IPFS Menckens Ghost

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U.S. Healthcare Costs: What's the truth?

Dear Thinker:

Below my signature is a Wall Street Journal blurb that compares life expectancies and costs for selected drugs and medical treatments between the U.S. and selected countries.  The stats suggest that Americans pay through the nose for medical care yet have a lower average life expectancy than countries that pay less for medical care..

Of course medical care is an emotionally-loaded and politically-charged subject, one that is subject to propaganda from all sides and the cherry-picking of data based on the picker's politics and party affiliation.  It's also highly complex and beyond the scope of even a lengthy newspaper or journal article to cover fairly and completely.  Most hot topics of today are similar.  As such, be leery of any source on the left or right or in between that pretends to know the absolute truth on a given subject.

For example, in comparing medical and drug costs between countries, one would have to account for:

- The racial make-up of the countries.  The fact is that different races have different health profiles.  As such, predominately white Switzerland and New Zealand will have different profiles (and costs) than a country like the U.S., which has a lot of people of color (and a lot of poor immigrants).

- Related to the above are the dietary customs of different races and countries.  For example, obesity has reached epidemic levels in the U.S., especially among African Americans and Native Americans.  This in turn has increased the incidence of the associated medical problems of diabetes and heart disease, which in turn have lowered life expectancy. 

- Murder rates also affect life expectancy, and the U.S. leads most developed nations in this statistic.

- Other countries have price controls on drugs.  American pharmaceutical companies will sell to these countries as long as they can recoup their marginal cost of production and eke out a tiny profit.  But this results in them charging American customers for the huuuuge (to borrow a Trump word) cost of drug development.  If drug companies were unable to recoup the cost of drug development, then fewer life-saving drugs would be developed. Perhaps this is why countries with socialized medicine don't have an innovative pharmaceutical industry.

- Wait times are different between countries for diagnostics and medical treatments.  For example, Americans may pay more for an MRI, but the wait time to get one is probably insignificant compared to other countries.  How is this qualitative factor given weight in cost comparisons between countries?

Anyway, below are the Wall Street Journal comparisons. 

Mencken's Ghost

U.S. Health Care: Highest Costs; Not Highest Results

Patients often pay more for health care, but nation lags in life expectancy




The Wall Street Journal, Jan. 25, 2017 1:38 p.m. ET

With Congress now reconsidering rules affecting the U.S. health-insurance system, it's worth taking a look at what lawmakers are up against: an expensive health-care network that doesn't deliver the best results to the most people at the lowest cost. Americans pay far more than other wealthy nations for health care—more than double per year than Canadians or Australians. And the bottom line? U.S. life expectancy ranks behind countries such as Japan, Israel and Spain.

Who Pays the Most?

It's not just private-sector care here vs. public over there. Even comparing private to private sectors, U.S. costs generally surpass costs in comparable countries. Here are some average 2014 prices:

Sources: Organization for Economic Cooperation and Development (per capita expenditures); Centers for Disease Control and Prevention (life expectancy); International Federation of Health Plans (drug, diagnostic, procedure costs); companies, staff reports (drug information)


Write to David Crook at David.Crook@wsj.com