He writes,
That report found that the higher health care outlays in the United States–compared with Europe, Canada, Japan, and Australia–are due to the higher prices of health services. . .rather than to a greater use or higher quality of those services.
That is on p. 64 of his new book, Building the New American Economy. The report that he footnotes is this one from the Institute of Medicine.
I looked through the report, and I did not see the comparison to other countries to which Sachs refers. The report does have a table that allocates what it calls excess spending in the United States, which briefly looks like this:
| Category | Excess Cost |
|---|---|
| Unnecessary services | $210 billion |
| Inefficiently delivered services | $130 billion |
| Excess administrative costs | $190 billion |
| Prices that are too high | $105 billion |
| Missed prevention opportunities | $55 billion |
| Fraud | $75 billion |
I am not endorsing these numbers. My point is that the report’s analysis and recommendations differ considerably from the way that Sachs construed them.
I do not ordinarily write about books that I do not like. I was sent a review copy, and I would like to be charitable about it.
Sachs is not always wrong. He is willing to dispute mainstream economists, and I certainly do not hold that against him. But wading through this careless and dishonest book left me hoping that the Democrats stick with their mainstream economists.
…and the source report further says that prices “are one major factor” but “do not fully explain the differences in costs among different countries.”
I don’t think you should worry at all about your blog tagline when you find research misrepresented. Few people have the time/incentive to check sources as they read – this is a valuable service to your audience.
Not that hard to find references, a significant one being, It’s the prices, stupid all derived from OECD data. Other references provide data on other measures. The data isn’t indisputable, but numerous issues with it are addressed.
Yes, we have heard it many times.
Aaaaaaaand…further restricting supply and subsidizing demand is likely to result in what we’ve seen happen.
From a casual observer, I am impressed by Sachs heart, his head not so much.
Why would an economist promote the one cause thing, especially when that one thing is so well hackneyed. I’ve heard the individual procedure cost thing a hundred times. I’m more interested in why that is the case, even though I also don’t necessarily believe it is the case.
Example. We hear that there are long wait times for MRIs in Canada. Normally, you would raise prices. But maybe they are not able to do that. In the US, we buy more MRIs and then have to raise the price to cover the fixed cost.
And then if course we also do a lot more unnecessary MRIs. But we find out most tests were unnecessary by doing them.