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Why is U.S. healthcare so overpriced?

  • Blog Post by: Colleen Stoxen
  • November 13, 2013 - 11:49 AM

Contrary to popular belief, the biggest reason for the rise in U.S. health care spending is not an aging population or patient demand, but the higher costs of drugs, procedures and hospital care, a new study finds.

Since 2000, yearly price increases have accounted for 91 percent of the jump in national health care spending, which totaled $2.7 trillion in 2011.

"That was surprising," said lead researcher Dr. Hamilton Moses, of Baltimore's Johns Hopkins University School of Medicine. Often, he noted, people point to the aging population, or doctors ordering too many tests and treatments, as the main drivers of soaring health care spending.

"I think the origin of that misperception comes from the politicizing of the issue," said Moses, who is also chairman of Alerion Institute, a Virginia-based consulting firm. "Rational discussions based on valid information" are hard to come by. "But the fact is," he said, "we spend more on health care than other developed countries, and the U.S. still lags behind in outcomes."

For example, U.S. life expectancy is 79 years compared with 81 in the U.K. and Canada and 82 in Spain and Italy.

The new study is in the Journal of the American Medical Association.

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