
Graphs that show America’s health-care prices are ludicrous - stollercyrus
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/26/21-graphs-that-show-americas-health-care-prices-are-ludicrous/
======
beggi
The American health-care system is ludicrous!

My girlfriend and I are from Europe and we have been in the US for a year now
while she finishes her university degree. Half a year ago she (we?) got
pregnant, and we are paying more than triple the money for doctor visits than
it would be back home. Not only that - but the money we're paying is just 20%
of the "real" cost, the insurance she paid $7000 per year for is paying the
rest. So we're paying $180 per visit and the "real" cost of each half an hour
long doctor visit is about $900!

Now you might argue it's better service, but in my very subjective view, I
highly doubt it and it doesn't feel like it at all. To add insult to injury:
We got a 3D sonogram and the amount we paid (mind you, 20% of the "real" cost)
was twice the amount our friends at home have paid for 3D sonogram taken by a
private company (and the government is not paying a cent).

IMO, America is one fantastic country if you're rich - but it seems much much
harder to live here than in Europe on meager salaries.

~~~
tptacek
Careful. Hospitals and doctors often report the amounts that insurance
companies report based on a master price list that bears no relation to what
the insurers actually pay. Insurers are presumably fine with misleading
reports that puff up their value.

~~~
revelation
If they pay 20% of price A and the insurance theorethically covers 80% of A,
but in actuality pays only B << 0.8 A, then that sounds like fraud.

~~~
pbreit
Because everyone in all industries pays list price. Right.

~~~
voodoomagicman
The problem isn't the insurance negotiating a discount - it is that if your
insurance has agreed to pay 80% of the cost of your care, and then is able to
negotiate a discount, you should pay 20% of the discounted price, not 20% of
the pre discount price.

~~~
SoftwareMaven
I've never not had my co-insurance portion be anything but the percentage of
what their negotiated rate was. I don't know if it is fraud, but breach of
contract would probably apply if you did (assuming it wasn't in the fine
print).

------
crusso
Of course our prices are ridiculous. We have a horrible hybrid government-
market system that has completely divorced consumers from providers in terms
of pricing.

Consumers buy flat rate plans through their employers. They make use of
services without much thought or knowledge of costs since they don't see
bills.

Doctors over-test and over-treat because it makes them money, patients don't
protest the cost, and they're covered better legally.

Insurance companies don't really care because they pass on their costs by
increasing premiums.

Employers don't care since they write off the benefit to their employees and
pass on much of the costs through premiums.

The entire mess is a runaway train with no brakes.

~~~
tptacek
I guess I'm not seeing where the government enters the picture here. Is it
just the tax deductibility of group health insurance? If so, can you explain
how the market would be structurally different if those premiums were taxed?
For perspective, note that premiums have skyrocketed in the last 10 years, yet
employers that offered group health insurance tend to still offer it.

~~~
rdtsc
> I guess I'm not seeing where the government enters the picture here.

Government half-assed it. How? By providing neither complete liberalization
and deregulation (a libertarian dream I hear often -- why can't my health
insurance be like my car insurance...etc..etc), nor fixing prices (a la Japan)
or providing free a healthcare alternative.

It is the worse of both worlds it seems. All of the recent health care reforms
are pretty much bullshit from what I can see if they dropped the single payer
option. Without controlling the costs. Yeah I can insure my 26 year old
children but my premiums have gone up 30%+ in last 2 years. It is like they
are trying to plug holes in a hunk of Swiss cheese. "But we'll mandate them to
give free preventive care checkups, we got them now! Everyone cheers. HMOs
turns around, laugh and raise premiums by 30%.

~~~
tptacek
It feels like, at least until guaranteed issue kicks in, the government has
no-assed this problem, except for Medicare, which is by many accounts
tremendously efficient and effective.

~~~
bradleyjg
I fail to see how Medicare can be considered effective and efficient when it
costs about as much per capita as what other countries pay to cover everyone,
it covers less than 1/6 of the population, and only covers about half the
total health care costs of the covered population.

It may be better than the private US healthcare system, but that's not saying
much.

~~~
wtallis
Medicare has to do business with US providers, so of course it's still going
to be more expensive than in a civilized country. According to your numbers,
the tax burden relative to the level of service is at most about 12 times
worse than other countries, though the fact that Medicare covers the people
who most need expensive care means it's actually much closer to international
costs. It's certainly _effective_ in that it does provide a lot of care for a
lot of people, and it's about as efficient as it can be without completely
revamping the supply chain it depends on.

~~~
bradleyjg
There is a healthcare system in the United States that does far better -- the
Veterns Administration. So clearly it is not impossible.

Even leaving aside government provisioned care, there are several simple ways
Medicare could use its massive purchasing power to control costs. Part A could
take into account alternate available treatments and their effectiveness-
adjusted-cost when determining what procedures to cover. Part B could
coordinate care through a single gatekeeper physician. Part C could be
eliminated, as it was a cost saving experiment that failed. Finally, Part D
could negotiate with drug providers on behalf of the entire pool instead of
delegating negotiation to dozens of insurance companies, each with smaller
pools.

~~~
wtallis
The VA does a better job because they actually run their own hospitals and
clinics. That makes a huge difference - they can directly control many of the
costs, and can wield their negotiating power far more effectively than
Medicare is currently allowed to.

~~~
bradleyjg
I certainly agree that much of the blame for Medicare not being better than it
is lies with Congress, which seems to be the upshot of your comment.

------
michael_miller
Another way to look at this is that the US is subsidizing the world's
healthcare. Take the example of drugs in the linked article [1]. Given their
pricing power in the environment, the article asserts that we pay 2x what
other countries do for identical drugs, for no other reason than we aren't
negotiating as a large group. As an anecdotal example, when visiting Beijing,
I had some trouble breathing, so I went to a pharmacy to buy an inhaler. I
didn't have insurance that worked in China, so I had to pay out of pocket. Not
only did I not need a prescription, but I also only paid $4 for the inhaler,
complete with medicine. The same inhaler + medicine costs $10 with insurance
in the US (god knows how much without it).

Tom Sackville, a UK politician quoted in [1] summed it up nicely: "We end up
with the benefits of your investment. You’re subsidizing the rest of the world
by doing the front-end research."

[1] [http://www.washingtonpost.com/blogs/wonkblog/post/why-an-
mri...](http://www.washingtonpost.com/blogs/wonkblog/post/why-an-mri-
costs-1080-in-america-and-280-in-france/2011/08/25/gIQAVHztoR_blog.html)

~~~
zaphar
The question is does the world lose out if we no longer subsidize the front-
end research or would it just get redistributed?

~~~
sseveran
Who is going to big up the tab?

------
zht
I was interning in California (I'm a Canadian citizen) when I felt compelled
to go see a doctor because I spent about a week coughing up various different
colours of phlegm (was awoken pretty much nightly with really bad hacking
cough). I visited the walk-in clinic at Palo Alto Medical Foundation (in Palo
Alto). I had travel insurance offered through my (Canadian) university
supplement insurance plan (which for some reason wasn't in their system), so I
was asked (albeit very politely) whether I'd like to pay for the visit in cash
or credit card ($300 up front).

The doctor listened to me cough and did a swab for a staph infection before
diagnosing me with the common flu and advising me to come back if it didn't
subside within another week.

I guess in hindsight the visit cost much more than average (since $176
apparently is the 95th percentile cost for a routine doctor's visit), but it
just seemed strange that seeing a doctor (not even emergency room) cost
roughly half as much as an iPad.

~~~
rdtsc
You got lucky.

I was an international student. Had a terrible strep throat. Lived off campus.
Called university, asked if going to a nearby emergency clinic would be
covered. They said "yes". Did so. Got there, waited 1+ hours in the lobby.
Then a young intern saw me for 5 minutes. Prescribed a codeine pill and sent
me home.

It turns out outside of campus clinic visit was not covered. I did not record
the phone conversation. Got a $400 bill (in 1999 money!).

Fuck you American medical system. Should have given them the wrong name or
something. It seems they are out to rob people I wouldn't even feel back
screwing them over. Charging a student who lives on rammen noodles $400 in
1999 could mean not being able to pay for housing or not being able to avoid
food or books.

Now I just avoid doctors as much as possible. It is irrational but I just feel
like both insurance and doctors are out to screw me and take all my money. Sad
thing is, my rational part of the brain understand that the next time I will
see doctors might be in the emergency being unconscious or really sick (maybe
I should carry a wallet with a fake name with me ;-)

~~~
voodoomagicman
As an international student, what would the consequences of just not paying
that bill be?

~~~
yardie
As an expat, absolutely nothing. It drops off the credit report after 7 years.

Now before everyone gets indignant. I was a Verizon customer and had taken a
job abroad. 18 months into my 2-year contract I called to say I'm leaving next
month and want to cancel. The fuckers wanted to put me on a 2-month pause,
stop the line for 2 months add 2 more months on the contract. I told them this
was a permanent move and I didn't want to bother, just shut it down. Then they
wanted to hit me with a $250 cancellation fee, not prorated. I referenced the
part of the contract about coverage but the rep wasn't hearing it. While at
the airport I called them and paid my final bill (they charged me to pay by
credit card over the phone, too). Told them to cancel the line and goodbye.

I got a few very large bills in the mail after that, a few creditors calling
my Google voice line, and then silence. It's been that way for 6 years.

~~~
fpgeek
Wow. That's impressively bad, even for Verizon.

A few years ago, when I moved overseas, T-Mobile had no trouble waiving the
termination fees (for both my line and my wife's) once I'd shown them proof of
the move. And they'd already unlocked our phones for a previous international
trip, which was handy because we could easily go prepaid until we picked a
carrier post-move.

------
ThomPete
When I was diagnosed with a melanoma last year and had to go for my second
operation someone proposed I went to this specialist.

For reasons that are still unclear to me my insurance didn't cover it and I
was told that if I did it out of pocket I would have to pay 3000USD for an
initial meeting.

I was also sent the price for my uncomplicated operation which was between
30.000USD and 150.000USD. This is for a stage 1 removal.

Stage 2. started at 250.000USD and ended at 450.000USD

Stage 3. and stage 4. well lets just say i stopped reading after stage 2.

Now I am well aware that no one ever pay the list price, but it is to me (I am
originally from Denmark) completely absurd the way the healthcare system is
constructed.

I also recognize that there are no easy solutions here. You can never spend
enough money on healthcare.

But you can certainly construct it differently than we have here in the US.

~~~
josephagoss
If you don't mind me asking, what did you do? It would be cheaper to fly back
to Denmark and get the operation there wouldn't it?

~~~
seanmcdirmid
Parent probably had insurance.

~~~
ThomPete
Well I live in the US so I have US healthcare. The one I have now is much
better than the one last year.

------
jwallaceparker
Health insurance premiums in America are about to jump even higher because of
two key points in Obamacare.

1: By 2014 it will be illegal for an insurance company to deny coverage to a
customer with pre-existing conditions. This is great news for people with pre-
existing conditions, but bad news for everyone else, who will have to cover
the cost through increased premiums.

2: Obamacare carries a clause in which consumers may opt out of government-
approved healthcare and pay a tax penalty instead. The CBO estimates that in
2016 the average penalty will be $1200 per year.

In combination these two factors will create massive upward pressure on health
insurance premiums.

Healthy consumers who carry mainly catastrophic insurance will choose to drop
their coverage en masse in favor of paying the penalty.

After all, if they ever get really sick, they can always sign up for insurance
because it's now illegal to deny coverage to someone with pre-existing
conditions!

This will drive insurance prices higher, as there will be an ever-shrinking
pool of consumers paying premiums.

~~~
yardie
I believe the long term goal is the deregulation of the health insurance
market. Currently most states just have just 2-3 providers. The current
providers are driving prices up because they have a, temporarily, captive
market. Once more providers enter the market (because who wants to leave all
that money on the table) the market should be self correcting.

------
rgejman
The comments about the use of percentiles biasing the data are very true, in
particular because there are effectively 3 pools of patients in the US:
private/employer insured, Medicare/Medicaid and uninsured.

Medicare and Medicaid pay far less than private (employer) insurance (and the
uninsured frequently do not pay at all). As a result, many hospitals and
outpatient physicians charge private insurance disproportionately more than
what the services actually cost in order to cover the operational losses from
medicare/medicaid and uninsured patients. It's astounding how many articles
that discuss the "ludicrous" prices of health-care in the US fail to mention
that the prices for goods and services billed to uninsured patients are
designed to offset the losses from other patients. That $80 aspirin is $0.01
for the aspirin and $79.99 for the cost of the nurse to bring it to you and a
variable $ amount that helps offset losses.

The only fair analysis is to compare averages to averages, which in the US
should include both charges to medicare/medicaid and private insurance.

I'm not arguing that health care costs in the US are lower or even the same as
in other countries, by the way. I'm merely trying to point out that the
differences are not what they seem at first glance.

More importantly: a brief look at the IFHP website and the report itself
(<http://www.ifhp.com/news153.html>) leads me to question whether medicare was
even included in this dataset. The relevant lines from the report are "The
International Federation of Health Plans was founded in 1968 by a small group
of health plan industry leaders. It is now the leading global network in the
industry, with more than one hundred member companies from twenty-five
countries" and "Prices for the United States are calculated from a database
with over 100 million paid claims that reflect prices negotiated between
thousands of providers and almost a hundred health plans." Draw your own
conclusions (or perhaps someone should contact them).

Edit: I've emailed them to try and find out. I'll post back here what I find.

Edit 2: Another document put together by IFHP in 2009
(<http://tinyurl.com/bn9qtvm> warning: PDF) compares other countries to US
private insurance and medicare separately. Medicare prices are far more in
line with other countries than the averaged data would suggest.

------
verisimilitude
No THIS graph shows that America's health-care prices are ludicrous:
[http://thesocietypages.org/graphicsociology/2011/04/26/cost-...](http://thesocietypages.org/graphicsociology/2011/04/26/cost-
of-health-care-by-country-national-geographic/)

~~~
AlexeiSadeski
Life expectancy is not really related to health care.

~~~
lostlogin
Infant mortality is. And the mother's life certainly is too. But in general
you do seem to be right. However this could be due to quality of life being
hard to measure, because quality of life is related to healthcare, but damned
if I can prove that.

~~~
dantheman
Infant mortality is calculated differently by different countries. What counts
as infant mortality in the US often counts as a still birth etc in other
countries.

~~~
nitrogen
I can't help but think that at least some of the people putting these
statistics together know that and have corrected for it.

~~~
AlexeiSadeski
You'd be surprised.

------
Strang
Those graphs are terrible. Why bother comparing the USA's 95th-percentile
prices to the average price of other countries? And why refuse to show any
countries that are more expensive than the USA in any category? Very ham-
fisted.

~~~
ThomPete
You will not in the western world find any country that are more expensive
than the american system as far as I am aware.

~~~
acadien
That's beside the point. The graphs are misleading. If the author simply let
the data speak for itself, instead of biasing the visuals, it would be much
more effective.

~~~
ThomPete
If there isn't any other country that is more expensive how is that besides
the point?

Another way to interpret the different numbers could also be simply a question
of availability.

~~~
seanmcdirmid
China is probably more expensive at the high-end when considering bribes. But
it does nothing to invalidate this chart.

~~~
GFischer
I doubt it, I've heard of other peoples' experiences with bribes (not China),
and they're FAR less than an average U.S. treatment.

~~~
seanmcdirmid
The medical system in China is severely underfunded while prices are fixed by
the government that don't much these funding levels. Its kind of a mess.

For private healthcare without bribes in China, the prices are way more
expensive than the states...but what choice do we have? At least I have
insurance. Anyways, my experience is only in China.

------
narrator
What's funny about health care and to some extent education in the U.S is that
the solution is NOT to spend more money. This is fundamentally at odds with
the political ideology prevalent in this country which seems to think more
money is the universally applicable and most effective solution to social
problems.

~~~
Retric
I think it's spending more money on X, and less on Y. One of the huge savings
available for single payer systems is you can use random audits vs debating
every single bill. Cover everyone and suddenly you don't need to fill out
reams of insurance forms every time you see a new doctor etc.

------
adventured
Just as one factor in healthcare costs in the US - I wonder if people talking
about the expenses understand how much doctors and nurses make in most other
countries compared to the US?

Slash the costs, and one of the prime cuts is going to be that doctors and
nurses will make 1/3 as much instantly.

Nurses for example make 50% more in the US than in Germany, Norway, South
Korea, France, and Canada to name a few.

~~~
peteretep
Are American Nurses 50% better than those in other rich countries?

Do American Doctors cause 3 times better outcomes than others?

------
aethertap
I'd be interested to combine these charts with some other data that might be
related, such as doctors' student loan and mortgage debt, per capita income,
waiting times for various procedures, and maybe even a measure of how many
citizens there are per doctor (as a way of determining relative barriers to
entry for medical professionals). I don't really have a good sense about how
all of those things stack up in other places, but I suspect the U.S. would be
an outlier in some of those as well.

~~~
dlo
I believe you are making the assumption that doctors are pocketing this money
(or at least much of it). I am not saying that you are wrong, but I am saying
that you need to identify this as an assumption and re-examine it.

(As it turns out, you are wrong, but I don't have time to go into it right now
:-P.)

~~~
aethertap
Actually I'm not making any assumptions (hence the reason I would like to
_see_ the data stacked up together). I don't _know_ what it would look like,
but I enjoy exploring ideas like that. I actually do know, in at least two
cases, that the doctors _aren't_ pocketing the money (the doctor friends I
know are going to be living paycheck to paycheck for several years as they
deal with the huge debts they incurred in the process of becoming doctors).
The question I'm most interested in exploring with the above data is this:
what are the relative costs and barriers to entry for medical professionals in
all of these countries? It's my impression (could be profoundly wrong for all
I know) that they are exceptionally high in the U.S., and if that is the case,
then it would be a contributing factor to the high costs.

There are obviously many other contributing factors, and I'm not proposing
solutions here, just curiosity. I think you read more into my query that I
meant to convey- I have nothing against doctors, or even against doctors
making tons of money. I don't particularly like the disconnect between people
and the prices of their medical care that happens as a result of our insurance
model and I think that's also a major contributing factor to high prices. As
you say, though, I don't really want to go into that here.

------
zht
Another thing that I found extremely strange while living in the States.

Seeing Walgreen's advertisements for flu shots (I think it was $19.99).

~~~
peteretep
Why did you find that strange? Here in the UK I paid a similar amount for my
flu vaccination

~~~
Gmo
I think it's the advertising part ... I know I had the same.

------
cpursley
They key take away here is there is a HUGE opportunity for a medical tourism
startup that helps people find quality healthcare overseas (from US
perspective).

~~~
AlexeiSadeski
It's already decently popular.

------
justzisguyuknow
Umm is it just me or does it not look _ludicrous_ but just _higher_ if you
compare the AVERAGES to the other countries' AVERGAGES, rathr than out 95th
Percentile to other countries' AVERGAES?

------
mnazim
I wonder how "not so well off" people pay for health care. What are the costs
in government run hospitals?

(I am from Kashmir. Consultation with the best doctors does not cost more than
5 - 8 USD and in most cases this amount is for 10 - 15 days regardless of the
number of visits. And if you go to government run hospitals you can get the
best consultation for half a dollar. Only problem we have is that the health
care infrastructure - private and government combined - is overloaded. Not
enough hospitals, not enough doctors, not enough equipments. )

~~~
lilsunnybee
It depends on what income level you're talking about. Many low income people
can't afford insurance and never receive healthcare until something
catastrophic happens, and in that case they go to the emergency room.
Hospitals are required to provide treatment (though there have been scandals
surrounding this in the past), and so they will and then afterwards just bill
the uninsured low income patient an insane amount. Debt collectors will then
hound the individual or family for quite a while afterwards. Its a very
efficient system. ;-)

------
pbreit
Comparing USA Average (the middle number), the prices actually don't seem bad
at all considering that the USA has by far the best medicine in the world and
a host of reasons why it runs high (legal, cost of education, free markets,
high rate of elective procedures, center of advancements, etc).

~~~
btilly
_...the USA has by far the best medicine in the world..._

Citation needed.

The statistics that I've seen usually place the USA near the bottom of the
industrialized world on things like life expectancy, child mortality, survival
rate after open heart surgery, etc.

~~~
pbreit
Citation needed.

Either way, some/many of the things you cite have to do with access to care,
diet, smoking (yes, more than europeans), etc, not quality. Things like heart
surgery mortality rates are tough to compare since the USA is well-known for
performing more procedurs at the end of life.

Not my favorite source but little reason to think it's way off:
[http://www.foxnews.com/opinion/2013/01/15/facts-about-
americ...](http://www.foxnews.com/opinion/2013/01/15/facts-about-americas-
health-care-quality-that-world-doesnt-know/)

~~~
kalleboo
I find all these debates so difficult because it's so hard to interpret all
the numbers. For instance, your article's numbers all seem to be based on
outcomes for people who are seeing doctors. Maybe there's something about
people who don't see doctors in the US which would cause the outcomes to be
worse. Or maybe not. It's just impossible to trust anything, since everything
can be interpreted in 10 different ways.

------
pyre
I think that some of these comparisons may be a bit unfair. All of the dollar
amounts are expressed in USD, but cost of living is different in different
parts of the world. It would be like comparing housing prices in the Bay Area
to housing prices in Argentina just on dollar amounts in USD, without taking
other factors into account.

For instance, Argentina has $10 for an office visit. I'm not sure that a
doctor would be able to make any kind of decent salary if they were only
making $10/patient in the US. It would definitely incentivize the impersonal,
"get done as fast as possible, don't spend a microsecond more," style of visit
to the doctor.

~~~
ricardobeat
I'd say cost of living in Argentina is 3-5x lower than the US. Even if you
multiply all the AR values by 5x it's still ridiculous.

~~~
pyre
I'm not saying the numbers are reasonable. I guess I'm saying that the graphs
would be more useful if they were somehow normalized for something like cost-
of-living.

------
umarafridi
There are a number of differences between the US and all the other countries
which may explain the costs. For example - Malpractice insurance costs in the
US are much higher, the salaries for doctors are higher, the cost of their
education is higher, living expenses can be higher...

And because it is privatized - in the UK for example, the government can
negotiate fees to bring down costs (for drugs, services etc). They can set
prescribing guidelines so physicians don't just prescribe what they want and
they can set treatment protocols and budgets so the physicians don't order
unnecessary scans. All this brings down the overall costs.

------
iansinke
Maybe I'm reading the graphs wrong, but they seem somewhat misleading to me:
shouldn't the average (top of the blue bar, bottom of slightly greener blue
bar) be what you're comparing to the others? The other columns are all
strictly averages too, even though the prices are centrally set for many of
the other countries.

The US does come out more expensive, but not as much as the graphs might lead
you to believe. It's like saying: In Australia the average student scored 43
points on a standardized test, but in the US, students in the 95th percentile
got 150 points! Yeah, not so convincing.

n.b. I say this all as a Canadian.

~~~
Toadsoup
I agree that it is misleading.

The charts show the average cost for each country, then for US it emphasizes
the outrageous edge cases.

A more fair representation would show all 3 segments for all countries. With
the data presented, if we look at just the average costs the change is still
significant but not as dramatic and shocking.

Healthcare costs are a real issue and is totally jacked up in the US, but
representations like this take away credibility from the argument they are
trying to support.

------
jasonlotito
Once again, pricing that ignores the real costs in other countries, what
people really pay in the US, and most importantly, simply equate health care
with a dollar amount. As someone who has lived in a two countries in those
charts (one of those being the US), I can assure you those prices are not at
all representative of reality. They also don't take into account quality of
care, of which, I can again assure you, is vastly different.

I left Canada precisely because of the abusive medical establishment that
essentially abused my children.

------
cpursley
Seems like it's cheaper to fly to Argentina for health care. My wife goes back
to Russia for dental care - 1/5 the price.

~~~
shiftpgdn
Is it possible to have dental care done as a tourist? I'd rather visit Russia
for a few days and have my teeth worked on than pay $2500 to have some
cavities filled here.

~~~
Ras_
Thailand & co. already excel in it. Research common search result stories like
this:
[http://www.jaunted.com/story/2011/10/11/125413/89/travel/Tra...](http://www.jaunted.com/story/2011/10/11/125413/89/travel/Travel+Confessions%3A+I+Was+a+Dental+Tourist+in+Thailand)

------
chucknelson
A little too focused on raw dollars and not other factors. For instance, how
does quality of these services relate to the prices?

~~~
jandrewrogers
There are many things not factored into the graphs. Two that have been
substantially quantified in healthcare economics literature:

\- Average survival rates and outcomes for non-trivial procedures and
illnesses are excellent in the US compared to the rest of the developed world.
If I have cancer in the US, my average survival rate is 65-70%. In the UK NHS,
to use that as an example, it is 45%. The better diagnostics, treatments, and
options in the US are naturally going to cost more money and Americans have it
to spend.

\- The free-rider problem with pharmaceuticals. The vast majority of R&D cost
is recovered in the US because it is one of the few markets in the developed
world where drug companies can charge enough money to amortize their R&D
costs. If Americans paid as much for drugs as the rest of the world, the
pharmaceutical companies would go broke.

That said, there are an enormous number of aspects of healthcare in the US
that are just grossly inefficient, wasteful, and expensive. Americans pay an
inordinate amount of money for healthcare, and more than they need to, but
they also receive some benefits in terms of medical outcomes as well.

~~~
rbehrends
Cancer survival rates are indeed quite good in the US compared to some other
countries. However, that is not reflected in low cancer mortality rates.

Cancer survival rates generally measure how many people are alive five years
after diagnosis; because in America, cancer diagnosis is performed early and
often, cancer is often diagnosed early, and more patients will be alive five
years after an early diagnosis than five years after a late diagnosis.

However, this does not necessarily lead to a measurably lower cancer mortality
rate (the number of people who actually die from cancer) [1]. Furthermore,
aggressive diagnostic procedures can also lead to false positives, unnecessary
treatment, and overtreatment. Prostate cancer is a prominent example here: it
is rarely fatal; it's a cancer that one generally dies _with_ , not _from_.
Conversely, surgery at the typical age where prostate cancer occurs carries
significant risk and has, even when successful, negative effects on quality of
life, such as incontinence and bowel problems.

The free rider problem with pharmaceuticals is largely a myth. Pharmaceutical
companies typically invest only a relatively small percentage of their revenue
(for Pfizer or Merck, about 15%, give or take) in R&D. I.e., out of every $10
that you spend on their prescription drugs, only $1.5 will go to research.
Furthermore, most of the basic research (north of 80%) to discover new drugs
and vaccines is actually funded by the NIH; Pfizer, Merck, etc. are more
interested in variations of existing drugs than in innovating treatment [2].

[1] [http://www.overcomingbias.com/2011/05/beware-cancer-
screens....](http://www.overcomingbias.com/2011/05/beware-cancer-screens.html)

[2] <http://www.bmj.com/content/345/bmj.e4348>

~~~
snowwrestler
People diagnosed with cancer are obviously more likely to die of cancer, since
cancer is never cured, and everyone must die of something. What matters is how
long they live with their cancer. That is why survival rates are a better
measure of cancer treatment efficacy than mortality rates.

~~~
rbehrends
The problem with that is that cancer survival rates are measured from _the
time of diagnosis_ , not from the time the cancer presumably began (because
that's often difficult to tell). And even with identical treatment efficacy,
cancer that is diagnosed early will have a higher five-year survival rate than
one that is diagnosed later.

In short, we're lacking good data at the national level to measure what you'd
like to measure; and we do have studies (e.g., the one in the first link I
gave you) that at the very least cast doubt on the belief that an aggressive
cancer screening schedule reduces cancer-related or all-cause mortality. As
Robin Hanson puts it: "While cancer screening does consistently lead to more
cancer detection and more cancer treatment, it consistently doesn’t lead to
lower mortality."

~~~
snowwrestler
There won't be identical treatment efficacy, because cancer treatments work
better the earlier they are started. Early diagnosis is not a data problem, it
is an inherent part of why the U.S. gets good results fighting cancer.

------
fakeer
The costs tell how capitalism ruined the capitalism and twisted it to work
solely for the (already) capitalists who are/were on the upper deck of
capitalist yacht.

It's not just insurance cost - it's the entire healthcare system it seems that
is complicated and made not very easily accessible. There's an answer to a
question on Quora, by a guy who stayed in USA.

Question is: _What are some things that you can do in India but not in the
US?_

Answer says: _I can go to a doctor with no insurance, no paperwork..._ [1]

I don't think it's very unsafe to assume that the healthcare is designed in a
way to make it extremely costly and make it accessible only to the rich and
paying(whatever the huge amount set) customers.

Is it so true that USA doesn't have an dependent clinic or practitioner
medical care culture? As in an independent doctor setting up his/her clinic or
hospital and not associated with some BIG hospital clinic chain or just one
mammoth+costly hospital.

What about the state owned hospital or medical schools? Like those in state
owned universities for example. How is the cost of treatment/check-up there?

 _disclaimer_ : In no way it's comparison of quality of healthcare in two
countries, it just discusses the way it is accessible.

[1][http://www.quora.com/What-are-some-things-that-you-can-do-
in...](http://www.quora.com/What-are-some-things-that-you-can-do-in-India-but-
not-in-the-US/answer/Balaji-Viswanathan-2)

~~~
cpursley
What you describe is not capitalism. It's cronyism. The US healthcare market
is far from a free market; hasen't been for 50 years.

~~~
repeta
Yes, what he described is not True Capitalism™.

~~~
AlexeiSadeski
Given that Smith created capitalism in order to argue against cronyism (NOT
socialism), it seems odd to criticize capitalism for cronyism.

~~~
rskar
Smith "created capitalism"? Per Wikipedia
(<http://en.wikipedia.org/wiki/Capitalism>): "The term capitalism, in its
modern sense, comes from the writings of Karl Marx." You may want to read its
section "Etymology and early usage" for more perspective. Then look up Adam
Smith and "The Wealth of Nations".

~~~
AlexeiSadeski
One needn't coin the term to have created something.

Marx came after Smith - Marx's writings were in response to capitalism.
Smith's writings were in response to
mercantilism/cronyism/protectionism/imperialism.

