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Before coming to any conclusions on this topic, I highly suggest reading this extremely in-depth analysis on cross-country healthcare spending.[1] The simple a

Before coming to any conclusions on this topic, I highly suggest reading this extremely in-depth analysis on cross-country healthcare spending.[1] The simple answer is that Americans really do consume significantly more healthcare than Europeans. The most straightforward signature of this is the fact that a much higher proportion of Americans work in the healthcare industry than any other large country. The US also tends to consistently lead on the highest utilization of cutting-edge technology (such as ICDs, insulin infusion pumps, linear accelerators, and small bowel transplant) at any given time. Cost per inpatient discharge is exactly in line with a regression of European countries against average household disposable income. (The US having nearly double the household disposable income as Western Europe.) Rather than being some signature of American dysfunction, globally we observe hospital bills rising super-linearly with income levels. This strongly suggests that hospital costs primarily rise because of higher intensity of care per encounter. The strongest counterpoint to this is that despite America's high healthcare consumption, that health outcomes are significantly worse than Europe. In particular in terms of life expectancy. But healthcare economists have known for decades that medicine, on the margin, has virtually zero impact on health.[2] The US is an extremely unhealthy country, especially because of obesity. No level of healthcare would ever be able to counteract that. But again this disjointed relation between medicine and health is not an American-specific phenomenon. The ratio of healthcare spending between Norway and Spain is about the same as between the US and Norway. Yet Spaniards enjoys significantly longer life expectancies than their Norwegian counterparts. [1]https://randomcriticalanalysis.com/why-conventional-wisdom-on-health-care-is-wrong-a-primer/ https://randomcriticalanalysis.com/why-conventional-wisdom-o... [2]https://www.cato-unbound.org/2007/09/10/robin-hanson/cut-medicine-half https://www.cato-unbound.org/2007/09/10/robin-hanson/cut-med...

thatfrenchguy 6y ago
> The strongest counterpoint to this is that despite America's high healthcare consumption, that health outcomes are significantly worse than Europe. In particular in terms of life expectancy. Just look at the life expectancy of France and Germany to disprove your theories. The big difference between the American healthcare system and the one in these countries is that people don’t have to worry about the bills, which means healthcare providers have a much bigger incentive to learn what cost benefit analysis means.
- wskinner 6y ago
  > The big difference between the American healthcare system and the one in these countries is that people don’t have to worry about the bills, which means healthcare providers have a much bigger incentive to learn what cost benefit analysis means. Can you go into a bit more detail about how exactly this incentive linkage works?
- dcolkitt 6y ago
  I'd really encourage you to read through the first link because it goes into very careful detail. But the point is there's nothing unusual about America's high spending given its very high income levels. In particular look at this chart from the source.[1] Let's use France as a comparison point since you mentioned it. Household disposable income in the US is about 36% higher than France. That's about equivalent to the wealth gap between France and Slovenia. The US spends about 70% more per hospital stay than France, and very similarly that's almost the exact same spending gap between France and Slovenia. The point being it's easy to ask "why does the US spend more than Western Europe?" But, analogously you should also ask "why does Western Europe spend more than Southern and Eastern Europe"? And the most clear answer is because wealthier countries tend to spend a higher percent of their income on healthcare. [1] https://i0.wp.com/randomcriticalanalysis.com/wp-content/uploads/2020/01/rcafdm_america_average_discharge_cost_comparison_with_elasticity_2010.png?resize=720%2C496&ssl=1 https://i0.wp.com/randomcriticalanalysis.com/wp-content/uplo...
  - thatfrenchguy 6y ago
    > Household disposable income in the US is about 36% higher than France I've seen the prices of procedures and drugs in France and in the United States (that is, before insurance, because no-one really worries about the price of healthcare in France given you get reimbursed more the more expensive your procedures are, which is how things are supposed to be), and it's definitely not 36% more expensive. Everything is at least 10 times more expensive.
- whiddershins 6y ago
  Hey there. The comment you are replying to specifically addresses this. I find reading comment threads containing comments that don’t seem to account for the literal assertions made in the previous comment tend to be difficult to follow and quickly degrade.
huitzitziltzin 6y ago
> The simple answer is that Americans really do consume significantly more healthcare than Europeans. I do not believe this is correct. From the OECD, average length of hospital stay across rich countries: https://data.oecd.org/healthcare/length-of-hospital-stay.htm https://data.oecd.org/healthcare/length-of-hospital-stay.htm We pay more but we generally consume less. EDIT: let me add this comparison of health prices across countries from the Health Care Cost Institute. See Table 1: https://healthcostinstitute.org/hcci-research/international-comparisons-of-health-care-prices-2017-ifhp-survey https://healthcostinstitute.org/hcci-research/international-... Our prices are higher. The US is an obese country, but you will find if you look that obesity rates are similar or worse in (e.g.) Mexico and some Gulf States (I think the UAE though I don't have a source for you). We are not a wild outlier in terms of measured unhealthiness. Life expectancies here are lower though, despite vastly higher expenditure than other rich countries. There are important failures on the supply side of the market: From the OECD, we have fewer hospital beds per capita than most rich countries: https://data.oecd.org/healtheqt/hospital-beds.htm https://data.oecd.org/healtheqt/hospital-beds.htm We have fewer doctors per capita than most countries: https://data.oecd.org/healthres/doctors.htm https://data.oecd.org/healthres/doctors.htm Failures of competition throughout the market (including hospital consolidation) keep prices high. We do basically zero evaluation of cost effectiveness.

thatfrenchguy 6y ago

> The strongest counterpoint to this is that despite America's high healthcare consumption, that health outcomes are significantly worse than Europe. In particular in terms of life expectancy. Just look at the life expectancy of France and Germany to disprove your theories. The big difference between the American healthcare system and the one in these countries is that people don’t have to worry about the bills, which means healthcare providers have a much bigger incentive to learn what cost benefit analysis means.

wskinner 6y ago
> The big difference between the American healthcare system and the one in these countries is that people don’t have to worry about the bills, which means healthcare providers have a much bigger incentive to learn what cost benefit analysis means. Can you go into a bit more detail about how exactly this incentive linkage works?
dcolkitt 6y ago
I'd really encourage you to read through the first link because it goes into very careful detail. But the point is there's nothing unusual about America's high spending given its very high income levels. In particular look at this chart from the source.[1] Let's use France as a comparison point since you mentioned it. Household disposable income in the US is about 36% higher than France. That's about equivalent to the wealth gap between France and Slovenia. The US spends about 70% more per hospital stay than France, and very similarly that's almost the exact same spending gap between France and Slovenia. The point being it's easy to ask "why does the US spend more than Western Europe?" But, analogously you should also ask "why does Western Europe spend more than Southern and Eastern Europe"? And the most clear answer is because wealthier countries tend to spend a higher percent of their income on healthcare. [1] https://i0.wp.com/randomcriticalanalysis.com/wp-content/uploads/2020/01/rcafdm_america_average_discharge_cost_comparison_with_elasticity_2010.png?resize=720%2C496&ssl=1 https://i0.wp.com/randomcriticalanalysis.com/wp-content/uplo...
- thatfrenchguy 6y ago
  > Household disposable income in the US is about 36% higher than France I've seen the prices of procedures and drugs in France and in the United States (that is, before insurance, because no-one really worries about the price of healthcare in France given you get reimbursed more the more expensive your procedures are, which is how things are supposed to be), and it's definitely not 36% more expensive. Everything is at least 10 times more expensive.
whiddershins 6y ago
Hey there. The comment you are replying to specifically addresses this. I find reading comment threads containing comments that don’t seem to account for the literal assertions made in the previous comment tend to be difficult to follow and quickly degrade.

huitzitziltzin 6y ago

> The simple answer is that Americans really do consume significantly more healthcare than Europeans. I do not believe this is correct. From the OECD, average length of hospital stay across rich countries: https://data.oecd.org/healthcare/length-of-hospital-stay.htm https://data.oecd.org/healthcare/length-of-hospital-stay.htm We pay more but we generally consume less. EDIT: let me add this comparison of health prices across countries from the Health Care Cost Institute. See Table 1: https://healthcostinstitute.org/hcci-research/international-comparisons-of-health-care-prices-2017-ifhp-survey https://healthcostinstitute.org/hcci-research/international-... Our prices are higher. The US is an obese country, but you will find if you look that obesity rates are similar or worse in (e.g.) Mexico and some Gulf States (I think the UAE though I don't have a source for you). We are not a wild outlier in terms of measured unhealthiness. Life expectancies here are lower though, despite vastly higher expenditure than other rich countries. There are important failures on the supply side of the market: From the OECD, we have fewer hospital beds per capita than most rich countries: https://data.oecd.org/healtheqt/hospital-beds.htm https://data.oecd.org/healtheqt/hospital-beds.htm We have fewer doctors per capita than most countries: https://data.oecd.org/healthres/doctors.htm https://data.oecd.org/healthres/doctors.htm Failures of competition throughout the market (including hospital consolidation) keep prices high. We do basically zero evaluation of cost effectiveness.