Thursday, September 04, 2014

8 Facts that Explain What's Wrong with American Healthcare

Excellent article- worth the time to read in full .
Some highlights:

The reason that American health care is expensive is all about the price: when we go to the doctor, it costs more than when, say, someone in Canada goes to the doctor.
Part of this is about the price per unit of health care in the United States. From prescription drugs to imaging scans, nearly everything costs more when it's prescribed in America. Take the heartburn medication Nexium: the exact same medication costs $215 here and $23 in the Netherlands.

Most other countries have some form of price controls; the government negotiates with drug companies and device makers for lower prices, and the government has the power to win those negotiations. The United States doesn't do that. It leaves the negotiations up to individual insurers. And they tend to lose.

There are more nuanced ways that our health-care prices are more expensive, too. Harvard University's David Cutler points out that we have much higher administrative costs than most other countries — and those costs get tacked onto the bill when we go to the doctor. The average American doctor spends All those extra billing specialists' salaries have to get paid somehow — and that gets worked into our prices.

The National Institute for Health Care Management estimates that, in 2009, about half of health spending ($623 billion) went towards 5 percent of the population. On average, these are people who use $40,000 of health care annually.

As to who makes the most money, it's mostly drug companies and device manufacturers — the people who make the things that insurance companies buy. They typically run profit margins around 20 percent.

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