Study Examines Reasons Behind High U.S. Health Care Costs
A study on the U.S. health-care system released "without fanfare" earlier this year by McKinsey Global Institute, the independent research arm of the consulting firm, examined why the U.S. spends nearly double the average of other industrialized countries on health care - with no better, and in some cases inferior, medical outcomes. According to a Washington Post item about the study, even after adjusting for wealth, population mix and higher levels of some diseases, the U.S. spends $477 billion a year more on health care than would be expected if it fit the spending pattern of 13 other advanced countries. That waste of money works out to 3.6 percent of the nation's entire economic output, or $1,645 per person, every year. The New York Times' Paul Krugman noted that a major reason for the high spending is $98 billion a year in excessive administrative costs. U.S. doctors' high average incomes of $274,000 for specialists and $173,000 for general practitioners are the source of another $58 billion of the difference each year. The high costs are not due to doctors' charges per procedure, but to how many patients they see and how many procedures they perform - a volume of business 60 percent higher here than elsewhere. The U.S. also spends $57- $66 billion a year more for drugs than other developed countries, mostly because drug companies are able to charge, on average, 60 to 70 percent more for brand-name prescription drugs. "The study estimates the cost of providing full medical care to all of America's uninsured at $77 billion annually," said Edward Coyle, Executive Director of the Alliance. "The money for universal care is there, but the pot needs to be spent more wisely."