Opinion | Why American health care is so expensive
Health Care

Opinion | Why American health care is so expensive

David Goldhill’s Dec. 2 op-ed, “In health care, America is the world’s indispensable nation,” was a classic example of using somewhat misleading evidence to tell a story about how innovative our pharmaceutical industry and health-care system are. Yes, it is true that Americans spend far more on pharmaceutical products than people in other highly developed nations. It’s also true that foreign pharmaceutical companies, such as the mentioned Swiss company Novartis, avail themselves of our markets to increase their profits. But Mr. Goldhill didn’t mention that pharmaceutical companies in the United States spend more on sales and marketing (including consumer advertising and direct marketing to physicians and other health providers) than on research. Why, for instance, do we allow advertising of prescription drugs, when its only function is to have ill-informed patients pressuring physicians to prescribe particular drugs? A substantial amount of medical research is performed in our universities and financed by research grants from the National Institutes of Health, i.e., the taxpayers.

Mr. Goldhill asked why competition doesn’t bring U.S. health-care prices down. He blamed the insurance industry for the fact that hospitals and doctors “avoid competing on price.” Instead, he advocated that, except for a separate “safety-net function that insurance provides,” a “consumer economy could drive [price] competition” in the health-care system. Really? As “patient-consumers,” we first ask several providers how much they would charge for some treatment. Never mind that, as patients, we are often under stress or sometimes in an emergency situation. Most of us are also incapable of judging the quality of alternative treatments recommended. Similarly, how would “hospitals compete on price for patients”? None of this is possible without insurance. The almost 10 percent of Americans without health insurance are definitely not being wooed by health-care providers. But here again, our problem is a for-profit insurance industry that is spectacularly complex and inefficient, with more than 1 million people employed, requiring mountains of paperwork from providers as well.

There are, of course, many other flaws in our health-care system (such as the much lower physician-to-population ratio compared with those in other rich countries). This is the result of a classic monopoly strategy by the medical profession to restrict supply through control of medical residency slots. Not surprisingly, this leads to much higher physician incomes in the United States than in other rich countries such as Sweden, Switzerland and France.

Unless we get away from the fantasy that health care is just a consumer product, we will not solve our health-care cost problem. The lack of market regulation has led to this: Our health care is far too expensive, yet it does not even deliver decent care for large segments of U.S. society.

Manfred Stommel, Alexandria