He concludes,

The question of why the U.S. spends more than 50% more per person on health care than the next highest countries (Switzerland and Netherlands), and more than double per person what many other countries spend, may never have a simple answer. Still, the main ingredients of an answer are becoming more clear. The U.S. spends vastly more on hospitalization and acute care, with a substantial share of that going to high-tech procedures like surgery and imaging. The U.S. does a poor job of managing chronic conditions, which then lead to episodes of costly hospitalization. The U.S. also seems to spend vastly more on administration and paperwork, with much of that related to credentialing, documenting, and billing–which is again a particular important issue in hospitals. Any honest effort to come to grips with high and rising U.S. health care costs will have to tackle these factors head-on.

Read the whole thing. Note that he cites Larry Wilmore, another under-appreciated economics blogger.

In my book, Crisis of Abundance, I focused on the greater use of high-tech procedures and specialists.

I think that our ratio of specialists to primary care physicians is much higher than that in other countries, and I think that the reasons for this are the incentives embedded in third-party payment systems here. We pay for doing procedures that can be checked as boxes on an insurance company’s form. Specialists have a high ratio of checkbox procedures to time spent with the patient, so they make the most money and often have the least distorted lifestyle.

I don’t think that having a high ratio of specialists to primary care physicians is necessarily the right mix from a health care perspective–it may be the reverse. One of the benefits of getting away from third-party payment and instead having patients pay more of the cost out of pocket is that the resulting market forces might shift the balance back in favor of primary care.