The average U.S. citizen spends a tremendous amount on healthcare annually. In 2021, America’s healthcare spending was $4.3 trillion, which averages to around $12,914 per capita. Researchers expect the same to reach $6.8 trillion by 2030.
This out-of-pocket healthcare hurts everything, from the economy of the country to an individual’s mental health. A significant surge in premium costs, prescription drug prices, and high deductibles make healthcare expensive.
Nowadays, all it takes is one big medical bill to send a patient into financial debt. But the real question is: what’s causing these spikes in the first place?
In this blog, let’s try to understand what makes healthcare in the U.S. so expensive and explore how it impacts the current situation.
FACTORS CONTRIBUTING TO EXPENSIVE HEALTHCARE
Prescription drugs costs
Prescribed medicines and drugs are considerably more expensive in the U.S. compared to other nations. The lack of government regulations gives pharmaceutical companies the power to charge higher prices.
Moreover, most pharmaceutical companies nowadays deal directly with patients, increasing demand for specific drugs. This further drives up the cost.
Chronic diseases
Today, chronic diseases affect more than half of the U.S. population. CVDs, diabetes, cancer, and many more, contribute immensely to healthcare costs in the U.S.
A patient suffering from such conditions requires long-term treatment and medical intervention. It can be regular hospital visits, long-term medications, or specialized care. The total cost of managing these chronic illnesses is staggering.
Individual lifestyle
Your lifestyle choices play a significant role in determining your insurance premium.
For example, unhealthy lifestyles like eating junk, consuming alcohol, smoking, and a lack of exercise can make you more vulnerable to illnesses. These lifestyle choices can lead to chronic conditions and increase the need for costly treatments and medical interventions.
Poor diets and sedentary lifestyles contribute to the rise of obesity, diabetes, and cardiovascular diseases, which require expensive treatments and long-term care.
U.S. healthcare is highly fragmented
The U.S. healthcare system is extremely complex. It involves various stakeholders and insurance players, like private insurance, employer-sponsored plans, and government programs. Every system functions using a different set of rules and regulations, leading to administrative complications and increased costs.
Furthermore, this fragmentation leads to significant variation in quality and pricing. The cost of the same treatment can vary widely across various regions, hospitals, and insurance plans. The lack of price transparency makes it difficult for individuals to compare prices and make informed decisions.
Absence of government regulations
The U.S. healthcare system depends heavily on market influences and lacks centralized or government regulations. Without strict price laws, healthcare providers take advantage of setting service costs at their discretion.
This leads to a significant increase in costs for medical treatments, prescription drugs, and healthcare services. As a result, patients and insurance companies bear the burden of massive healthcare costs.
COMMON COSTS IN THE U.S. COMPARED TO OTHER DEVELOPED NATIONS
How does the expensive healthcare in the U.S. affect the cost of medical treatments? All prices listed below are from the most recent study by the International Federation of Health Plans, conducted in 2017.
Consider the cost of an MRI scan, a commonly used medical procedure in the hospital. In the U.S., the average cost of an MRI was around $1,500 in 2017. In New Zealand, it was $750, whereas, in Holland, the price was as low as $190.
