There are a variety of reasons, both good and bad.
- Our income is higher than most other countries.
- Since 1960 medical technology has advanced with enormous speed. Between 1980 and 2010 the number of total hip replacement surgeries increased nearly 10 times, for instance.
- The tax exemption for employer-sponsored health insurance has led to a medical arm race. Hospitals compete with the best amenities to attract privately-insured patients.
- Diminishing returns: A health care system that only goes after the low-handing fruit gets better returns on its investment. However, that does not mean the best health care system should do less and ignore costly treatments.
- Americans consume more health care because they need more care. Cancer and heart disease are more than twice as high in the U.S. as in Europe. Lung disease, strokes, and diabetes are also much higher in the U.S., as is obesity.
- The tragedy of the commons. Costly medical care is funded collectively through employers and government. Beneficiaries resist cost control that rations care or increases their burden.
The bottom line: U.S. health care is tailored to an affluent population that suffers from the afflictions of an affluent population. The solution is more individual control.
HT: Chris Pope, Manhattan Institute, writing in City Journal.