good morning Hank it's Tuesday I want to
talk today about why healthcare costs in
the United States are so phenomenally
fascinatingly expensive but first I have
to blow your mind all right so you've
probably heard that the reason people
enjoy quote-unquote free health care in
Australia and the UK and Canada etc etc
is that they pay higher taxes that money
then goes into a big pot and is used to
pay for people's health care but in fact
in the United States we spend more tax
money per capita on health care than
Germany Australia the United Kingdom or
Canada that's right Hank you pay more in
taxes for healthcare than you would if
you were British and in exchange for
those taxes you get no health care in
fact only about 28% of Americans get
their health insurance through
government funded programs mostly poor
people old people and congresspeople but
as you can see in this graph our private
health care spending most Americans are
privately insured through their
employers is way higher than anywhere
else in the world in total the u.s.
currently spends about 18% of its gross
domestic product on health care costs
Australia by comparison 9% why is this
well because everything costs more which
seems obvious but apparently it isn't
because every article you read is like
oh it's because of malpractice insurance
or it's because we're obese or we go to
the doctor too much or people are
prescribed too many medications well not
really it's because everything costs
more a hip replacement in Belgium costs
$13,000 in the u.s. it's often over a
hundred thousand dollars colonoscopies
averaged over eleven hundred bucks
apiece in the US and Switzerland there's
six hundred fifty five dollars and on
average a month of the drug lipitor will
cost you 124 dollars if you live in the
United States if you live in New Zealand
seven dollars now we are also not to
brag richer than all of these countries
so it makes sense that we should spend a
little more on health care but we don't
spend a little more we spend a ton more
and vitally we don't get anything for
that money which means we are
essentially paying people to dig holes
and then fill those holes back up like
we don't live longer in fact we're
thirty thirty life expectancy and
everything from asthma to cancer
according to one recent nonpartisan
study American health outcomes are not
notably superior so why are we spending
all this money for nothing well first
let's discuss some of the problems that
are not
Trulli problems for instance the problem
is not so-called overutilization the
idea that Americans go to the doctor
more and get more tests and spend more
time in hospitals we know this because
Americans actually go to the doctor less
than Europeans and spend much less time
in hospitals although to be fair you can
stay in a Dutch hospital for seven
nights for what it costs to stay an
American one for one night so no wonder
we're hesitant also it is not because we
are sicker than other people everybody
likes to blame obesity on our rising
healthcare costs but ya know that
argument is just not supported by data
for one thing disease prevalence does
not affect healthcare cost that much and
for another thing while we do have more
obesity in the United States which
sometimes leads to health problems we
have fewer smokers and less alcohol
consumption really apparently yes so
that saves us a little money and if you
compare us to like the British or the
French in the end it's probably a wash
thank the truth as usual is complex like
there are obvious inefficiencies in our
healthcare system for instance not
everyone has insurance if you don't have
insurance you still get health care but
you are responsible for paying for that
health care which often you can't do so
you end up going bankrupt that sucks for
you obviously because you're bankrupt
but it also sucks for the rest of us
because we have to pay not only for your
care but also for all the money the
hospital spent trying to get you to pay
for your care also the only options
available to uninsured people are
usually the most expensive options like
emergency rooms which is just bananas
but those inefficiencies are hard to
measure fortunately there are things
that we can measure so like I said
before because the u.s. is one of the
richest countries in the world you would
expect us to pay a little more for
health care than most people the
question is when do we pay more than you
would expect us to pay and that turns
out to be pretty interesting let's start
with malpractice and so-called defensive
medicine the idea here is that doctors
are scared of huge malpractice suits so
they order a lot of unnecessary tests in
order to like cover their butts that
does contribute to our health care costs
like there are more MRIs and CT scans in
the US than anywhere else however there
are a bunch of states like Texas that
have passed tort reform to limit
malpractice suits and in those states
health care costs have dropped by an
average of a whopping point one percent
the biggest estimates for the total cost
of defensive medicine put it around 55
billion dollars which is a lot of money
but it's only 2% of our total healthcare
costs another smallish factor doctors
and to a lesser extent nurses are paid
more in you
United States than they are in other
countries and by my possibly faulty math
we end up spending about 75 billion
dollars more than you would expect us to
there then we have the cost of insurance
and administrative costs like paperwork
and marketing and negotiating prices all
that stuff that's about ninety billion
dollars more than you would expect us to
spend we spent about a hundred billion
dollars more than you would expect on
drugs not so much because we take more
of them but because the ones that we
take cost more per pill okay and now for
the big one I'm going to lump inpatient
and outpatient care together because in
the u.s. we do a lot of things as
outpatient procedures like gallbladder
surgeries that are often inpatient
procedures in other hospitals so we're
just going to make a big ball that big
ball is five hundred billion dollars
more than what you would expect given
the size of our economy per year why
well because in the United States we do
not negotiate as aggressively as other
countries do with healthcare providers
and drug manufacturers and medical
device makers so like in the UK the
government goes out to all the people
who make artificial hips and says one of
you is going to get to make a crap ton
of fake hips for everybody who is
covered by the NHS here in the United
Kingdom but you better make sure your
fake hips are safe and you better make
sure that they're cheap because
otherwise we're going to give our
business to a different company and then
all the fake hip companies are motivated
to offer really low prices because it's
a huge contract like think if your
company got to put hips inside of
everyone in England and Scotland and
Wales and Northern Ireland I guess not
everyone just the people who need hips
but in the u.s. we don't have any of
that centralised negotiation so we don't
have as much leverage the only big
exception is Medicare the
government-funded health care for old
people which not coincidentally always
gets the lowest prices
so basically Hank in the United States
providers charge whatever they think
they can get away with and they can get
away with a lot because it's really
difficult to put a price on like not
dying this is a phenomenon called
inelastic demand like if you tell me
that this drug that will save my life
cost seven dollars a month I will pay
you $7 a month for it if you tell me
that it costs 124 dollars a month I will
find a way to find 124 dollars a month
to pay for it you can't negotiate
effectively on your own behalf for
health care services because you need
them and not like you need a new MacBook
Air or the new season of Sherlock but
actual
physical need I guess it is like the new
season of Sherlock so basically Hank
until and unless we can negotiate as
effectively with the people providing
health care as Australians and British
people do us healthcare costs will
continue to rise faster than anywhere
else in the world and we won't get
better healthcare outcomes Hank I know
this video is long although it could
have been much longer but I am so tired
of people offering up simple
explanations for what's wrong with our
healthcare system they say oh it's
malpractice or it's doctors who must
also be business people or it's
insurance companies or it's insane rules
for who can get insurance it's drug
companies it's government bureaucracy
it's an inability to negotiate prices
yes yes yes yes and yes it is all of
those things and more it is not a simple
problem there will not be a simple
solution but it is probably the biggest
single drag on the American economy and
it's vital that we grapple with it
meaningfully instead of just treating
health care costs as political theater
so I hope I've at least introduced the
complexity of the problem I put some
thoroughly nonpartisan links in the
doobly-doo for further reading Hank
welcome back to the United States as you
can see everything is peachy here I'll
see you on Friday
friendly reminder educational videos are
allowed to be more than four minutes
long all the people who are commenting
about how punished I am did not watch to
the end of the video I feel dizzy