Five Facts: Why U.S. Health Care is So Expensive
Last week, President Trump announced that the Affordable Care Act should be repealed and replaced with an alternative to be developed by GOP leaders. This declaration was the latest move in the battle for better health care, what has been a lightning-rod issue in Washington for years. Politics aside, data clearly shows that Americans have disproportionately high health care costs compared with the rest of the world. According to the Diabetes Council, the United States spends more than twice the amount of the average health care expenses compared with all OECD countries. And in 2017, Americans spent close to $3.5 trillion on health care alone.
Here are five facts on the cost of health care in the U.S. today:
1. There are a number of reasons why health care is more expensive in the U.S. than other countries. The New York Times reports that, in addition to U.S. citizens paying more for services, they also pay more for administrative costs related to the complexity of the country’s health care system. Doctors in the U.S. also use more technology in their practices, including PET, CT, and MRI exams; the U.S. has 35 MRI machines for every million people while France only has 8. Moreover, most U.S. providers make more money by performing more tests. This system inherently encourages doctors to treat more rather than being more conservative in their approach.
2. According to Bloomberg News, health care premiums, the monthly cost paid to an insurance company or health plan, continue to increase at a faster rate than both wages and inflation. Average family premiums have increased 55 percent in the past decade; this is outpacing workers’ earnings, which have increased 26 percent, and inflation, which has increased 17 percent, over the same period. Moreover, Bloomberg reports that in 2018, annual family premiums for employee-sponsored health insurance rose to an average of $19,616. This marked the seventh year in a row that the cost of family premiums has increased.
3. There are a number of blockbuster drugs in the U.S. that are exponentially more expensive than in the rest of the world. A 2018 Vox report showed that Humira, an injectable drug used to treat autoimmune diseases including rheumatoid arthritis and Crohn’s disease, cost three times as much in the U.S. than in Switzerland. The publication also reported that Harvoni, a medication to treat Hepatitis C, cost $10,000 more in the U.S. than Europe and Avastin, a chemotherapy agent, costs nine times more. Insulin, the lifesaving medication for diabetics, costs $350 in the U.S. but only $50 in Canada.
4. But it’s not just drugs that cost more. Diagnostic tools and surgeries do too. In the U.S., a routine MRI costs twice as much as it does in Switzerland, and an appendix removal in the U.S. costs $12,000 more than it does in Australia. Giving birth is also cheaper abroad; in the U.S., the average cost is close to $11,000, while in Germany it’s just over $2,500.
5. While many of these statistics are discouraging, there are some signs of progress. In September 2018, POLITICO reported that Medicare spending per patient is trending down. And many politicians on both sides of the aisle have committed to addressing some of the runaway costs that plague patients.
No Labels is an organization of Democrats, Republicans, and independents working to bring American leaders together to solve problems.