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Review Essay: Herding Cats and Reforming the American Health Care System
Published online by Cambridge University Press: 01 January 2021
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A recent New York Times/CBS poll shows that nearly 80 percent of respondents think the American “health care system is headed toward a crisis because of rising costs.” Indeed, the public has become well acquainted with ominous-looking graphs that detail the nation’s health care spending. The increasingly steep slope of the graph showing the percentage of gross domestic product spent on health care invites tongue-in-cheek projections for when health care spending will finally consume it all.
High aggregate health care expenditures result from the low prices individuals pay for coverage. On average, patients pay only five cents out-of-pocket for every dollar of hospital charges they generate. The remainder is paid by private or public health insurance. Patients pay slightly more for physicians’ services—nineteen cents on each dollar. For health care of all types, patients pay approximately twenty-four cents on each dollar. With individuals paying what amount to fire sale prices for health care, it should come as no surprise that they purchase a great deal of coverage.
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