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?
Healthcare personnel are paid much higher wages than in other countries
The healthcare administration and doctors are paid excessively high wages. For the simplest of procedures, a whole system of people is required. Many medical protocols and people have to be involved. Doctors have to increase their number of hours. All of this creates an avalanche of costs that ultimately results in skyrocketing healthcare costs.
Administrative costs are much higher in America compared to other countries
The healthcare administration is quite large and expensive in America. This is because administrators are tasked with the huge responsibility of protecting doctors and hospitals from legal complaints and insurance companies. Since there is an excessive amount of such claims in the US, the number of administrative people tends to increase and their salaries also become quite large.
The salaries of American doctors tend to be quite high
On average, American doctors are paid around $300,000 a year, which is much more than any other country. Many powerful medical organizations ensure that only a handful of doctors graduate every year. Since there is low supply and high demand, these few doctors are paid very well. Overall, this drives up the cost of healthcare for all patients.
The rising costs of drugs, facilities, medication, and premiums result in excessive fees
The everyday medical protocol in hospitals has established that a large number of tests be performed. Also, prescription drugs and premiums cost more due to monopolies or price manipulation. Hospitals explain that these prices help them provide exceptional care while patients argue that they are unnecessary and expensive.
Monopolies in medicine increase the price of prescription drugs
Prescription drugs in America tend to cost more even if they are the same quality as what is available in other countries. Many monopolies in the pharmaceutical industry make sure that only a few companies can provide the necessary medication. They can also set prices as high as they like which increases the overall cost of healthcare.
The aging population is causing a huge surge in the price of premiums
Insurance companies keep increasing premiums; the amount paid towards them every month for health coverage. The aging population combined with an increase in diseases seems to account for this trend. Many people who are paying almost $20,000 per year would point to the rising premium costs as a top reason for why healthcare is so expensive.
A large number of diagnostic tests are conducted for every patient
America, on average, tends to run more medical tests than most other countries. They are equipped with more machinery, and patients are referred to laundry lists of tests even for the smallest conditions. The effectiveness of this method is questionable and potentially a waste of money It is no wonder that healthcare costs are more expensive as a result of this.
Most of the healthcare sector is profit-oriented not service-oriented
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.
Most hospitals are for-profit institutions which focus more on making money than caring for patients
Hospitals provide a service that many consider a human right. Yet, they still give an enormous bill to profit off of people's sicknesses or injuries. For-profit hospitals incentivize expensive healthcare in the US.
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.