Health economist Austin Frakt expresses puzzlement in his latest op-ed in the New York Times. Why does the United States pay more for health care than other OECD countries without benefits to life expectancy comparable to those in other OECD countries?
“Medical care is one of the less important determinants of life expectancy,” said Joseph Newhouse, a health economist at Harvard. “Socioeconomic status and other social factors exert larger influences on longevity.”
For spending, many experts point to differences in public policy on health care financing. “Other countries have been able to put limits on health care prices and spending” with government policies, said Paul Starr, professor of sociology and public affairs at Princeton. The United States has relied more on market forces, which have been less effective.
“Confronted with fiscal pressures, as the share of G.D.P. absorbed by health care spending began to get serious, other nations had mechanisms to hold down spending,” said Henry Aaron, a health economist with the Brookings Institution. “We didn’t.”
One result: Prices for health care goods and services are much higher in the United States. Gerard Anderson, a professor at Johns Hopkins and a lead author of a Health Affairs study on the subject, emphasized this point. “The differential between what the U.S. and other industrialized countries pay for prescriptions and for hospital and physician services continues to widen over time,” he said. Other studies also support this idea. However, by some measures, growth in the amount of health care consumed has also been a factor.
Possible explanations are low levels of competition in the health care sector, higher insurance administrative costs, a more diverse population, and the lack of universal coverage are all considered. None really explains the difference between the U. S. and other OECD countries and in particular why improvements in life expectancy slowed in the U. S. while health care spending didn’t.
In the end we’re left with a mystery. Are Americans just worse patients? That’s an explanation frequently given by health care providers. Is it possible that you get what you pay for? At least that’s the best case scenario. In the U. S. we pay for procedures. Increased intervention isn’t always associated with improved outcomes but increased costs are.