An Economic Perspective of Healthcare Prices in the United States

Date

2024

Authors

Junn, John

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Abstract

The United States currently leads the world in health expenditures despite ranking below the median for health outcomes among countries from the Organization for Economic Cooperation and Development (OECD). Despite knowledge of the United States’ overwhelming and exorbitant spending, the general public does not understand much of what contributes to this problem. In this thesis, we initially provide extensive literature that reveals that prices are the strongest factor associated with increasing health expenditures. We then compare the health systems and cost-containment strategies of Germany and the United Kingdom with those of the United States and compare the effects of such systems and policies on prices and health expenditure. Afterward, we develop an economic model that illustrates how the market structure of the United States healthcare industry contributes to the relatively high price of healthcare services in the United States, which shows that increased levels of productivity from these health goods and services prompt higher prices for these same goods and services. Lastly, we suggest potential policy reforms incentivizing price controls and competition among insurers and healthcare providers, resulting in lower prices and increased efficiency.

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Economics

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