Later On

A blog written for those whose interests more or less match mine.

Why US healthcare costs so much

with one comment

Krugman pointed to this report (at the link are links to two PDF files: one the full report, one a synthesis). McKinsey states the following about the report:

The United States spends more of its income on health care than other developed countries and that share is rising. It is an arresting statistic that the U.S. now spends more on health care than it does on food.

In this new report MGI finds that the United States spends approximately $480 billion ($1,600 per capita) more on health care than other OECD countries and that additional spending is not explained by a higher disease burden; the research shows that the U.S. population is not significantly sicker than the other countries studied.

Instead, MGI found that the overriding cause of high U.S. health care costs is the failure of the intermediation system — payors, employers, and government — to provide sufficient incentives to patients and consumers to be value–conscious in their demand decisions, and to regulate the necessary incentives to promote rational use by providers and suppliers.

Given the less than optimal access for all U.S. citizens (relative to peer countries), MGI concludes that major opportunities for cost improvement —even if not the full $480 billion—are as possible as they are necessary although no single reform is likely to succeed in achieving the needed rebalancing. To be effective, reform in health care will need to apply sound principles on both the demand and supply side of the system.

Written by Leisureguy

9 November 2007 at 6:19 pm

One Response

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  1. Among the reasons that American health care is so expensive is the cost of medical education. Typically, the new medical school graduate is hundreds of thousands of dollars in debt. No wonder that the (unofficial) slogan of the American Medical Association is, “Your money or your life”.

    The U.S. imports medical professionals. Cuba, where medical education and heath and dental care are free, and where the basic indices of the health of the population – a low infant mortality rate and high longevity – are better than those of the U.S., exports thousands of health professionals to poor countries.

    Something is very wrong with the American health care “system”.



    10 November 2007 at 3:32 am

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