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Why Americans Pay More
CNBC.com | September 12, 2011 | 10:34 AM EDT

It's no secret Americans pay a lot for health care. The big secret is why.

In 2008, the latest year for reliable statistics, the U.S. spent more than $2.3 trillion on health care , three times more than in 1990.

Comparing these numbers to other industrialized countries, the U.S. spends a greater share of gross domestic product on health care, by as much as 50 percent in some cases.

The reasons Americans pay more, say analysts, boils down to a complicated system that requires a profit motive.

"The U.S. pays higher costs for the same service in part because the government plays a smaller role in negotiating prices," says Gerry Wedig, associate professor of business administration at the University of Rochester. "Overseas, governments compress patient demand by acting as a tough regulator and negotiator for the whole system."

"Our labor costs are higher for doctors, nurses and other health care professionals than other parts of the world," says Paul Keckley, executive director for Deloitte's Center for Health Solutions. "Specialists easily make more money here than in other countries."

A private insurance market and an overworked legal system are also behind the cost differential, says professor Colin Pritchard of Bournemouth University in Great Britain and who has co-written a comparison study on health care costs.

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