Editor’s Memo

The Prices Ain’t Right


Peter Wehrwein
Uwe Reinhardt

Economics is called the dismal science. Uwe Reinhardt was anything but dismal. When the Princeton health economist died last month at the age of 80, the remembrances were of a lively, funny, and approachable man with important things to say and clever ways of saying them.

The headline of the New York Times obit called him a “listened-to voice” on health care. Ezekiel Emanuel told the Washington Post that Reinhardt was a “great moral conscience.”

Reinhardt was on our editorial advisory board, so he was familiar and accessible. Frank Diamond, our managing editor, wrote an eloquent blog post about him, recalling—among other things—the laughs they shared after a 2013 interview. You can see the video (but not, alas, the post-interview laughs) on our website.

Reinhardt’s most enduring contribution to the never-ending discussion about what ails American health care may be a 2003 Health Affairs article provocatively titled “It’s the Prices, Stupid.”

Reinhardt and his coauthors looked at a variety of measures of health care utilization, including physician visits and hospital days per capita. They found that the United States was actually below the median of those measures for other developed countries. Yet this country is a complete outlier in health care spending. Administrative costs, “service intensity”—they’re factors. But Reinhardt and his colleagues highlighted price as the explanation for American health care spending—and so that memorable title and an abiding truth.

Some think value-based care can tame American health care spending. Others believe we can unleash market forces with health care saving accounts and the like. But they are pretty weak medicine when what the American health care dollar buys is priced so high. It remains the prices, stupid.