It is well known that the U.S. spends far more on health care, by any measure, than any other country. The paper by Irene Papanicolas et al. (2018) is a major study of the differences in healthcare spending across high-income countries. It concludes that "Prices of labor and goods, including pharmaceuticals, and administrative costs appeared to be the major drivers of the difference in overall cost between the United States and other high-income countries." In a commentary on that paper, Ezekiel Emanuel (2018) analyzes much of the same data and concludes "it is unlikely that prices alone drive excessive health care costs in the United States." The same issues are addressed in Chapter 1 of Uwe Reinhardt'sPriced Out(2019), and in an interview with economist David Cutler. This assignment will focus primarily on the Emanuel piece, making reference to these other sources, as well as an article by Kevin Drum (2019).

We will not discuss prescription drug spending. It is generally agreed that the higher prices that the U.S. pays for drugs accounts for a significant portion of our excess spending compared with other countries, even though drug spending is only about 15 percent of total U.S. health care spending, according to the Papanicolas et al. numbers.

Question

1. Emanuel agrees that doctors are typically paid much more in the U.S. than in other countries, but argues that this is not an important explanation for why we spend more on health care in total. Briefly explain his argument.