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July 12, 2005

Health care: more expensive here because of higher prices

This is Matthew Holt from The Health Care Blog doing a bit of guesting while Ezra is away

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Two studies out. Neither providing exactly new news. I did a study looking at laproscopic cholecystectomy between Japan and the US for my master's thesis in 1992. The result then was that that surgery and basically all health care cost twice as much here, when in those days everything else in Japan (land, food, cars, golf club memberships, hookers) cost twice as much. Outcomes seemed to be similar even though patterns of care were very different overall.

Now a similar study (albeit done in a major journal and not for some punk's masters thesis) is showing the same thing about the costs of CABGs between the US and Canada. They cost twice as much here too. Outcomes again seem to be similar.

The in-hospital cost of CABG in the United States is substantially higher than in Canada. This difference is due to higher direct and overhead costs in US hospitals, is not explained by demographic or clinical differences, and does not lead to superior clinical outcomes.

Finally, in a repeat/update of an article he wrote with Uwe Reinhardt a while back called "It's the prices, stupid" Gerald Anderson shows that we spend more money here, not because of the canards of malpractice or even because we receive more services per capita, but because in general we pay more for the same thing.

U.S. citizens spent $5,267 per capita for health care in 2002—53 percent more than any other country. Two possible reasons for the differential are supply constraints that create waiting lists in other countries and the level of malpractice litigation and defensive medicine in the United States. Services that typically have queues in other countries account for only 3 percent of U.S. health spending. The cost of defending U.S. malpractice claims is estimated at $6.5 billion in 2001, only 0.46 percent of total health spending. The two most important reasons for higher U.S. spending appear to be higher incomes and higher medical care prices.

So we're shopping at Nordstroms and the rest of the world goes to K-Mart. That's good news if you are "Nordstroms", which is why we lead the league in doctors and drug company executives driving Porsches. Of course if you're an American who can't "afford" Nordstroms, you're SOL.

Matthew Holt

July 12, 2005 in Health Care | Permalink

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Comments

What about a comparision to VA hospitals? Those are the same docs, mainly the same equipment but different prices

Posted by: jeet | Jul 12, 2005 5:12:59 PM

>more expensive here because of higher prices

Woah, hold on there. Are you sure you can prove a direct relationship between "more expensive" and "higher prices"?

Sorry. I'm still coping with RNC talking points of "Bush never used the word 'fired'" even though he said point-blank "yes" to the question "would you fire the leaker?".

Posted by: bartkid | Jul 12, 2005 6:09:24 PM

I've read that the AMA has over the years has intentionally created a shortage of doctors to keep their wages high. If that's the case, perhaps we need to start reforming that organization in order to create an economy of doctors which is more competitive.

Posted by: Steve Mudge | Jul 13, 2005 12:36:43 AM

If you keep doing what you're doing, you keep getting what you got. We don't have the balls to rein in doctors or pharmaceutical companies. They're are powerful lobbies and we lack the political will to change things. Once a large portion of the middle class loses coverage, maybe something will happen.

Posted by: Sonny | Jul 13, 2005 8:03:32 AM

Sonny is right -- absolutely.

Steve though is wrong. Beleive it or not there is a real phenomemen called "physician induced demand" which means that the more doctors there are, the more they'll find to do. It is no coincidence that we doubled the nubmer of places in medical residency between the late 1960s and the mid 1980s. The only way to cap that activity is to limit the amount of money available to doctors and the numbers of places for the most expensive ones (the specialists). That's basically what every other country does.

Posted by: Matthew Holt | Jul 13, 2005 6:55:36 PM

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Posted by: peter.w | Sep 17, 2007 3:15:52 AM

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