The Saga of Overpriced Healthcare
An exit poll conducted after the 2018 midterm election showed that 4 in 10 voters highlight healthcare as one of their top issues. And if you’ve ever tried to decide between treating a fractured wrist or eating for the next few months, you are probably in the “I care” camp.
Healthcare prices have been steadily skyrocketing for decades. In 1970 health spending totaled $74.6 billion. By 2000, health expenditures reached $1.4 trillion. Yes, Trillion. And in 2018 the amount spent on health had more than doubled, reaching $3.6 trillion. The word “yikes” comes to mind, if not a more unsavory one.
SO WHAT IS THE DEAL WITH HEALTHCARE AND ITS CLIMBING PRICES? AND HOW DOES IT AFFECT YOU? IF YOU WANT TO KNOW, YOU’RE NOT ALONE.
America, Your Health, and Your Wallet
If you have a healthcare plan provided by your employer, you may have noticed that your monthly premiums have been increasing over the last few years. If you’re responsible for your own insurance, you probably either had to work *unreasonably* hard to find an affordable plan or are stuck paying a high monthly cost and staggering deductible.
Health insurance price has been slowly increasing over time. A study performed by UCLA David Geffen School of Medicine and Health Metrics and Evaluation in 2013 found that American healthcare spending grew by a staggering $930 billion between 1996 and 2013. And in 2017, Americans spent $3.5 trillion on healthcare alone. How come, though?!
The U.S. population is growing. The large baby boomer population is getting older. And people are living longer in general. Then there are salary increases and cost inflation. So this must be the reason for sky high spending trends, right? Nope.
After crunching the numbers, analysts discovered that these reasons don’t account for the substantial health insurance cost increase. The economy grew by 2.4%, yet the healthcare sector disproportionately grew at a 4% rate. Houston, we have a problem.
If you think that Americans spent more money in the last decade because they became less healthy, you’re outta luck there too. Overall, population health has not deteriorated. In fact, cardiovascular diseases are on the decline, partially due to healthier lifestyles, and a decrease in smoking. Preventable diseases like rubella, polio, and measles have been almost entirely eradicated thanks to vaccines. There was that one case where some unvaccinated folks caused a measles outbreak at Disneyland, but that’s a story for another time. Overall, diseases are considered more treatable now than they were a few decades ago.
So now that we know what’s NOT making healthcare so expensive, let’s take a look at what is, according to experts.
In his cheekily named paper, Princeton economist Uwe Reinhardt gives us the long-awaited answer: “It’s the Prices, Stupid.” This is the actual name of the paper (*mic drop*). Aside from having a great sense of humor, Reinhardt provides a clear assessment: it’s the cost of services that are driving healthcare prices up.
How America’s Healthcare Compares to the Rest of the World
Percentage-wise, the U.S. spends twice as much on healthcare as any other developed country. Americans pay substantially higher prices for things like doctor’s visits, hospitalizations, and medications. Administrative costs here are higher as well.
Because we have more technology like MRI machines, C.T.’s, and PET scans at our disposal, doctors tend to use these more frequently. In general, doctors make more money by performing more tests so this built-in incentive has to be considered.
Medications in the U.S. are also more expensive than analogous options in other countries. For example, Humira, which is used for arthritis and Crohn's disease management, costs $2,669 in America, $1,362 in England, and $822 in Switzerland. A drug for curing Hepatitis C costs $10,000 more in the U.S. than in any other country. And an essential cancer medication Avastin is $3,930 in the U.S., $1,534 in Spain, and $470 in the U.K.
And it’s not just the drugs - even 1 day in the hospital can set you back by $5,220 (compared to $424 in Spain). Having a baby in America will run your up about $10,000, and if you are fortunate enough to hop over to the above mentioned Spain to have your mini me, expect to pay $1,950.
Now the question you’ve all been waiting for...why does it cost an arm, leg, and your first born child to afford healthcare in this country?
We pay more because of our unregulated medical market. In other countries, there tends to be a dedicated group whose only job is to negotiate better prices and deals for things like prescription medication. Here, each insurance plan negotiates separately with providers of medication, doctors, and hospitals about pricing. Because the healthcare system is so fragmented and lacks a larger governing body, it’s easier for providers to set higher prices and refuse to give bulk discount prices.
What Can You Do?
So, to summarize - the cost of healthcare in the U.S. is higher than in any other developed country because of the price of services.
What Can You Do Besides Never Ever Getting Sick?
If you’re looking to make a change to the system, the good news is that healthcare is a very hot topic in upcoming elections. And every politician who needs votes is well aware of that. You have the power to influence your politicians’ actions by simply making yourself heard.
There are two healthcare propositions currently being voted on: the Affordable Care Act (ACA) and the Single-Payer Health care system.
Single-Payer Healthcare is Universal healthcare financed by people’s taxes. It covers the healthcare needs of all residents and is paid for by one single public system.
The ACA is the healthcare plan previously brought to life by the Obama administration. ACA’s primary goal is to slow down rising healthcare costs and make health coverage more readily available and affordable. The ACA also requires insurance companies to grant coverage to those with pre-existing conditions (which was not the case before the ACA) & allows you to stay on your parents healthcare plan until you are twenty-six (look at us being free-loading millennials...)
The Democratic Party has been largely in support of the ACA and the Single-Payer Healthcare system. The Republican Party recommends replacing existing public coverage programs with premium support and encouraging private plan competition. Both parties seem to agree that Medicare is important.
Whether you want the ACA, Single-Payer healthcare, or are entirely against both, you can make your opinion count by contacting your representatives.
You can find out who your representatives are with this handy link: https://www.house.gov/representatives/find-your-representative
You can also send an editable letter to Congress in support of Single-Payer Healthcare: https://pnhp.salsalabs.org/housebilllegislatoroutreach201920/index.html
