WHY IS HEALTHCARE SO EXPENSIVE IN THE UNITED STATES
Special interests have shifted the healthcare debate. They focus on delivery methods like single-payer and private insurance, not on costs.
The United States spends more on healthcare than any other developed country. We devote 18% of our Gross Domestic Product to it. Germany, Australia, and Switzerland spend under 10%.
In 2023, United States healthcare spending hit $14,570 per person, doubling Canada’s $7,013. We also outspend wealthy European nations, with Switzerland at $9,688 and Germany at $8,444. The EU average is $2,697.
The United States pays much more for hospital stays. We spend $4,500 per person, while Canada spends only $1,352, despite shorter stays and fewer services.
Americans face the highest prescription drug prices. We spend approximately $1,450 each year per person, while Europe has an average of $350. Our drug costs are 36% higher than Germany’s and more than double the OECD average.
What can we do to fix this?
Prescription Drugs. Congress allows drug companies to charge more in the United States than in Canada or Mexico. This "price discrimination" helps cover costs here while keeping prices lower elsewhere.
Solution: Congress should legislate to require drug companies to charge the American consumer the same as the rest of the world.
Doctor Fees. In 2023, doctor fees made up about 20.1% of total health spending in the U.S., compared to around 14% in Canada. After six years, family medicine doctors earn about $200,000. In contrast, urologists make around $400,000. Other developed countries do not match this pay. A routine visit in the United States costs insurers $89 on average, while it is $64 in Switzerland and $23 in France. For a normal birth, United States doctors earn $3,390, while in France, it is $449.
Solution: Congress should legislate to set up a relative value fixed payment system. This system would depend on the location and the quality of services.
Hospital Services. Hospital costs are rising at a rapid pace, especially in not-for-profit hospitals. Their markups can be ten times what Medicare pays. For-profit hospitals also have high markups. CEOs, like Universal Health Services' Alan Miller, earn millions, with last year’s pay over $51.3 million. Profits are fine, but this is out of control.
Solution: Congress should legislate to set up a relative value fixed payment system. Payment for services can be according to quality and location.
Frivolous Liability Lawsuits. Many doctors still practice defensive medicine, even though things are getting better. The consumer at the end of the day pays the prohibitive cost of malpractice insurance.
Selling health insurance across state lines. Competition would lower premiums, but it faces resistance from insurance companies since it will reduce their profits.
Francisco Cabreja