Why Is US Health Care So Expensive?

The US has the world’s most expensive health care.  Is it superior to that of other nations or is it more a matter of just charging more? The difference between US costs and those of the rest of the developed world indicates that US care is almost twice as expensive as that of other developed nations. Why brings up the question: “Why?”

First, we do “NOT” have anything close to a free market in medicine.  It is a government enforced monopoly where prices for the most part are set well above the levels we’d see in a true free market where there was open competition. As a matter of fact, any attempt to introduce free market competition into health care will be violently resisted.  The medical establishment is quite willing and able to use the police powers of the “State” against any who dare to change things. At one time the mayor of Springfield, Massachusetts tried to lower the cost medical drugs by purchasing them in Canada for the people of Springfield. The American drug companies quickly had the federal government put a stop to it.  They also threatened to refuse to sell medical drugs to the Canadian pharmacy who had agreed to supply the prescription drugs if it continued to sell drugs at the lower Canadian prices to Americans.  Of course our well bribed Senators and Representatives went along with the idea. After all, the US government exists for the benefit of the wealthy and the big corporations, not for the people who supposedly elected these people to office.

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This should give you some idea of the differences in physician office fees between the US and the rest of the developed world.  I will grant that some countries provide “free” education to students up through the doctorate level.  There is also a considerable difference in malpractice insurance costs with the US having the world’s highest level. Additionally our system of private health insurance means that billing is far more complex than it is in countries with national systems.  For example, a primary care physician has four to five different “codes” for an office visit, each one being based upon what medical issues the patient has. In theory more complex medical issues require more time and pay more. Payment also varies according to the insurance plan. There does not seem to be any sort of “standard fee” in American medicine.  And the amount billed to an insurance company can be considerably different from the amount the insurance company actually pays. There are no “established prices”, only different agreements as to the price charged. There is a site on WordPress called “selfpaypatient.com” where you can find a better price for those who are willing to pay cash, instead of using insurance. It’s well worth a visit even if you are content with using your health insurance to pay for medical care. You can also download a copy of the book to your Kindle (a very “handy” device to have).  In my own opinion a combination approach of Health Savings Accounts, backed up with a system of low interest long term loans, and that in turn backed up by a high deductible catastrophic insurance plan would likely be the most cost efficient way to pay for medical care today.

Lets look at drugs:  I’ll use “GoodRx” for drug prices.  Mobic is the brand name drug for osteoarthritis.  A 90 day supply of the 15 mg tablets will cost $897.30.  The generic, called Meloxicam, is $9.50 for the same drug.  Lipitor, brand name, 80 mg, 90 day supply will cost $743.40.  The same Atorvatatin, in generic costs $36.00.  We can assume that the generic price is likely the actual cost of production.  The higher brand name price covers development, marketing, everything else. Drug prices for brand name drugs outside the US are closer to generic levels.  Supposedly this is because the rest of the developed world threatens to void the patent on the drug and produce it themselves.  However, what most people don’t know is that many of these drugs are produced by manufacturers who have production facilities both in Europe and here in the US. So what they do is cover their costs in the rest of the developed world, but make all of their profits here in the US!  The reason for this is political.  Governments in the rest of the developed world are controlled by their citizens.  The US government on the other hand is controlled by the wealthy and the big corporations.  They control who actually gets to run for political office through control of the financing of political campaigns. It’s harder in the rest of the developed world to do this because the rest of the developed world is set up so you vote “party”, not an individual as such. And with the parliamentary systems and proportional representation, it’s a lot more difficult to control the process of who gets elected and who doesn’t. Of course a Demarchy would be even better because there are no political campaigns, only a lottery.  No doubt some would try to bribe the selected representatives, but that is rather difficult because no representative would serve more than one term. So a lot of the power of “special interests” in controlling the political process is a lot more difficult.  I have no doubt it would be tried, but the chances of success are considerably less.

The US health care system is about twice as expensive as that of the rest of the developed world. It may be claimed that the American standard of living is higher so naturally our own costs will be higher.  The flaw in this argument is that if you compare the American median income to those of other countries, the difference is not all that large.  Our own “average” income is higher mainly because we do have more wealthy people on a per capita basis. For example we have about half of all the world’s billionaires. Mainly due to the fact that we tax wealth “less” than is the practice in the rest of the developed world. However the average American pays a total tax bill of about 40% of their gross income, which isn’t that much lower than what Europeans pay. The reason most people aren’t aware of this is because the taxes are divided up in ways that conceal part of the burden. For example, the payroll tax is split between employee and employer. But in reality the tax is actually paid by “you”, either in the form of lower wages or in the form of higher prices. We also have state and local taxes.  Here in Michigan the state sales tax is 6%.  We also have a state income tax, which is currently 4.6%.  So if you add the 15.6% payroll tax, an income tax of 15% to your state and local taxes, you will see that you come out at about 40%.  Not that much different from what they pay in the rest of the developed world…

 

 

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About muskegonlibertarian

77 year old retired owner of a security guard agency. Member of the Libertarian Party.
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