More or less a private health insurance industry was built up out of the efforts of individual hospitals and private hospital associations like the American Hospital Association and other groups to develop payment structures for care in the first half of the 20th century.
The US government never engaged in rate setting or any other policy aimed at managing the amounts hospitals could charge*. Public payers with the heft and and incentive to bring down costs while maintaining low prices for members were only developed for the old, disabled, and very poor. Private insurance and provider markets became extremely concentrated and there was basically no anti-trust reaction.
In short, the government didn’t do any of the several key things other governments do to contain healthcare costs. Every attempt to do so is, generally, met with violent screeching by the Republican party and determined opposition by providers and payers.
*I just want to note that, as a health policy researcher, it’s kind of BS just how little providers get blamed for astronomical prices.
Insurance is a pooled risk against unlikely events.
It should not be used for routine care.
To base a heathcare system on Insurance operating assumptions will always result in unreasonable costs.
All negotiations are carried out at the confluence of interests of organizations that do not have your interests at the center of their positions:
-Insurance providers
-Your employer
-Pharmaceutical companies
-Healthcare companies
Once they all agree on a position that they find acceptable, you are then sold on the “benefits” being offered.
At no time is there a feedback system that provides downward pressure on costs and improved quality of service.
The 3rd party payer system is stupid.
Imagine buying groceries in the following way. You pay company xyz $200 a month for groceries. Then you go to the store load up your basket and walk out. You dont know how much anything costs, you dont know how much you spent, you just leave. Then, a month later you get a bill from xyz because you got $300 in groceries so they bill you $150 for the difference, plus fees.
Thats how American healthcare works.
liability. US is THE most litigious country and when it comes to healthcare the damages can be awarded in billions. Hospitals have to take cover, doctors have to, care takers have to and ultimately the pharma companies have to. All this adds to high cost of services. For covering a high priced service, the premium would obviously be high. When was the last time a court awarded a million euro fine on a doctor/hospital for negligence in service?
The fundamental reason is pretty straightforward.
USA health care is designed to maximize profit. Hence everything should cost as much as possible. That’s why you get $1000/month insulin, for instance.
A bonus screw up, back in the 1970s there were various wage freezes, so employers started adding health care benefits in lieu of wages, to attract employees. This became extremely widespread. And objectively it is a terrible terrible terrible idea in every single way.
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