Money for Nothing

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Why does healthcare cost so much more in this country than it does elsewhere? Ezra runs down some of the reasons detailed in a new report.

Take drugs. The report finds that we overpay for prescription drugs by $66 billion. If you compare brand name drugs in the US and Canada, the same drug will cost you a full 60% more here. If you restrict that to the top selling drugs, you find we pay 230% more than anyone else. For generics, the difference evaporates. So on average, we overpay by 60-70% for pharmaceuticals, largely because we don't bargain down the costs just like every other country. In essence, we're subsidizing the low drug costs for the rest of the world. If we demanded the discounts as well, other countries would pay a bit more, but we'd pay a lot less. This, of course, is just
what the administration has been trying to prevent in their fight against allowing Medicare to bargain down prices. They believe American consumers should continue paying for the discounts of Europeans.

Doctor's compensations are also problematic: We overpay here by $58 billion. In
other nations, specialists make 4 times the average salary. In America, they make 6.6 times the mean. Meanwhile, the overall profits of the system add on another $75 billion in costs. Another $147 billion in increased spending, much of it a consequence of the fee-for-service system, wherein doctors are paid based on how many procedures they recommend and carry out. Doctors with equity in facilities where they can co-refer cases conduct between two and eight times more tests than those without equity interests. Just another way the profit incentive helps us out.

And of course, there's administration, where we pay $98 billion more than anyone else, $84 billion of it in oh-so-efficient private sector. 64% of those costs come from insurer underwriting and advertising -- in other words, we're paying more than $50 billion dollars so insurers can convince us we need care and then figure out how to deny those of us who'll actually use it. That's some added value.

None of these extra costs get us better healthcare, only more expensive healthcare. And I dare say it’s common sense that fewer people can afford something the more expensive it is.