Communist State of Canada." You're already skewing your message to say something. You are just plain wrong about health care in Canada, the way you talk about. I am living proof of how well it works.

I'm a self employed photographer and the most I've ever had to pay was for parking at the hospital. That was the $300 dollars. I paid my taxes and that paid for my health care. If I didn't, and if other Canadians didn't, I would not be here, as with many other Canadians.

Critique us for the things we do shitty, but I have yet to see anyone do that. I see talking points and misinformation from people just spreading false info.

Get your facts straight. I know how it works in Ontario the best. But, I also know for a vast majority of the other country. I can tell you Saskatchewan has had an exodus of nurses, but that's not bad health care system. That's a gov't system that can't keep nurses in the province. If we can keep doctors and nurses, the system works great.

The guy you linked to, most of his sources for data are absolute crap and he misleads a lot of his talking points. This stupid lottery doctor that happened was because it was an isolated town in the wilderness and there was only one doctor left after the other passed away. So yes, he had to do a lottery for people so he wouldn't get swamped, unless it was an emergency. It was a town, I believe about 10,000 people, but I'm not sure on that.

Trancecoachsaid:

The US government pays a lot for healthcare. When you work for a major university (as I have you), you became acquainted with how much funding their university hospital gets for research from the government. And in countries like Canada, where you can't even find a doctor and have to wait months to see one, of course the spending will be less as they have fewer medical providers and fewer variety of services. But your point is well taken. The US government does spend more "tax" dollars per capita than many of these other socialist healthcare utopias.

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