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< Back to question Why is healthcare in the US so expensive? Show more Show less

Healthcare in America seems to be a lot more expensive than the rest of the world. From research and development for pharmaceutical drugs, to diagnostic tests, to doctors' salaries, everything in America has a higher price tag. In fact, in 2016, 17.8% of the country's GDP was spent on healthcare. Meanwhile, countries such as France, Sweden, Canada, Australia, and many others only spent around 11.5% of their GDP on healthcare-related reasons. Is the higher price of healthcare in America justifiable? What factors are driving the costs of healthcare and making it so expensive?

Most of the healthcare sector is profit-oriented not service-oriented Show more Show less

Several companies and specialized workers allow the American healthcare system to provide exceptional care. This large number of players, combined with a for-profit type economic model, challenges the healthcare industry to provide the best standards of service. But this system also makes the healthcare system more expensive by adding extra capital and human costs to the process.
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"Middle-man" costs make healthcare expensive

America's healthcare system includes many extra steps, where "middle-men" profit off of the system. These extra steps between consumers and doctors drive up the price of healthcare. Companies that negotiate about equipment for hospitals and insurance companies, among many others, add extra costs, making healthcare so expensive.
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Proponents


The Argument

The American healthcare system is complicated and has multiple layers. The over-complication of the system leads to lots of middle-men, people who go in between two groups and are to some extent, not a necessary supplier or consumer. These include negotiators such as insurance companies and groups that buy hospital supplies for hospitals from producers. Hospitals require drugs and equipment to be regularly replenished in order to properly function. Instead of negotiating directly with the producers of these drugs and equipment, hospitals go through Group Purchasing Organizations (GPOs) or Pharmacy Benefits Managers (PBMs). These groups negotiate prices and purchase goods from the medical supply (for GPOs) or drug companies (for PBMs). Obviously, these groups must be paid for their services. In addition, the hospitals are the ones actually paying for the goods, so the middle-men have little incentive to negotiate for low prices. This raises the price of medical goods, and introduces a new step to make healthcare more expensive.[1] Insurance companies also serve as a type of middle-man. In many countries, the government establishes how much basic treatments cost for hospitals. The government holds all patients, so the hospitals cannot refuse the prices, or else they will have no business. But in America, there are many small insurance companies that negotiate with hospitals. These insurance companies only hold a small number of patients, so the hospital will not suffer significantly if they don't accept the price the insurance companies suggest. The insurance companies don't have much leverage over the hospitals, so the hospitals can negotiate high prices for treatments, increasing healthcare costs. Additionally, insurance companies must make money; yet another middle-man driving up costs for healthcare.[2]

Counter arguments

These middle-men are necessary and worth the extra expenses. They streamline the processes of healthcare, leaving doctors and nurses with time to treat patients well and do their jobs. If doctors, nurses, and other primary healthcare workers had to be the ones to buy equipment, establish malpractice regulations, run the hospital, and save the patient, then the entire healthcare system would fall apart. Having middle-men also ensures an organized and structured system that creates jobs for thousands of people working in these companies.

Premises

[P1] American healthcare is structured so that there are many middle-men. These middle-men cannot or do not negotiate low prices, increasing healthcare costs. [P2] Middle-men charge for their services, increasing healthcare costs.

Rejecting the premises

[Rejecting P1] This structure insures a quality healthcare system. [Rejecting P2] The increased healthcare cost is justified.

References

  1. https://www.houstoncourant.com/houston-voices/2019/7/28/middlemen-in-healthcare-creating-high-costs
  2. https://www.vox.com/videos/2017/12/1/16720076/american-health-care-expensive-prices-insurance

This page was last edited on Friday, 28 Aug 2020 at 00:21 UTC

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