# No, Really - Why is U.S. Healthcare So Expensive? **URL:** \ **Category:** Great Debates\ **Created:** [October 12, 2016, 10:48pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369 "2016-10-12T22:48:59Z")\ **Posts on this page:** 16\ **Page:** 3
**Author:** ![monstro](https://avatars.discourse-cdn.com/v4/letter/m/ba9def/32.png) [@monstro](https://boards.straightdope.com/u/monstro)\ **Post date:** [October 16, 2016, 11:02pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/41 "2016-10-16T23:02:23Z")
I don’t know how I would “shop around”. Let’s say I develop a strange rash on my hands. Over the course of a couple of days, it gets worse. My fingers swell up. Benedrayl does not to ease the burning itchiness. I call up my GP and ask for a ballpark figure on the cost. She tells me she has to know what I have first. And that requires actually seeing me. For all she knows, it could run as cheap as $150 to tens of thousands of dollars, depending on just what the deal is. I could go to a Doc-in-the-Box and ask them for an estimate. But it’s going to be the same situation. To give me a treatment cost, they need to diagnose me first. They can’t do that sight unseen. But let’s say I manage to get doc to diagnose me for $100. They determine I’m experiencing chilblains and advises me to buy a thicker pair of gloves and to limit my exposure to the cold. But maybe they are wrong, right? If I’m being a smart consumer, wouldn’t I get a second opinion? That’s what I would do if my car had something wrong with it, right? So despite the fact that I’m miserable because my fingers itch like the dickens, I drag myself another Doc-in-a-Box, since none of the GP’s with private practices have openings in the near future. The doc determines I have an infection and prescribes a course of antibiotics. So now I’m out of another $100, plus whatever the antibiotics cost. Am I supposed to find another doc who can break the tie? Or should I take the antibiotics and put on an extra pair of gloves and hope for the best? It’s nice to liken health care to other commodities. But it’s different. If a patient is miserable enough (as I was when I suffered from my first bout of chilblains), they simply aren’t going to be able to “comparison shop”–which also presumes that there are options to choose from or that all options are equally effective. And medicine isn’t yet so simple that a patient can diagnose themselves. For the “comparison shop” approach to work, doctors would need to provide free diagnostics. I don’t think that makes much sense. ---
**Author:** ![Grim\_Render](https://avatars.discourse-cdn.com/v4/letter/g/a87d85/32.png) [@Grim\_Render](https://boards.straightdope.com/u/Grim_Render)\ **Post date:** [October 17, 2016, 12:21am UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/42 "2016-10-17T00:21:57Z")
Health care does not behave like other commodities in a market situation. There is an entire field of economics called health care economics which is dedicated to how health care behaves economically. If you are going to argue the “competition will lower prices” argument, I recommend a basic familiarity with Kenneth Arrow and others in the field. Anyway, as for the OP, I’ve read some studies. From memory, the biggest factor is the excessive bureaucracy generated by having umpteen different healthcare systems that don’t communicate well and does a lot of gate-keeping. Thats about 35 %. Inefficiency, overprovision, overequipping etc is another 30 % or so. Then there are lesser cost-adders, like defensive medicine is 9 %, medical malpractice insurance is about 2 %, and higher salaries for medical workers is about 6 %. Higher drug prices, I don’t remember how much that was. But the two top ones, bureaucracy and medical inefficiency is almost 70 %. These numbers tend to be fairly consistent over time, although you can play around a bit with categories. What goes into medical inefficiency in particular. Note that this is not percentage of total costs, but percentages of the money spent in excess of an average developed world system. ---
**Author:** ![D\_Anconia](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@D\_Anconia](https://boards.straightdope.com/u/D_Anconia)\ **Post date:** [October 17, 2016, 12:30am UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/43 "2016-10-17T00:30:04Z")
Part of the reason it’s so expensive is that some people (including people on this mb) use the ER instead of a PCP. :rolleyes: ---
**Author:** ![Navy\_draftee](https://avatars.discourse-cdn.com/v4/letter/n/ec9cab/32.png) [@Navy\_draftee](https://boards.straightdope.com/u/Navy_draftee)\ **Post date:** [October 17, 2016, 1:15am UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/44 "2016-10-17T01:15:46Z")
It is so expensive because many patients with serious diseases will insist that " whatever it takes" is their motto. Thus drugs costing $5,000 per month (and with a very poor track record of helping) are being taken solely because their insurance pays for them. Insurance companies covering expensive drugs with a poor record of curing=high insurance costs ---
**Author:** ![Grim\_Render](https://avatars.discourse-cdn.com/v4/letter/g/a87d85/32.png) [@Grim\_Render](https://boards.straightdope.com/u/Grim_Render)\ **Post date:** [October 17, 2016, 12:29pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/45 "2016-10-17T12:29:07Z")
> [@AK84](#): > > You are right that Big Pharma does support lots of labs all over the world, sometimes in unexpected places. However, the point was that **Shagnasty** had claimed that one reasons that US drugs are so expensive is that Americans are subsidizing its development for the rest of the world, which is far from the truth and indeed sometimes the reverse is true. > > Trying to navigate the often Byzantine world of pharma R & D is next to impossible, but on the issue of patents came up in the TPP negotiations. Lots of diseases are regional, so many governments in the Far East or S Asia (as an example) support research on diseases, research which is later sold to large US Pharma who later patent the drugs and turn around and charge an arm and a leg for them. Just wanted to point out that in addition to these points, there is another reason R&D cannot be responsible for, or a major factor in, US healthcare spending: R&D spending is just not big enough to show up. The biomedical research spending of the entire world is ~270 billion. The US provides less than half of that. In the US, the biggest single contributor is the government, through the NIH which provides ~30 % of US biomedical research spending. The remaining amount of US research spending is ~75 billion dollars. The overspending in US healthcare is about 1 500 billion. The total private-sector research spending is 5 % of that, and the **entire planets research budget** is 20 % of that. > [@FlikTheBlue](#): > > That person reaches old age, and develops heart disease or dementia or they have a stroke or get cancer or have osteoporosis and fall and break a hip or some other disease that is essentially caused by being old. Unless you die suddenly from trauma or a sudden major illness like a massive heart attack, you will eventually get one or more of the diseases of aging. These things are not fixable, but as a society we insist on treating them. I have personally treated hundred of elderly patients with end stage dementia who develop things like pneumonia, sever pressure ulcers, and other complications of being frail and old. It’s not uncommon to spend millions of dollars treating these patients with high dollar IV antibiotics, ventilator machines, surgery to try and repair pressure wounds that aren’t going to heal, and countless other treatment modalities. I’ve seen all these treatments used on patients that are end stage with no hope of meaningful recovery, and these are not uncommon occurrences. It’s politically incorrect to say so, but I think until a cure for aging is developed, we will probably need the infamous “death panels” if we ever hope to get medical costs under control. Other developed nations populations age too. Many have longer lifespans than the US and they still manage to spend half as much money while getting better results. Aging does not explain the US uniquely high costs because aging is not a uniquely US problem and it is not particularly worse in the US. ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [October 17, 2016, 1:33pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/46 "2016-10-17T13:33:46Z")
Let me describe how it works here in Quebec (each province has its own system, but I think they are all similar). You go to a doctor. he gets paid by the province on the basis of his specialty and whether it is a full checkup or less. There is no copay and you pay him nothing. Similarly if you go to a hospital. Doctors are reasonably well-paid, although none get wealthy from it, but I think 200,000 for a GP and maybe up to twice that for a neurosurgeon might be in the right ball park. The hospitals are given a global budget to divide as they see fit. Hospitals are, to say the least, spartan. They do have all the high-priced equipment, just not enough of it to use willy-nilly. It took me a month to get an appointment for a CT scan, although it was definitely not an emergency. The food in hospitals is lousy, to say the least. Hospitals are definitely non-profit. There is some bureaucracy of course, but I think it is pretty lean. There are private insurance companies that provide for certain uncovered items. For using a private lab to analyze blood tests, for example, instead of killing a day to get it done free in the hospital. I have such insurance through my fprmer employer. I guess the important point is that the hospital, not getting paid for each action, each pill, each look in from a nurse, has every incentive to control costs. Does this result in worse care? Not from the statistics I have seen. The really bad part is that some non-emergency procedures (e.g. knee or hip replacement) can take a long time to get scheduled. It looks like a relatively small amount of extra money would go a long way to fix that. Incidentally, 48% of the provincial budget goes for health care. My provincial taxes are somewhat higher than my federal taxes. Worth every cent. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [October 17, 2016, 2:50pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/47 "2016-10-17T14:50:24Z")
> [@monstro](#): > > I don’t know how I would “shop around”. > > Let’s say I develop a strange rash on my hands. Over the course of a couple of days, it gets worse. My fingers swell up. Benedrayl does not to ease the burning itchiness. > > I call up my GP and ask for a ballpark figure on the cost. She tells me she has to know what I have first. And that requires actually seeing me. For all she knows, it could run as cheap as $150 to tens of thousands of dollars, depending on just what the deal is. > > I could go to a Doc-in-the-Box and ask them for an estimate. But it’s going to be the same situation. To give me a treatment cost, they need to diagnose me first. They can’t do that sight unseen. > > But let’s say I manage to get doc to diagnose me for $100. They determine I’m experiencing chilblains and advises me to buy a thicker pair of gloves and to limit my exposure to the cold. But maybe they are wrong, right? If I’m being a smart consumer, wouldn’t I get a second opinion? That’s what I would do if my car had something wrong with it, right? > > So despite the fact that I’m miserable because my fingers itch like the dickens, I drag myself another Doc-in-a-Box, since none of the GP’s with private practices have openings in the near future. The doc determines I have an infection and prescribes a course of antibiotics. So now I’m out of another $100, plus whatever the antibiotics cost. > > Am I supposed to find another doc who can break the tie? > > Or should I take the antibiotics and put on an extra pair of gloves and hope for the best? > > It’s nice to liken health care to other commodities. But it’s different. If a patient is miserable enough (as I was when I suffered from my first bout of chilblains), they simply aren’t going to be able to “comparison shop”–which also presumes that there are options to choose from or that all options are equally effective. And medicine isn’t yet so simple that a patient can diagnose themselves. For the “comparison shop” approach to work, doctors would need to provide free diagnostics. I don’t think that makes much sense. The way it would work is you would go to the website of a couple of doctors and see how much they charge for an initial consultation. You would then make an appointment with the doctor, they do not need to know what you have to charge a standard rate for initial consultation. Wanting a second or third opinion would not be affected by whether the healthcare system is single payer, totally private, or anything in between. For a market to work not everyone needs to be a marginal customer. There just needs to have marginal customers existing. ---
**Author:** ![slash2k](https://avatars.discourse-cdn.com/v4/letter/s/439d5e/32.png) [@slash2k](https://boards.straightdope.com/u/slash2k)\ **Post date:** [October 17, 2016, 3:38pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/48 "2016-10-17T15:38:23Z")
A lot of medical problems a person develops are related to previous medical problems that same person has had. For example, suppose I have a recurrent condition that requires a course of medication (antibiotics, whatever) to fix me up. Doctor A has treated me before, has documented this condition, and will prescribe the same meds again after a brief consultation. His/her consultation fee is more expensive that Doc B’s, but I’ve never seen Doc B, have no history there, and Doc B may have limited or no access to my medical records at Doctor A. I save money in the short term by paying the higher fee at Doctor A rather than go through the process of establishing myself at Doc B’s, which might include expenses such as repeating basic labs or X-rays, etc. Long-term, establishing myself at Doc B’s might be cost-effective, \*\* if and only if \*\* Doc B’s costs are going to stay lower than Doctor A’s for all of the treatments I might need. Since I can’t predict future cost structures and have only limited notions of what treatments I might need in future, I don’t have access to enough information to tell whether moving to a different practice is really cheaper. Medical treatment is rarely a set of discrete events, so comparing the initial consultation fees at various providers isn’t going to tell me how much it REALLY costs to obtain diagnosis and treatment once we figure in the costs of repeating tests, obtaining records, etc. ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [October 17, 2016, 4:25pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/49 "2016-10-17T16:25:35Z")
> [@Hari\_Seldon](#): > > Let me describe how it works here in Quebec (each province has its own system, but I think they are all similar). You go to a doctor. he gets paid by the province on the basis of his specialty and whether it is a full checkup or less. There is no copay and you pay him nothing. Similarly if you go to a hospital. Doctors are reasonably well-paid, although none get wealthy from it, but I think 200,000 for a GP and maybe up to twice that for a neurosurgeon might be in the right ball park. The hospitals are given a global budget to divide as they see fit. Hospitals are, to say the least, spartan. They do have all the high-priced equipment, just not enough of it to use willy-nilly. It took me a month to get an appointment for a CT scan, although it was definitely not an emergency. The food in hospitals is lousy, to say the least. Hospitals are definitely non-profit. > There is some bureaucracy of course, but I think it is pretty lean. > > There are private insurance companies that provide for certain uncovered items. For using a private lab to analyze blood tests, for example, instead of killing a day to get it done free in the hospital. I have such insurance through my fprmer employer. > > I guess the important point is that the hospital, not getting paid for each action, each pill, each look in from a nurse, has every incentive to control costs. Does this result in worse care? Not from the statistics I have seen. The really bad part is that some non-emergency procedures (e.g. knee or hip replacement) can take a long time to get scheduled. It looks like a relatively small amount of extra money would go a long way to fix that. Incidentally, 48% of the provincial budget goes for health care. My provincial taxes are somewhat higher than my federal taxes. Worth every cent. Just to pick one statistic, GP compensation in Quebec [rose](http://globalnews.ca/news/382318/quebec-doctors-earn-third-lowest-salaries-in-canada/) 34 percent between 2006 and 2010. And there’s nothing atypical about that; as I noted above, the Canadian system and the US system are about equally effective in controlling (or not controlling) health care cost increases these days. Again, US costs are higher in absolute terms because they’re starting from a higher base that arose from cost control failure in the past, but the differences between the two systems are basically irrelevant to cost control any longer. ---
**Author:** ![monstro](https://avatars.discourse-cdn.com/v4/letter/m/ba9def/32.png) [@monstro](https://boards.straightdope.com/u/monstro)\ **Post date:** [October 17, 2016, 5:22pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/50 "2016-10-17T17:22:05Z")
> [@puddleglum](#): > > The way it would work is you would go to the website of a couple of doctors and see how much they charge for an initial consultation. You would then make an appointment with the doctor, they do not need to know what you have to charge a standard rate for initial consultation. Wanting a second or third opinion would not be affected by whether the healthcare system is single payer, totally private, or anything in between. > For a market to work not everyone needs to be a marginal customer. There just needs to have marginal customers existing. If all the doctors charge the same amount for consultation, then what? If all the doctors in an area except one have no immediate openings, then what? Sure seems to me the best and easiest thing would be to have the government involved in setting prices, rather than pretending that consumers can or even should dictate them. I don’t think it’s in the interest of public health for eveyone to flock to the “lowest bidder” provider. Not when it comes to people’s lives. ---
**Author:** ![Clothahump](https://avatars.discourse-cdn.com/v4/letter/c/51bf81/32.png) [@Clothahump](https://boards.straightdope.com/u/Clothahump)\ **Post date:** [October 17, 2016, 9:08pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/51 "2016-10-17T21:08:25Z")
> [@Shagnasty](#): > > There is another very large piece that is unfortunate but it tends to help the rest of the world. Medical R&D is incredibly expensive and the U.S. tends to be a leader in both developing it and paying for it because we always want the most cutting edge medicine and the system is set up so that cost is no object for people that really need it. That means that that the thousands of biotech and pharmaceutical companies based in the U.S. have a captive domestic market for any new, approved treatments but they want their money back for developing them so they force U.S. consumers and their insurance companies to pay out the nose for them. However, the incremental costs of those new drugs and medical devices are not nearly as high so they can sell them for much lower in foreign markets at the same time just to earn even more money. That is an artificial condition created by the differences in regulations between countries. Not quite. New drugs cost a buttload of money to do the R&D on. And not all of them make it to market, so their costs get rolled into the ones that do in order for the company to stay in business. The primary problem is the patent process. By the time all the R&D is done and the human trials are completed, the companies have maybe 4 or 5 years left on patent to do their cost recovery. If we extended the patent protection by as little as 5 years more, drug costs would plummet. ---
**Author:** ![slash2k](https://avatars.discourse-cdn.com/v4/letter/s/439d5e/32.png) [@slash2k](https://boards.straightdope.com/u/slash2k)\ **Post date:** [October 17, 2016, 10:37pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/52 "2016-10-17T22:37:02Z")
> [@Clothahump](#): > > If we extended the patent protection by as little as 5 years more, drug costs would plummet. Would they really? Or would drug costs just stay higher without generic competition for another five years? The recent examples of Daraprim and Epi-pen are not encouraging. ---
**Author:** ![WordMan](https://avatars.discourse-cdn.com/v4/letter/w/e8c25b/32.png) [@WordMan](https://boards.straightdope.com/u/WordMan)\ **Post date:** [October 18, 2016, 12:04am UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/53 "2016-10-18T00:04:51Z")
> [@Sitnam](#): > > [Why are American Health Care costs so High?](https://www.youtube.com/watch?v=qSjGouBmo0M) > > I am not at all suggesting you take a video bloggers word for it, but in that seven minutes are plenty of factual claims that are easy to verify and he lays out a substantial case. My IRL job is in healthcare. This is a good overview. If you want more, and richer detail, the most-respected recent article was a 26,000 word article in Time in 2015 by expereinced journalist and lawyer **Steven Brill**. I haven’t found a link to the article without a paywall. He has since spoken at many of the biggest healthcare conferences, like AHIP and MGMA. Here is a summary of the article from the Washington Post: [https://www.washingtonpost.com/news/wonk/wp/2013/02/23/steven-brills-26000-word-health-care-story-in-one-sentence/](https://www.washingtonpost.com/news/wonk/wp/2013/02/23/steven-brills-26000-word-health-care-story-in-one-sentence/) Here is his interview on NPR: ['America's Bitter Pill' Makes Case For Why Health Care Law 'Won't Work' : Shots - Health News : NPR](http://www.npr.org/sections/health-shots/2015/01/05/375024427/americas-bitter-pill-makes-case-for-why-health-care-law-wont-work) ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [October 18, 2016, 9:20pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/54 "2016-10-18T21:20:04Z")
Minor correction: Brill’s TIME article was published in 2013. He then expanded it as a book, which was published in 2015. ---
**Author:** ![WordMan](https://avatars.discourse-cdn.com/v4/letter/w/e8c25b/32.png) [@WordMan](https://boards.straightdope.com/u/WordMan)\ **Post date:** [October 19, 2016, 12:26pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/55 "2016-10-19T12:26:32Z")
> [@Northern\_Piper](#): > > Minor correction: Brill’s TIME article was published in 2013. He then expanded it as a book, which was published in 2015. Ah, cool; thanks for that. ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [October 19, 2016, 2:32pm UTC](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369/56 "2016-10-19T14:32:54Z")
I read the Time article (paper copy, not online). It was indeed fascinating. [Previous page](https://boards.straightdope.com/t/no-really-why-is-u-s-healthcare-so-expensive/768369.md?page=2)