Why Health Care is So Expensive

Why Health Care is So Expensive? America is one of the wealthiest countries on earth, but it also has some of the most expensive health care in the world. The United States spends more per person on health care than any other country in the world — about 17% of its GDP — and yet we don’t have better outcomes than those countries that spend far less (like Canada, Norway and Australia).

Why Health Care is So Expensive

In fact, America ranks 50 out of 55 high-income countries according to a study by The Commonwealth Fund – just ahead of Poland! This means Americans are paying higher prices and getting less value for their money when it comes to health care costs compared with other wealthy nations.

More Americans are insured, but those with insurance are paying more for deductibles and co-pays.

• Co-pays are rising. The cost of a doctor’s visit or prescription drug has been steadily increasing, with many patients now paying $50 or more for an appointment and up to $400 for the most common drugs.
• Deductibles are rising, too. These are the amounts you pay out-of-pocket before your insurance kicks in (usually annually). In 2016, average deductibles were as high as $2,750 for workers covered by employer health plans—a significant jump from 2014’s average deductible of $1,318.* More people have insurance now than ever before—but that hasn’t made health care cheaper. It’s estimated that nearly 20 million Americans have gained coverage since 2014 due to various state and federal programs aimed at curbing uninsurance rates.* Yet even though access has increased dramatically since 2010 when only 15% had coverage through Obamacare exchanges (the government website where individuals can purchase private insurance), there still isn’t universal coverage across all states due to differences between states’ Medicaid programs (Medicaid provides free or low-cost health care services for certain groups including single mothers with children).

The U.S. government spends more per person on health care than many other countries around the world.

You’re probably aware that the U.S. government spends more per person on health care than many other countries around the world. What you might not know is that this includes some of our closest allies, such as Canada and Germany. The United States spends an average of $9,990 per person to the tune of $3 trillion annually; in contrast, Canada spends just $5,741 per person ($201 billion), while Germany spends $4,399 ($234 billion).

Those low numbers aren’t just because these countries have a lower cost of living; they’ve found ways to provide quality care at much less expense than we do here in America through things like greater reliance on single-payer systems or public-private partnerships like Kaiser Permanente (an HMO founded by industrialist Henry J. Kaiser).

The fact of the matter is that our health care system is very expensive, and it’s only getting more expensive as time goes on. We spend an average of $1,000 per person more than any other country in the world; if you extrapolate that out over a period of 10 years, it comes out to an extra $3 trillion—roughly equal to our annual budget deficit today.

Drugs, hospital bills, doctor visits and health insurance keep going up in cost as we get older.

Health care costs are high in the U.S., and it’s not clear how we will make them affordable for all.

• Drug prices are increasing faster than inflation. The cost of prescription drugs has risen more than any other part of the health care system, including hospital stays and doctors’ visits. For example, between 2010 and 2017, wholesale price growth for brand name drugs was 8 times higher than for all medical goods and services combined (6.5% vs 0.77%).
• Hospital costs have been rising rapidly as well in recent years: In 2016 alone they grew by 4%, which is twice the rate seen in 2015 (2%). This reflects both higher prices paid by insurers as well as by patients who pay out-of-pocket or through government programs like Medicare Part B Each year hospitals provide more services per patient: an average increase of 2 percent between 2010 and 2016 compared with just 0 percent between 1980-2010..
• Doctor visits are also becoming more expensive: In 2017 alone they grew at a rate similar to that seen during previous years—an average increase of 3 percent annually since 2010 compared with 1 percent prior to then

Insurance companies often negotiate with hospitals, doctors and drug companies to lower the price of care, meaning patients end up paying a lot less than they otherwise would.

You may have heard that insurance companies negotiate with hospitals and doctors to lower the price of care. That’s true, and it’s one reason why patients end up paying a lot less than they otherwise would. Insurers also negotiate with drug companies, which helps keep the prices of drugs down too.

This is important because when people pay directly for their medical care (as opposed to having an insurer do so), they tend to spend more on health care overall than patients who get their insurance through work or government programs like Medicaid or Medicare. The reason? In part because they don’t have an incentive to comparison shop as much or seek out less expensive services.

And, of course, there’s the fact that people who pay directly for their care often don’t have any coverage at all. Even if you have insurance through work or government programs like Medicaid or Medicare, those plans typically don’t cover everything. In most cases, patients are expected to pay some portion of the cost of their care out of pocket (either in a fixed amount each month or after receiving an invoice from their provider).

Providing older Americans with access to affordable healthcare will continue to be an issue as more people age into Medicare eligibility and out of employer-sponsored coverage.

As the population ages, and more Americans become Medicare eligible, access to affordable healthcare will continue to be an issue. This is because health care costs are rising faster than inflation and wage growth.

According to the Centers for Medicare and Medicaid Services, spending on health care grew by 4.3 percent in 2018—that’s over twice as fast as the rate of economic growth (1.8 percent) that year. Even worse news is that these trends aren’t slowing down: they’re only going to get worse as baby boomers begin taking advantage of their Medicare benefits in greater numbers.[14]

As more people enter into Medicare eligibility (and out of employer-sponsored coverage), access to affordable healthcare will continue its downward spiral into unavailability for many Americans.

Health care costs are high in the U.S., and it’s not clear how we will make them affordable for all.

Why Health Care is So Expensive? In the United States, health care costs are high and increasing. This is true for the government and for individuals. There are many reasons why this is the case, but a main one is that people have different types of coverage or none at all.

The government has been trying to make health care more affordable for everyone by providing subsidies through Medicaid and Medicare as well as making purchasing insurance mandatory through the Affordable Care Act (aka Obamacare).

Conclusion

Why Health Care is So Expensive? We can’t afford to ignore this problem. By 2030, the U.S. Census Bureau estimates that nearly one in five Americans will be over 65 years old, making it increasingly difficult for them to obtain affordable health care coverage. If our country wants to maintain its current level of access and quality of life, then we will have to find some way of reducing costs—and fast!

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