June 9, 2015

Why U.S. Health Care Is so Expensive

Robert Graboyes

Senior Research Fellow
Summary

For over a century, we've regarded health care as qualitatively different from other goods and services – an economic Oz, where the normal rules of nature don't apply. In doing so, we waste resources, keep prices artificially high and delay life-saving and life-improving technologies. But this will soon pass.

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For over a century, we've regarded health care as qualitatively different from other goods and services – an economic Oz, where the normal rules of nature don't apply. In doing so, we waste resources, keep prices artificially high and delay life-saving and life-improving technologies. But this will soon pass.

In December, Dr. Naoki Ikegami told The New York Times: "[T]he U.S. health care system … defies the laws of economics, and of gravity. Once the price is high, it just stays there." Over a century earlier, three-time presidential nominee William Jennings Bryan proclaimed the primacy of miracles over science: "Do we not suspend or overcome the law of gravitation every day? Every time we move a foot or lift a weight we temporarily overcome one of the most universal natural laws and yet the world is not disturbed."

Bryan didn't understand that lifting a foot doesn't suspend gravity; it expends resources (energy) to fight it. Biologist Stephen Jay Gould wondered how Bryan, whom he admired, could be so misguided. He blamed Bryan's scientific naïveté. He also suspected Bryan may have known better but "didn't care because the line had a certain rhetorical oomph," and Bryan "explicitly defended the suppression of understanding in the service of moral good."

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