Why Does U.S. Healthcare Cost So Much?

The opening tautology of this piece in the Washington Post brilliantly encapsulates the entire problem with the cost of healthcare in the United States:

“There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher.”

The statistics in the piece are soul-crushing:

“In 2009, Americans spent $7,960 per person on health care. Our neighbors in Canada spent $4,808. The Germans spent $4,218. The French, $3,978.” (Of course, the French people have to live in France; that’s a separate cost not factored in but I’ll tell you this: actually, I won’t. Email me for private thoughts about France.)

Others who have thought about this went through and eliminated a lot of other possibilities:

It’s not that we’re getting sicker.

It’s not that we go to the doctor more frequently.

It really is as simple as: we pay more per capita for health care because we’re charged outrageously more for services in this country than those who live in a country with a National Cheese and a Jerry Lewis fetish.

Knowing the answer isn’t helpful, though: it brings up another question. WHY do we spend more? From the article:

“Other countries negotiate very aggressively with the providers and set rates that are much lower than we do,” Anderson says. They do this in one of two ways. In countries such as Canada and Britain, prices are set by the government. In others, such as Germany and Japan, they’re set by providers and insurers sitting in a room and coming to an agreement, with the government stepping in to set prices if they fail.

In America, Medicare and Medicaid negotiate prices on behalf of their tens of millions of members and, not coincidentally, purchase care at a substantial markdown from the commercial average. But outside that, it’s a free-for-all. Providers largely charge what they can get away with, often offering different prices to different insurers, and an even higher price to the uninsured.

The conclusion comes, where it should, at the end of the article: “If I could change one thing in the United States to bring down total health expenditures, it would definitely be the prices.”