THE AMERICAN HEALTHCARE SYSTEM

EXCESSIVE EXPENSE AND SOME SOLUTIONS

By Rachel Zhang EJ Beck

It’s often best to do some thorough research before buying a new car. What kind of mileage are you looking for? What price range? What color? How large is the car? There are many different factors and careful considerations which can influence your final decision. When it comes to a person’s health, whether it be experiencing pain or a circumstance of life and death, you simply can’t afford yourself the same flexibility. While being rushed to the nearest hospital, placed in an emergency room as an uninsured patient, or undergoing life-saving surgery, the monetary cost or quality of care is not under your control. In short, any person requiring urgent or necessary healthcare has low market power with a limited capacity for price negotiation.

The United States spent $3 trillion or $11,582 per person on healthcare as of 2019, a number that far exceeded the spending of any other industrial nation. Unfortunately, American healthcare quality and accessibility rankings are not reflective of this high budgetary spending. America has lower life expectancies and higher rates of chronic disease, obesity, and suicide compared to other nations of comparable spending. With no uniform system and no universal coverage, uninsured Americans and those requiring out of pocket procedures often experience financial hardship and extensive stress due to their costly medical expenses.

expensIVe healThcare

The reasons for these high expenses, and a brief explanation of the various complexities of American healthcare are as follows:

I. The American healthcare system consists of a very wide range of insurance companies, both private and public, as well as various pharmaceuticals, hospitals, and other parties involved in healthcare pricings and negotiations. Medicare or Medicaid are forms of public insurance which cover very many people. These companies can afford to negotiate for lower prices from hospitals and pharmacies because losing the business of a large insurance company such as Medicare or Medicaid means losing a massive number of profitable patients. Nevertheless, there are also several hundred private insurance companies, each covering a smaller number of people. The costs for care when negotiated by these companies is much higher as hospitals and pharmacies have the capacity to demand a higher price. In the case of an uninsured patient, healthcare providers have ultimate control over an unregulated, unnegotiated cost. The complexities of such a varied system and lack of universal coverage contribute to these higher expenses and inacces-

sibility.

II. With so many insurance companies and cross-negotiation, a significant portion of healthcare expenses are administrative tasks. There are various insurance companies, plans, coverage, deductibles, copays, etc., each of which require sophisticated systems for management and regulation. Compounding bills and added complexity make the system even more expensive to manage as America continues to pour an increasing portion of healthcare spending into administrative management.

III. Healthcare in America is also motivated by an interest in avoiding impending lawsuits, which is a legitimate concern for many physicians and hospitals. As a result, American healthcare involves the practice of defensive, preventative medicine; there are more orders for MRIs, CAT scans, and expensive procedures as a precautionary measure. Physicians and hospitals order these aforementioned scans to prevent lawsuits; patients approve of these scans as they improve quality of care; and medical technology companies profit off the earnings of using their machinery. While such precautions are understandable, they support the economic interests of parties involved, inducing a self-inflating healthcare system.

IV. As time goes on, less government regulation has resulted in more powerful healthcare providers, including hospitals and pharmaceuticals, which have monopolized the market and effectively control medicinal prices. These inflated prices continue to result in higher company profits and more inaccessibility.

While the aforementioned explanations are not an exhaustive list, they do demonstrate some of the inefficiencies within our current healthcare system. Pricing by insurance companies, administrative overspending, defensive medicine, and limited regulation have contributed to the monetization of healthcare as a privilege rather than a right.

some soluTIons

Nevertheless, there are still several various ideas, although some conflict one another, which illustrate promising attempts and progressions towards favorable systemic improvements. • In March of 2010, President Barack Obama passed the Affordable Care Act (Obamacare), which increased access to Medicaid and improved the accessibility and affordability of American healthcare. However, those who oppose this act also recognized higher insurance company premiums, increased taxes, and the incentivization of businesses into hiring less employees to avoid covering healthcare. • Medicare for All is a single-payer system ensuring health care access for all promoted by Bernie Sanders in his 2020 presidential campaign. Still, while a single-payer system

in which the government standardizes a price for each medical treatment might work well in theory, there remains the danger that influential private providers could increase these standards to much higher prices, creating a larger scale of inaccessibility. • America’s variety in insurance companies, hospitals, and pharmaceuticals increases incentive for research and improved quality of care due to the potential profit. The diversification and technology of American healthcare through the private sector serves those who can afford care very well. To maintain these benefits of our current system, some researchers are considering the network in Germany. With a government-regulated network of private insurers, both nonprofit and for-profit companies are able to achieve societally-desired healthcare provisions through insurance-company generated “sickness funds.” Germany's success in maintaining a comprehensive healthcare system while minimizing costs provide a promising example for future American policies to emulate.

Despite these complexities and expensive concerns, there are aspects of American healthcare such as the diversified coverage, developed technology, and abundant resources which are very desirable. Through further research and succeeding developments, America’s healthcare system has salvageable aspects and high potential for improvement.

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