I understand that insurances covers part of the cost. However, the total cost (before coverage) is still much higher in America. Why?
Is the supply chain different? Are doctors and staff paid better in America?
In: 188
**It doesn’t.**
Or rather, it doesn’t as a proxy of income and consumption relative to other countries. When people say our healthcare costs way more, they’re using costs as a share of GDP as a measurement. But while a factory adds to a country’s GDP, it doesn’t consume healthcare. Individuals and households do. Which is why it’s better to use real income as our metric. And when you do that, you see that the US is right in line with what you’d expect compared to other OECD countries.
In other words, we spend more because we’re very, very rich. Similar to how high cost of living areas is due to wealthy people living there. So not only do prices follow rising incomes, we also *consume* more healthcare because we’ve more money to spend.
https://randomcriticalanalysis.com/why-conventional-wisdom-on-health-care-is-wrong-a-primer/
Hospitals making big profits? Profits are razor thin. And lately they’ve been losing money!
“Between 2017 and 2019, median hospital operating margins were between -1% and -2%.”
https://www.definitivehc.com/resources/healthcare-insights/hospital-operating-margins-united-states
Insurance making big profits?
“Profit Margin data is updated quarterly, averaging 3.000 % from Mar 2012 to Mar 2023, with 45 observations.”
https://www.ceicdata.com/en/united-states/health-insurance-industry-financial-snapshots/health-insurance-profit-margin
If 3% is an absurdly large sum, what’s a reasonable number for profit? 1%?
If other countries have cheaper healthcare because they’re successful at keeping costs down, how come almost no countries in the OECD are successfully keeping healthcare costs from outpacing GDP growth?
https://www.oecd.org/health/health-spending-set-to-outpace-gdp-growth-to-2030.htm#:~:text=07%2F11%2F2019%20%2D%20Health,to%20a%20new%20OECD%20report.
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