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
The US doesn’t have a single payer healthcare system so it doesn’t get any of the advantages of one. So the result is you get raw capitalism.
To start off you need to understand why laissez faire capitalism doesn’t work with healthcare. Free Market concepts assume that if a product is too expensive people will stop buying and costs will have come down to encourage people to buy. But for required services like healthcare you can’t do that because you’ll suffer or die, so the very concept breaks down. There is no natural pressure from the market to reduce costs, so you end up with costs that spiral upwards.
There’s an argument that insurance based systems actually drive up costs. When people don’t/can’t pay for medical care hospitals have to cover their costs somehow, so they increase their rates and the insurance companies in a sense get the bill resulting in higher costs overall.
This phenomenon also happens in the auto repair industry. Insurance providers are often charged *more* than the guy on the street for the same repairs after an accident because the insurance companies will just pay (to a point). So the entire industry has inflated costs because they were able to get away with it.
One of the advantages of single payer healthcare is the power of negotiation.
When a government represents every single person in the country and is the sole organization that can pay for medical procedures, companies have no choice but to bend over backwards to try to get that business.
You aren’t buying 10 replacement hips at 1 hospital, you’re buy 10,000 for the entire country at once. So that allows you to get prices down.
Another factor is regulation. The government can step in to limit and regulate the prices of things like drugs, undo monopolies and patents that are harmful to patients, and provide funding to local companies to make low-cost equivalent drugs. The government can also subsidize costs like education to encourage more people to become Doctors and Nurses when required if it is to the advantage of their citizens to do so. A government isn’t profit motivated like an insurance provider and that makes a big difference.
Then there’s preventative care. If medical care is too expensive people won’t get it until it’s too late. If it’s *free* (it’s not free, but you don’t get a bill at the end of it) then people are more likely to go to the Doctor earlier and for regular check ups. This reduces the likelihood of larger bills later.
For example if you get diagnosed and treated for diabetes earlier, then you don’t get expensive treatment later because it’s out of control.
Latest Answers