The real reason American health care is so expensive (2023)

Introduction

Hint: single-payer won’t fix America’s health care spending.

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Americans don't drive up the price by consuming more health care. They don't visit the doctor more than other developed countries:
international.commonwealthfund.org/stats/annual_physician_visits/

But the price we pay for that visit - for a procedure - it costs way more:
static1.squarespace.com/static/518a3cfee4b0a77d03a62c98/t/57d3ca9529687f1a257e9e26/1473497751062/2015+Comparative+Price+Report+09.09.16.pdf

The price you pay for the same procedure, at the same hospital, may vary enormously depending on what kind of health insurance you have in the US.

That's because of bargaining power. Government programs, like Medicare and Medicaid, can ask for a lower price from health service providers because they have the numbers: the hospital has to comply or else risk losing the business of millions of Americans.

There are dozens of private health insurance providers in the United States and they each need to bargain for prices with hospitals and doctors. The numbers of people private insurances represent are much less than the government programs. That means a higher price when you go to the doctor or fill a prescription.

Uninsured individuals have the least bargaining power. Without any insurance, you will pay the highest price.

For more health care policy content, check out The Impact, a podcast about the human consequences of policy-making.
itunes.apple.com/us/podcast/the-impact/id1294325824

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Content

I cannot tell you how obsessed I am with this chart.

It shows exactly what is wrong with America's conversation about health care on one level.

You've seen this chart before it shows health care spending as a share of the economy of a bunch of countries, there's Germany and France and Japan Canada and oh, there's America.

But not want to add something you haven't seen to this chart.

This is how much of that spending in each country is private.

And how much is public here's, what's, amazing America's, government spending on health care on programs like Medicaid and Medicare.

And the VA, our versions of socialized medicine it's about the same size as these other countries.

These countries where the government runs the whole health care system and then there's our private spending it's, the private insurance system that makes health care in America.

So expensive conventional wisdom says, the government is more expensive than the private sector.

It can't say, no, it's, corrupt its inefficient it's slow.

If you want something done, right, you give it to the private sector that is what we hear in America all the time.

And yet here we are with the biggest private sector spending the most.

Why is a free-market so bad by controlling the cost of health care in the United States? If you look at the data on physician visits and hospital discharges, you can get rid of one theory, Americans, don't consume more health care than people in these other countries.

We don't go to the doctor more than the Germans or the Japanese.

In fact, we go to the doctor less.

The difference between us and them is it.

We pay every time we go to the doctor for everything from an angioplasty to a hip replacement from a c-section to a pain reliever in America.

The price grew same procedure at the same hospital.

It varies enormous lis, depending on who is footing the bill the price for someone with public insurance like Medicare or Medicaid is often the lowest price these groups.

He covers so many people that the government can demand lower prices from hospitals and doctors, and they get those lower prices.

If the doctors in hospitals say, you know, there was a ton of business.

They lose all those people on Medicare.

All those people on Medicaid, but there are hundreds of private insurance companies, and they each cover far fewer people than a Medicare or Medicaid.

And each one has to negotiate prices and hospitals and doctors on their own.

And if you're uninsured, you have you been less levered.

Nobody is indigo.

She your behalf.

So you end up paying the highest price.

One study found that most hospitals charge uninsured patients, four times as much as Medicare patients for an ER visit other countries.

They don't have this problem.

Instead of every private insurance company negotiating with every healthcare provider, there's, just this big list country.

The central government they go.

And they say, if you want to sell to us to all of our people then here's, what you can charge for a checkup here's, what you can charge for an MRI or a prescription for lipitor.

And so then whether that bill goes to the heavily regulated, private insurance companies in Germany or directly to the government like in the UK.

Each country is telling the doctor or hospital or drug company how much that bill will be.

And because the government controls access to all of the customers it's, an offer that hospitals and doctors and pharmaceutical companies, typically can't refuse in America.

The idea is that you'll be a consumer you'll deal.

What you do when you go to Best Buy and buy a television, but that just doesn't work in healthcare, doesn't work in healthcare, because you often come and get health care when you're unconscious in an ambulance when you're scared when it's for your spouse or your child.

It is a time when you have the least bargaining power.

You are not usually capable of saying, no you're, not knowledgeable enough to do it you're, not comfortable doing it or you're.

Not conscious enough to do it that's.

Why? In other countries, the government is a person who can say, no for you, you can say, no, that's, too expensive, you're gonna have to lower your price, because they do have that power a new push for single-payer health care right here in the US California and others are saying, maybe we should adopt the European model if we decided to create a single-payer system with one of these huge prices in the US, there'd be nothing to stop lobbying from hospitals from doctors from drug companies.

And those prices would get influenced.

So we could end up with a single-payer system that is expensive even as expensive as our current system.

It all depends on how much you negotiate down the prices.

And now in America, these groups have so much power because they are so rich, but it's really hard to get them to bring down the prices.

This is the irony of American healthcare, it's so expensive that it's become hard to make it cheaper.

All that money they make that becomes political power and years and years and years of overpaying.

Those are huge industries now.

And they have a lot of influence in Congress under a single-payer system.

If we did drive prices down, doctors and hospitals, they would be paid less in there right now that might mean some of them closed or some go out of business or some move.

It would be really painful.

One person's waste is another person's essential service or local hospital or their income, but then single payer it's, not an all-or-nothing choice.

For instance, if there's a really interesting section of Bernie Sanders Medicare for all bill where he lays out this interim plan it's a plan.

He wants why setting up his new single-payer system.

And in that plan, he expands Medicare to cover vision and dental.

And he opens it to nearly everyone, not just people 65 and older all kids go on Medicare automatically and most adults can buy in that plan on its own.

It wouldn't get American health care spending far down overnight, but it would at least begin to recognize what we already know.

And what most of other countries already do that health care is one of those things, the government can do cheaper and better than the private sector.