why is healthcare so expensive in the us

7 Reasons Why Healthcare is so Expensive in the U.S.

Healthcare in the United States is extremely costly and can be difficult for many to afford. Some may argue that healthcare in the U.S. is more expensive now than ever. Many factors affect the cost of healthcare in America, and one of those is the high prices. You may be wondering why prices are so steep when it comes to healthcare in the U.S. It sounds confusing because it is and in this article, we’ll go over the 7 reasons why healthcare is so expensive in the United States.

1. Drugs are more expensive

Drug prices in the United States are high compared to those in other countries. Compared to other countries, the U.S. pays almost twice as much for pharmaceutical drugs. The U.S. overspends dramatically on expensive pharmaceutical drugs and since the prices aren’t government-regulated, they can remain high. Drug prices in the U.S. are 256% higher than those in other countries– a drastic difference in costs that many find too difficult to afford. 

2. Doctors and nurses are paid more 

In the United States, doctors, specialists, and nurses are paid more than those in neighboring countries. On average, a U.S. nurse makes about $74,250 per year, while nurses in Switzerland make $58,014 and those in the Netherlands make $60,253. With doctors, specialists, and nurses being paid such high wages, this drives the costs of diagnostic tests and treatments up – which results in patients paying more out of their pocket.

3. Hospital administrative costs are higher

A lot more money and resources go into regulating and managing medical services that are at the administrative level. When it comes to excessive spending in healthcare, administrative costs are often the cause. Most other countries spend 1% to 3% of their healthcare dollars on administrative costs, while the U.S. spends a whopping 8%. A recent study found in 2017, administrative costs made up 34.2% of the healthcare costs in the U.S. This was twice the percentage in Canada, which runs using a publicly funded healthcare system. 

4. Hospitals are profit-driven 

In comparison to prices for surgical procedures in hospitals, U.S. prices exceed those of other countries by a lot. A heart bypass operation in the U.S. costs $78,100, compared to only $32,010 in Switzerland. Prices for inpatient and outpatient hospital care are consistently rising. During Covid, there were fewer hospital stays, as well as fewer elective surgeries performed. This resulted in a decline in hospital finances.  The U.S. spends an average of $1,443 per person in comparison to the $749, spent by other countries studied. 

5. Hospital services are extremely expensive

Not only are drug prices, administrative costs, and nursing prices higher in the United States, but hospital services are just as high. On average in the U.S., a CT scan costs $896, versus $97 in Canada, $279 in the Netherlands, and $500 in Australia. With skyrocketing prices for services, many patients struggle to afford the services and tests they need. An MRI costs $1,420 in the U.SUS while only costing around $450 in Britain – another extensive price difference. The high prices of hospital services, tests, and procedures are one of the main reasons why healthcare is so expensive in the U.S.

6. With no set prices, costs vary greatly

In the U.S., there are no set prices for medical services. This, in addition to a complex healthcare system, is one of the reasons why healthcare providers can charge what they see to be fit, driving prices up. The U.S. government doesn’t regulate what companies in the healthcare industry can charge for their services, and this often keeps prices high. Many factors influence the cost of medical services such as whether the payer is using private insurance, Medicare, or Medicaid, as well as where they are located. With no set prices, the costs of medical services are often overpriced and difficult for many to afford.

7. Patients pay by service

Patients are charged based on the medical service and treatment they receive in the hospital. A variety of services are utilized regularly, which means that in some parts of the healthcare system, people are paid for volume. This encourages extra scans and tests to be booked to help the hospital earn more, which also supports the staff and the healthcare system overall. Although this may be in the economic interest of the hospital, it results in clients having to shell out more of their own money to pay for services that could be less expensive.

It’s clear that healthcare in the United States is expensive and can border on being unaffordable for many. In most countries, the government plays a much more significant role in negotiating healthcare prices and controlling them to avoid prices being driven up. 

Healthcare reforms like the Affordable Care Act can help everyone gain access to healthcare and not have to worry about unrealistically high healthcare costs. Make sure to collect your receipts and add up your expenses so that you can get reimbursed for as many of your payments as possible.

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