Why is it so expensive?

If you hear the word healthcare, one of your first thoughts is probably how expensive it is. This is definitely true. The cost of healthcare in the United States is significantly more than that of other countries and some of these countries actually have better healthcare and longer life expectancies than we do in the United States. Why is this the case?


0828 Healthcare Cost TNThere is more than one contributing factor as to why healthcare is so costly. The bottom line is that the price of healthcare services is more expensive in the United States than other countries. Companies charge more here for a service than the same company does in other countries (procedures and pharmaceuticals cost on average 60% more here than other countries). The other major contributor is that we, as a nation, order more expensive diagnostic tests, such as MRI and CT, and perform a significant number of interventions when it isn’t always clear whether the procedure was necessary. Despite doing all of these high-priced tests and procedures, the overall health outcomes in the United States is not better than other countries. Not only is our life expectancy lower, but our infant mortality rate is higher.

Another consideration is that we do not have enough primary care doctors causing our primary care system to be underdeveloped. This means that people need to go to the hospital for routine monitoring of conditions that should be monitored by primary care doctors. So, we are paying more for services and the quality of those services isn’t the best. Some places, like the Veterans Affairs medical system, have the best healthcare in world and others are very poor quality. We also pay too much for health insurance and, even if you have it, doesn’t mean that everything is covered. The pricing in healthcare is determined by who is paying rather than having a set price for each test, procedure or medicine.

On a national level, we need to put an emphasis on primary care to help make sure that the majority of care takes place outside of costly hospitals. Since we currently have a shortage of primary care doctors, we should find ways to incentivize new physicians to go into primary care practice. Another area we should be focusing on is encouraging the use of cheaper, generic drugs as alternatives to expensive brand drugs. We should be doing a better job of regulating pricing and fees to eliminate the current system of charging whatever is felt like based off of who is paying. This is especially important for services paid for by public programs. By creating better, and adhering to, clinical guidelines, this will decrease the excessive use of expensive diagnostics/procedures. Essentially, unnecessary healthcare is prevented and this helps to reduce cost. All of these things are currently being done by countries who have better quality and cost-efficient healthcare than the United States.

As individuals, there are certain steps we can take to aid in paying less for healthcare services. If you need to have a test or procedure, find out the actual cost and where locally has the best quality for it. Most likely, the best quality isn’t going to be the most expensive. You should also do this with any medications that your doctor may prescribe. Ask your doctor about their affiliations with drug companies. Also, ask your doctor if there is a generic option for the medication or is there an alternative medication that might not cost as much. If you want to see a high-profile doctor or have a procedure done at a more expensive facility, then you should not be surprised to pay more out-of-pocket. Another consideration is seeking out small medical networks because they are will have bargained with insurance companies for pricing better than bigger networks.

The cost and quality of healthcare is definitely a problem that needs to be addressed on a national level. While this is being addressed, remember there are things that you can do to help manage the direct cost to you. Healthcare quality, efficiency and cost is up to all of us to fix!