I agree its a contributor, and it might be a big one, but there are a number of other fairly obvious contributors.
One being that most health care is made through third party payment. Patients don't pay the full cost, and because of that (and "bargain" heath care could in theory leave them dead) they have little incentive (and also often little time) to shop based on price. What makes this even worse is that prices are not clear. There are a number of charges, that sometimes get negotiated down (esp. with insurance companies) and sometimes don't. Even if you had to pay out of pocket, and low price care could be counted on to be just as good as high price care, and you had plenty of time to make the decision, it could be difficult to figure out the price you would pay with different decisions.
Another factor is simply that we are wealthier than we used to be. As we get wealthier we have more money to spend on health care, and since it is considered important, that extra money leads to extra demand. In addition to that health care hasn't had the same productivity improvements of other areas. Manufactured goods can be imported from low cost laborers, or can be built by machines that allow each worker to create far more goods than their parents or grand parents could create. Health care has gotten better, but its better in the sense that there is more that can be done, not as much in the sense that each person can do more in a certain time. If productivity goes up a lot in some areas and less or not at all in others, than the areas that lag will become relatively more expensive.
Another factor is that our prescription drug sales effectively subsidize much of the rest of the world. In a number of countries prices are controlled. The drug companies accept that because they can't stop it, and because the revenue from the sales in those countries is above the incremental cost of producing the drugs (the variable costs of producing drugs are usually low). The companies largely pay their R&D and overhead with the profits they make in the US.
But you are right that the direct, and esp. the indirect costs (defensive medicine) add a lot to the cost of health care. |
