NCPA - National Center for Policy Analysis


December 4, 2006

Austria's cheap fees for prescription drugs have not contained health care costs, says the Dallas Morning News.

  • Thanks to a labeling law, Austrians can now see what medicines cost, including the ones that are $50 a pill.
  • But Austrians pay a deductible of about $5.70 for each prescription under their government medical insurance, regardless of the actual costs.

"We have big amounts of medicine thrown away every year because people don't have to pay for it," says Christoph Hörhan, a spokesman for the Austrian Ministry of Health and Women.  "We started to print the price on the package to let them know what it costs, but it didn't help."

But according to Devon Herrick, a health economist with the Dallas-based National Center for Policy Analysis, someone has to ration it.  Health care is a scarce resource.  If the consumer doesn't do that, then someone else will have to.  Otherwise, over the years, we could spend our entire gross domestic product (GDP) on health care.

The main problem, says Herrick, is that U.S. consumers pay too little, not too much:

  • In 1960, health care accounted for 5.1 percent of the economy. Consumers paid
  • half the costs out of their own pockets.
  • Today, employers fund most U.S. health insurance, and employees typically pay less than a third of the premiums; co-pays and deductibles are low enough that consumers often have no idea what they're spending.

Source: Jim Landers, "Force patients to comparison-shop, conservatives say," Dallas Morning News, December 3, 2006.


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