• #1 reason: excessively commercialized/market-driven/… but healthcare (like education) is more humanitarian than publishing, music, sports, journalism,
  • hospital performance is measured and ranked in terms of profit, efficiency, like any commercial business
  • In other countries the gov negotiates with insurers to bring down premium but in U.S. the “free market” seems to be dominated by insurers and service providers.
• Healthcare spending is driven by utilization (the number of services used) and price (the amount charged per service). Utilization is similar between U.S. and other rich countries. Price is the main differentiation.
• reason: admin cost — The number one reason U.S. healthcare costs are so high, says Harvard economist David Cutler, is administration cost.
  • Administrative costs accounted for 8 percent of total national health expenditures in the U.S. For the other 10 rich countries, they ranged from 1 percent to 3 percent.
  • Eg: 1,300 billing clerks at Duke University Hospital, which has only 900 beds. Those billing specialists are needed to determine how to bill to meet the varying requirements of multiple insurers.
  • Doctors spend too much time (cf other countries) on coding/billing so they have less time to see patients, driving up the cost per patient.
  • xp: Boston hospital visit
• reason: more tests — most U.S. providers make more money by performing more tests, perhaps more than needed
• reason: defensive medicine – Scared by malpractice lawsuit, doctors order multiple tests even when they are certain they know what the diagnosis is. A 2019 malpractice lawsuit awarded $229M, an amount presumably calculated based on the provider’s capacity to pay.
• reason: over-utilization of specialists — more people in the U.S. are treated by specialists, whose fees are higher than primary-care doctors when the same types of treatments are done at the primary-care level in other countries
• reason: hospital (and insurer) mergers reduce competition
• reason: medical education — U.S.doctors have longer education and need to earn more to compensate.

Healthcare premiums increase faster than both wages and inflation.

https://www.investopedia.com/articles/personal-finance/080615/6-reasons-healthcare-so-expensive-us.asp is a good answer.

— black swan (i.e. the time when we need insurance) .. I have never had a major medical event in the U.S. When (not IF) it hits my family, it would be a huge impact, financially and psychologically. It could change my long-term plan for the family.

Note The low-income American families can’t afford the insurance.

— overall medical spending compared to other rich countries

https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/#item-start has good comparative trend lines.

Per capita, the U.S. spent $10,600/Y. That’s nearly double the level in Canada, Germany, Australia, the U.K,. Japan, Sweden, France, the Netherlands, Switzerland, Denmark.

Per capita, U.S. spent $1,443  on pharmaceuticals vs $749 for the 11 countries (including U.S.)

https://www.channelnewsasia.com/news/commentary/us-coronavirus-covid-19-healthcare-system-public-funding-staff-12555738  is an explanation why U.S. response to covid19 had a poor start. It claims

“The US is spending more than any other country for a system that is significantly under-performing… Yet, the system is highly profitable for all players involved… To maximize income, both for- and nonprofits have consistently pushed for greater privatization”

This explanation is mostly focused on public health (rather than private health system), the system needed by ordinary people, including most non-working Americans. As soon as I stop working, I would rely on this infrastructure. I remember the dilapidated Woodhull hospital at Flushing Avenue.