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Why Are Medical Procedures So Expensive in the United States?

Did you know that medical bills are the leading cause of bankruptcy in the United States? According to a study by financial services firm Sambla, exorbitant medical expenses cause 62% of all bankruptcies in the US. That even includes people with health insurance.

Among all the developed countries, the US claims the first spot in cost, but not in life expectancy. If the quality of medical services is not higher, why are US citizens paying so much more than everyone else?

The short answer is business and politics. Among the world’s top 50 highest developed countries, the United States is the only one without universal healthcare. Moreover, hospitals and pharmaceutical companies can charge as much as they want for their services. In other words, the healthcare sector is run for profit, not with people’s well-being in mind.

Insurance in the US

When the notion of health insurance first spread in the United States, it was more akin to philanthropy than business. Organizations like the Blue Cross and the Blue Shield both offered prepaid health insurance at affordable prices during the 1920s and 30s. Today the two have merged into just one of the many healthcare companies operating in the US.

After World War II and the rise of employer-sponsored health insurance, many other companies began offering different healthcare packages. Some cover more expenses than others. Still, there is usually a deductible and copayment that the patient must pay out of their own pocket. Additionally, insurance companies can turn away people who are too poor or have pre-existing conditions.

Government programs to help the poor or otherwise uninsurable patients have come and gone. Some of the most robust proposals have failed to come into effect due to hard lobbying against them by private insurance companies. Even Obama’s Affordable Care Act, which helped about 20 million previously uninsured citizens get health coverage, has faced a lot of opposition. Insurance companies are earning a lot of money and are ready to fight the government for their self-interest.

Big Pharma

The pharmaceutical industry in the United States alone is worth half a trillion dollars. These companies hold exclusive patents over their drugs, which gives them a monopoly. They are in a position where they can charge any sum they want for the medicines they sell.

For instance, when only one company produces a certain cancer treatment, the patient’s choice is between an unreasonably expensive drug or no treatment at all. If they refuse (or simply cannot afford) to pay for the drug, doctors and hospitals have to turn them away.

Things get worse, considering drug costs in the US are constantly increasing in price. Thus, even when the government spends more on healthcare coverage, it fails to keep up with the growing costs of drugs.

Hospitals

Hospitals in the US, like any other company, are run by private shareholders. They invest money to make a profit and make pricing decisions with that goal in mind.

Moreover, many hospitals rely on “unbundling” — charging separate fees for each service. Parking, ambulances, a visit to the ER, overnight stay, and medical tests all appear as separate expenses.  Some hospitals have made it into the news for charging $50 per pair of sanitary gloves and $20 for alcohol swabs.

Considering how many of these a patient might use up even during a short stay, the costs add up to thousands of dollars quite quickly. Even a patient with private health insurance might find that not every single expense is covered by their plan.