Why is Medical Care So Expensive in the US?

Hospitals, doctors and nurses in the US charge more than in other countries, and hospital costs rise much faster than salaries for professionals. It only takes one surprise medical bill to send a patient into bankruptcy. So, what exactly makes healthcare in the US so expensive? TMRW spoke to experts about different aspects of the health care system, who pointed out five general reasons. The most prominent reason is that US health care is based on a for-profit insurance system, one of the only in the world.

In the US, on the contrary, many other countries have some element of something private, but there is a basic understanding that health care is a right, not a privilege. The underlying motive for making money has a domino effect that increases prices. For example, insurance companies spend a tremendous amount of money on utilization review, the process that determines if a medical service is covered by a particular plan. In the same way, the lack of universal health care, in which everyone is guaranteed access without suffering financial hardship, is another main reason for the high costs.

Health care exists in a system where patients are charged based on the services they receive. As a result, there is less use of primary care and pay-for-service creates a perverse incentive to provide more procedures. The US government does not regulate what most healthcare companies can charge for their services, whether it's insurance, medication or care itself. The health system itself may be fragmented, in many parts of the country there are only one or two companies that provide health insurance or health care.

This means that there is little or no incentive for them to reduce costs. In addition, healthcare providers are paid much more in the US than in other countries. 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 spends less than other countries on social support systems and long-term care.

A survey showed that a significant proportion of physicians consider the time they waste on matters related to insurance claims and the presentation of clinical data to be a major problem. The real difference between the US health care system and overseas systems is pricing. Meanwhile, administrative costs accounted for 8 percent of total national health expenditures in the US. For other countries, they ranged from 1 to 3 percent. Health professionals in the US also reported a higher level of administrative burden. Even so, researchers didn't find a substantial difference in utilization rates between the US and other countries.

The ratio of primary care physicians to specialists was similar between the US and other high-income countries. And while innovation may justify high levels of spending, it's not clear whether this is true. The conclusion is that high incomes can improve performance and studies have suggested that some countries do not pay their health professionals enough. In addition, high salaries in the US may reflect the time and greater amounts of money that American health professionals must invest in.

Theodore Eflin
Theodore Eflin

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