The Health Care Industry

Doug Henwood dhenwood at
Wed Aug 25 09:57:43 PDT 1999

Steve Perry wrote:

>*Why* have costs spiralled upward so dramatically in the past 20

Lots of reasons. Comparative international studies, like those by the OECD, show that every aspect of the U.S. healthcare system is excessively costly - you can't point to just one factor. You've got extreme pricing power from drug and equipment makers, without offsetting buying power (as is the case with national systems, which have much more negotiating power vs. Merck & GE); you've got drug & equipment makers constantly producing innovations, some genuine and some spurious, but all expensive; you've got extremely high doctor and executive salaries; you've got massively expensive administrative costs in private hospitals and insurance companies (with administrative staffs increased in an effort to control rising costs); and, until recently, you had private and public insurers who just kept paying the bills and passing along the costs. Even U.S. attempts to monitor costs have been inefficient, with insurance companies following individual cases rather than auditing providers' general performance (as they do in Canada).


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