Tyler Cowen quotes one of his readers saying:
[Americans] can get “cheap” European care if they like, just create extremely bad American HMO insurance, or don't buy health care at all and go to Public hospitals. The reason the European systems are cheaper is not that they magically have less costs, it is that they give the consumer much less health care.
"These claims hold up under the scrutiny of Google," he claims. He should Google better. In their (damn good) paper on the variance between US health spending and costs in other countries, Uwe Reinhardt, Peter Hussey, and Gerard Anderson explain:
in 2000 the United States had fewer physicians per 1,000 population, physician visits per capita, acute care beds per capita, hospital admissions per 1,000 population, and acute care days per capita than the median OECD country. These simple comparisons suggest that Americans are receiving fewer real resources than are people in the median OECD country. There are, however, other explanations. A more comprehensive approach would be to compare the actual progression of treatment for a set of tracer conditions in various countries.
A study by the McKinsey Global Institute followed that more in-depth approach. The research team, which was advised by a number of prominent health economists, based its analysis on four tracer diseases: diabetes, cholelithiasis (gall stones), breast cancer, and lung cancer. Using PPP-adjusted U.S. dollars as the common yardstick, the McKinsey researchers found that in the study year of 1990 Americans spent about $1,000 (66 percent) more per capita on health care than Germans did. The researchers estimated that Americans paid 40 percent more per capita than Germans did but received 15 percent fewer real health care resources. A similar comparison revealed that the U.S. system used about 30 percent more inputs per capita than was used in the British system and spent about 75 percent more per capita on higher prices.
That study also found that if the Germans had paid American prices, they would have spent $390 more per person than we did. The claim that our system is more costly because we use more health care simply doesn't hold up. Our system is more costly because using it costs more. And while I'm sure the median American uses significantly more health resources than does the median resident of X, it's worth remembering that we have a system in which doctors, hospitals, and even patients are all economically encouraged to prescribe and except the maximum level of care. In other countries, the incentives are not there to overprescribe, to deploy ever more costly knock-off pharmaceuticals because the old version can now be purchased as a cheap generic, to be quick with the surgical referral. As the Dartmouth Atlas program has found, this excess of care does nothing for our health. It's a bug, not a feature. Sure costs a lot, though.
But, at base, we spend so much more on health care because individual units cost so much more for us than they do for other countries. As an American, the only way to approximate European care is to go to Europe. But as a European, you could approximate American care by demanding to pay 60%-80% more for all pharmaceuticals, or by sending your local hospital an extra check for $1,645 every year.
More evidence along these lines here.
