Why Do Americans Pay So Much for So Little?

The United States devotes 16.9% of its economy to health care, more than any other nation in the Organization for Economic Cooperation and Development (OECD), yet has the lowest life expectancy among OECD nations, according to The Commonwealth Fund. What accounts for the high cost of health care here?

Health care costs defy the normal laws of supply and demand, for several reasons. Fundamentally, health care is not like other goods and services, in that you can’t easily consume less of it as the cost increases (you can buy a smaller house if housing costs increase, but good luck settling for half of an open heart surgery). This would be as true in Geneva, Switzerland as in Geneva, Illinois. But there are several features of American health care that make U.S. health care a uniquely bad bargain.

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