So-called experts on U.S. vs. Europe in health care spending

The European IGM Experts Panel was polled on the following proposition:

Higher quality-adjusted US healthcare prices contribute relatively more to the extra US spending than does the combination of higher quantity and quality of US care (interpreting quantity and quality to reflect both greater American healthcare needs due to underlying population health and the delivery of more or better healthcare services to Americans).

Of those voicing an opinion, those who agree outnumber those who disagree by almost 5 to 1.

They are wrong. The amazing blogger at Random Critical Analysis (who is this person? I am dying to know) takes down the “it’s the prices, stupid” claim. Just one of the many statistics the blogger cites is

The human health share of total employment also explains a fair amount of the variance in the HCE [Health Care Expenditure] share of GDP and the US, unsurprisingly, has a proportionally larger health workforce.

In other words, using the size of the workforce in the health care sector as a measure, or at least an indicator, of the amount of real resources devoted to health care, then if you want to explain what makes the U.S. an outlier, it’s the quantities, stupid.

5 thoughts on “So-called experts on U.S. vs. Europe in health care spending

  1. Not quantities, but qualities. More high tech and newer tech, less low cost, less effective treatments, from more advanced diagnostics and imaging to newer and more expensive medications. An expansion of capabilities rather than more of the same.

    • It’s on both margins, i.e., increasing use of technology (broadly speaking to include novel procedures, therapies, etc) and increasing preference for cutting edge technology on a per encounter basis.

      We see some evidence of this with MRIs, CT scans, C-sections, and so on and so forth (not to mention increasing human inputs to keep it all going).

  2. I think this is a matter of semantics. If US patients get a lot of completely useless procedures which are called “medical services” but really aren’t, it would be fair to say that actual medical services are very expensive. Any economist can see through bundling marketing techniques and tell you that getting a cheap price for an item you don’t want is just an opaque way of charging a high price for an item you do want.

    Hence I don’t think the statement is wrong at all. The bottom line is that the US ratio of money spent on health care to actual useful healthcare services is very high, and that is a good definition of price.

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