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Figure 15

Comparative Rates of Inflation (compared to base year 1992)

50%

45%

Medical Services

40%

All Goods

35%

Cos metic Surgery

30%

25%

20%

15%

10%

5%

0%

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

Source: Author's calculation using data from the Consumer Price Index and the American Society of Plastic

Surgeons. See Devon Herrick, “Why Are Health Costs Rising?” National Center for Policy Analysis, Brief Analysis

no. 437, May 7, 2003.

pling of the number of surgeries, cosmetic

As the figure shows, the countries of the

surgeons' fees remained relatively stable.

OECD have been no more successful than the

United States in controlling costs and many have

been far less successful. During the 1990s, health

Myth No. 9: Single-Payer

care spending in all but 3 of 15 OECD countries

National Health Insurance

studied grew at about the same rate as in the

United States--or higher. The notable exception

Would Reduce the Cost of

to the spending trend among OECD countries is

Prescription Drugs for

Canada. The Canadian federal government limit-

Americans

ed spending increases by cutting funding. It

reduced block grants to provinces for health care

as a percentage of GDP in 1986 and again in

Advocates of single-payer insurance maintain

1989; funding to the provinces was frozen at

that it would provide all Americans with full cov-

1989-90 levels through 1995, and further cuts

erage for necessary drugs and control drug costs

were made in the second half of the 1990s.90

by establishing a national formulary--a list of

drugs available to patients under the national

Not all health care prices are rising.

heath plan--and negotiating drug prices with

Although health care inflation is robust for

manufacturers "based on their costs (excluding

those services paid by third-party insurance,

marketing and lobbying)."91 However, access to

prices are rising only moderately for services

patients buy directly. As Figure 15 shows, the

new, more effective (and more expensive) pre-

real (inflation-adjusted) price of cosmetic

scription drugs is often restricted in countries

surgery fell over the past decade--despite a

with national health insurance.

The cost of

huge increase in demand and considerable

Drug development is costly. Only one in five

bringing a new

innovation. Cosmetic surgery is one of the

drugs tested ever reaches the public, and the

drug to market

few types of medical care for which con-

cost of bringing a new drug to market now aver-

ages $900 million.92 A government facing rising

sumers pay almost exclusively out of pocket.

now averages

Even so, the demand for cosmetic surgery

health care costs is tempted to negotiate prices

$900 million.

exploded in recent years. Despite the quadru-

just above the costs of production, ignoring the

16