How much do we waste on health care?

Arnold Kling writes:

I am prepared to make the following bet: ten years from now, it will be objectively clear that the United States provided significantly better health care to its citizens between 1990 and 2005 than did other developed countries. From the vantage point of 2015, the policy blunder of the past fifteen years will not be that the United States spent too much on health care, but that other countries spent too little. The socialized systems, forced to ration health care because tax revenues are not sufficient to pay for state-of-the-art care, are constraining their citizens from being diagnosed and treated as well as Americans.

And why do we spend so much on health care?

While the usual suspects receive attention that is disproportionate to their true impact on U.S. health care spending, two important factors receive relatively little attention: physician compensation; and the utilization of high-tech procedures. Both of these are much higher in the United States than elsewhere.

Physicians are paid more than twice as much in the United States as in other developed countries. Because physician services are about one fourth of all health care spending, we could eliminate one eighth of our health care spending by reducing doctor salaries to the levels of other countries.

The other big factor is utilization of high-tech procedures, such as MRI's, CT scans, and open-heart surgery. If Americans would cut back on the utilization of these procedures, that would reduce health care spending by hundreds of billions of dollars.

The question is whether our medical care would deteriorate if we were to pay our doctors much less while at the same time reducing our utilization of expensive capital resources. It seems reasonable to conjecture that the quality of diagnosis and treatment ultimately would suffer.

Read the whole thing; this could be my favorite Arnold Kling essay.  And if there could be five issues I wish I understood better, this would be one of them.