The High Cost of American Treatments

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This morning at the gym I listened to an excellent Planet Money podcast about why getting an MRI scan costs so much more in the United States than it does in Japan. It turns out to be a bit hard to say. This is clearly related to the fact that we have more of the very fanciest MRI machines, but it doesn’t seem to be all that tightly related and it’s not entirely clear in what direction the causation runs.

This is important because the biggest reason American health care is more expensive than what you see in other OECD countries is that we pay higher prices for basically the same stuff. In some pockets of health care, this gives us a clear edge in the availability of certain kinds of advanced treatments. The high prices we pay both helps fund R&D efforts and also means that if you’re going to rush something new to one market, you want it to be our market. But it doesn’t, as a whole, seem to have any obvious benefit in terms of health outcomes in part because the most valuable health care interventions (give antibiotics to kids with infections instead of letting them die) aren’t especially expensive or high tech.