US Health Care Costs - An Analysis

Why does the US spend more on health care costs than other advanced countries? Another fair question might be, why are our health care outcomes generally worse?

The first question is not of trivial significance. Our health care costs range from 50% to 100% more expensive than other countries offering comparable technological quality of medicine. This is important to current debates on budget priorities, because most of the projected increase in federal budget expenditures over the next few decades results from projected increases in health care costs.

Economist Timothy Taylor has taken a close look at several studies of health care costs here. His conclusion:

"The question of why the U.S. spends more than 50% more per person on health care than the next highest countries (Switzerland and Netherlands), and more than double per person what many other countries spend, may never have a simple answer. Still, the main ingredients of an answer are becoming more clear. The U.S. spends vastly more on hospitalization and acute care, with a substantial share of that going to high-tech procedures like surgery and imaging. The U.S. does a poor job of managing chronic conditions, which then lead to episodes of costly hospitalization. The U.S. also seems to spend vastly more on administration and paperwork, with much of that related to credentialing, documenting, and billing--which is again a particular important issue in hospitals. Any honest effort to come to grips with high and rising U.S. health care costs will have to tackle these factors head-on."