Why Is Healthcare So Expensive – The United States health care system operates differently from many others in the world with high per capita costs as a major, differentiating factor. After all, higher prices mean the US spends more on health care than other “developed countries,” a 2019 Johns Hopkins report found.
What’s more, nearly one in three Americans are worried about affordability of health care, according to a February 2020 survey from NBC News. (In June, a man hospitalized with Covid-19 for 62 days received a $1.1 million bill.)
Why Is Healthcare So Expensive
So, what exactly makes health care in the US so expensive? Health insurance rates? Government control – or lack thereof? The pharmaceutical industry? TMRW spoke to experts in various areas of the health care system who identified five overall reasons.
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The main reason is that US health care is based on a “for-profit insurance system,” one of the worst in the world, according to Carmen Balber, executive director of Consumer Watchdog, which has advocated for health insurance reform. the market.
In the US, most health insurance is run by private companies and people have to pay for it themselves, even if their employer pays for it. In contrast, “a lot of other countries have some kind of privacy, but there’s a basic understanding that health care is a right, not a privilege,” Balber said.
The main objective of making money has the negative effect of raising prices, he continued. For example, insurance companies are spending “a lot of money on utilization review,” a process that determines whether a medical service is included under a given plan, adding that the goal is “not to pay customers for the care they think they are insured for.”
Similarly, Dr. Georges Benjamin, executive director of the American Public Health Association, pointed out the lack of universal health care, where everyone is guaranteed access without financial difficulties, as the main reason for the high costs.
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“Part of our system is that everyone … pays less than everyone else, whether they like it or not,” he said. “Everybody’s trying to figure out who else can pay it instead of them.”
Benjamin blames the complex and fragmented structure of US health care — from payment to delivery of care — that can unnecessarily expand administrative processes and overstretch. A recent study found that in 2017, administrative costs made up 34.2% of medical costs in the US, twice the percentage in Canada, which has a low-cost, government-funded system.
Another example: Medicare, the national health insurance program for Americans 65 and older, has very low administrative costs, between 1.1 and 7%.
“Medicare … is much cheaper, because we don’t spend a lot of time trying to deny people the care they need,” Balber said. “There is nothing offered in the health care bureaucracy like there is in private systems.”
Why Is Healthcare So Expensive?
US health care exists in a system where patients are billed based on the services they receive, but that’s another reason why “almost everything is more expensive here,” Dr. Harlan Krumholz, a cardiologist and professor of health policy at Yale School of Medicine, told TMRW. .
“We have high utilization of many different services,” he said. “In many parts of the health care ecosystem, people are paid for volume, and that drives the attitude of, ‘We can get an extra scan.’ … It is in the economic interest of the hospital, the doctor, the health care system when they are paid fee-for-service, and the balance is that more is better.”
“Instead of taking people into a room, examining them, taking a history and spending time talking to patients, we … did all the complicated things,” he added. “We’re quick to jump to getting a CAT scan and diagnostic tests when the history and physical exam will tell you the answer.”
Balber argued that fee-for-service creates a “perverse incentive” to provide more procedures, instead of helping patients get healthier so the nation as a whole needs fewer procedures. The US also spends less than other countries on social support programs and long-term care, Benjamin added.
Open Thread: Why Is Us Healthcare So Expensive
This is perhaps the most challenging reason for divorce, but the main idea is this: Companies that provide and pay for health care, such as hospital systems and drug makers, have more power to keep costs high when they negotiate with many potential payers. , such as various private insurance companies. But when they have to negotiate with a single payer, like the federal government, there’s a lot of pressure to meet demand to sell their services.
For example, a recent study found that private insurance companies paid almost two and a half times what Medicare would have paid for the same medical service at the same facility.
To make things more expensive, the US government does not control what most companies in the health care space can pay for their services, whether it’s insurance, drugs or personal care.
While the US health care system itself may be fragmented, in most parts of the country, there are one or two companies that provide health insurance or medical care. This means that, again, there is little incentive for them to cut costs as patients don’t have many choices.
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“We’re always agreeing to more and more mergers that drive the cost up a lot,” Balber said. “Those hospitals buy all the private doctors … and the profit motive is aligned all the way to your primary care physician.”
Moreover, health care providers are paid, on average, more in the US than in other countries, both Benjamin and Krumholz emphasized.
“Despite the huge costs we have in America for health care, we don’t get the same value for our health care dollar as other nations,” Benjamin added. “If you’re sick, this is the place to be, no doubt about that, but … we don’t have a system with everyone and no one out.”
Maura Hohman is a senior health editor and has been covering health and wellness news and trends since 2015, when she graduated from journalism school. His column has appeared in NBC News, US News and World Report, People, Daily Health, WhatToExpect.com, History.com and more. Her interests include women’s health, racial health disparities, mental health and COVID-19. The United States has, quite simply, the most expensive health care system in the world, but that has not translated into better outcomes in a variety of areas.
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In 2013, 17.1 percent of the gross domestic product of the US was spent on health care, which was 50 percent more than France, the 2nd country, according to a 2015 analysis by the Commonwealth Fund.
That report estimated that the average U.S. spent $1,074 in 2013 out-of-pocket on health care, for things like co-pays for doctor’s office visits and prescription drugs and health insurance deductibles.
“Only the Swiss spend more than 1,630 dollars, while France and the Netherlands spend less than a quarter ($277 and $270, respectively),” said the report.
Despite high spending on health care, the US ranks low compared to other developed sectors in many key health outcomes such as life expectancy, prevalence of chronic conditions and death from heart disease, the leading cause of death in the US.
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“When you look more closely at how countries spend health care, it is clear that in the US we are paying higher prices but not getting more,” said David Squires, a senior researcher at the Commonwealth Fund and coauthor of the 2015 report.
“Per capita health care spending is high in the US not because Americans go to doctors and hospitals more often, but because more medical technology is used and health care prices are higher than in other nations,” the Commonwealth report said.
In fact, Americans see a doctor an average of four times a year – only residents of Switzerland, New Zealand and Sweden have fewer visits.
Americans also go to the hospital less frequently, with 126 visits per 1,000 people, compared to 252 visits in Germany, where the rate is higher, according to the Commonwealth report.
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A 2016 report by the International Federation of Health Plans provides ample evidence of the high prices paid by Americans compared to other developed countries.
For example, the average cost of an MRI in the U.S. is it was $1,119 in 2015, compared to $811 in New Zealand, the second highest price cited in the IFHP study. An MRI in Spain costs around 130 dollars.
The average price of an appendectomy: $15,930 in the US, $8,009 in the United Kingdom and $3,814 in Australia.
The average cost of giving birth to a normal child: $10, 808 in the US compared to $7, 751 in Switzerland and $5, 312 in Australia.
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The bill for a hip replacement averages $29,067 in the US compared to $19,484 in the UK. and $6,757 in Spain, the survey said.
A monthly supply of Xarelto, a drug that treats blood clots, averages $292 in the U.S. compared to $126 in the U.K. and $48 in South Africa.
A month’s supply of Humira, an arthritis drug, is worth $2,669 in the U.S.
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