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Why is European health care so much cheaper?

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A French medical tourism company is trying to promote its international health care provider directory service by answering a popular question: Why is health care in rich European countries so much cheaper than comparable care in the United States?

See also: 5 rich countries where it’s hard to see a doctor

Analysts at the firm, INDIGOMED SAS, tackle the question in a new commentary.

The analysts note that U.S. residents spent an average of $1,074 each on out-of-pocket health care costs alone in 2015, while the average resident of the Netherlands spent an average of just $270, and had easy access to comparable care.

The analysts say the main components of health care costs in the United States and countries like France are:

  • Real estate.

  • Advances in medical technology.

  • Prescription drugs.

  • Medical staff compensation.

Lower prices are clearly not an explanation of lower health care prices in Europe, because real estate prices tend to be higher in Europe, the analysts say.

Differences in regulation and health care finance systems do tend to slow the introduction of hot new medical technology in the United States and drive up the cost of prescription drugs, the analysts add.

In 2015, the analysts say, a Reuters study found that the world’s 20 top-selling drugs were about three times more expensive in the United States than in the United Kingdom.

But the analysts conclude that the big drive of the cost difference is that medical professionals tend to earn about twice as much in the United States as they would in Europe.

Provider compensation levels are similar in Italy and Germany, the analysts say.

“Training costs for health care professionals in Europe are, to a large extent, paid for by the state,” the analysts say. “In return, trained professionals are offered a managerial-level salary that ensures them a good standard of living as part of a system that believes in health care as a mission.”

See also: 

Health Care Also Eats GDP In Other Countries

OECD Analyst: Your Hospital Stays Are Short


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