eli5: How come health care cost so much more in America vs. other countries?

Question

I understand that insurances covers part of the cost. However, the total cost (before coverage) is still much higher in America. Why?

Is the supply chain different? Are doctors and staff paid better in America?

In: 188

Answer 1

After the second world war, USA and Great Britain came to a conclusion that in order to help it’s citizens and promote a boost in population, a form of standardized health care was required since (in the UK at least)most people didn’t even have access to full medical care, it wasn’t standardized and getting sick from what is considered minor illnesses/injuries today could have been fatal 100 years ago. They both had the idea that so long as people were working and paying their taxes a fair system could be introduced to cover the cost of health care.

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In UK they created a new type of tax known as the “national insurance” which automatically gets deducted from your pay, this goes towards the cost of medicine, health care and your state pension. The USA decided that they wouldn’t directly tax the employee, but they would make it mandatory for employers to provide a form of health insurance for their employees, so if you had a job, in theory, you wouldn’t need to pay for health care or medicine.

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Down the line, lots of people in the USA decided it was better for them financially to be self employed and simply not get cover for themselves, or if they were business owners to save money by getting restricted policies for their employees because they weren’t penalized for not providing full medical cover. Medical providers also saw an exploit with the insurance policies where they could charge inflated amounts for medicine and treatment because the insurance would have to cover it, which led to a lot of insurers refusing to pay out if a person had pre-existing risk factors or illnesses.

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Combining tight insurance company rules and regulations for it’s clients, hospitals and drug companies gouging their prices, people finding themselves in a position where they haven’t got any insurance whatsoever, they’re in a position now where suffering a medical emergency could be a financial disaster.

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In the UK you can experience USA style pharmacy costs by getting non NHS doctors to prescribe you medicine – some will be surprisingly low and some will be eye wateringly high.