'It's the Prices, Stupid': An Interview with Health Policy Expert Gerard Anderson

Gerard Anderson teaches health policy at Johns Hopkins University.  He spoke with Sojourners associate editor Elizabeth Palmberg by telephone in March.

Sojourners: What are some of the most important causes for why the U.S. is paying a lot more than other wealthy countries [in the OECD] for health care without getting improved results?

Anderson: A higher health-care cost is pretty much because of what I call, “It’s prices, stupid.” We just pay approximately twice as much for each good and service that we utilize in the U.S. vis-a-vis other industrial countries. So if we’re talking about brand name drugs, we could spend twice as much. If we’re talking about a physician visit, we’re talking about twice as much. In fact, for a hospital visit it’s about three times more than other industrialized countries for a similar visit—in a shorter period of time that you’re in the hospital, we still spend about three times more. So it seems to be that we just pay more for identical services compared to other industrialized countries.

Sojourners: Why?

Anderson: Because, in most other countries they have a single purchaser, which is a very tough negotiator, whereas in the United States we have so many different purchasers that nobody has a lot of power. Medicare is an important player, but the private sector is paying about 30 percent more than Medicare. So if Medicare tries to keep prices down too much, the doctors, the hospitals will say, “I’m not going to play with Medicare.” They can play one player off with another payer in order to keep the prices very high.

Sojourners: What about U.S. obesity and higher rates of cancer and HIV?

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