Description: This blog post aims to tackle the complex and controversial topic of how much healthcare costs in America…and the steep and deep price associated with it.
Did you know that the average cost of insulin in the United States of America is nearly an upfront of $100 per unit? That’s blazing past the second most highest cost in the world per unit, Chile, with only $21.78 per unit. The differences were even more highlighted when researchers noticed that rapid-acting insulin per unit costs $118 in the US, compared to just over eight to ten dollars in other countries across the world, which beckons the question: is the USA overpricing its medical care, and why?
This question had been asked by numerous citizens and politicians ever since the system had been set up years ago. As the years go by (at least, since 1960), US health expenditure has been steadily spiraling. In fact, as of 2020, healthcare costs are 17% of the States’ GDP and this percentage is only rising. But what exactly is the cause of all this?
One answer is the growing number of elderly. In 2022, 17% of America was 65 or older, and that number is expected to increase to 20-21% in 2030. Due to this age growth, Medicare (federal health insurance for those 65 and older) spending is also expected to rise substantially. It’s already 3.12% of our GDP, compared to 1.5% 30 years ago. It might become 6.3% (near 1.3 trillion US Dollars) in 2051!
Another reason for this rise in expenditure could be the rising costs in healthcare and its materials. The Consumer Price Index, aka CPI, increased at an average of 2.1% per year for general products, while the CPI for medical care increases by 3.5% every year. There are a couple of theories explaining this. The introduction of new medical technologies can drive up costs and the US Healthcare system’s general complexity can cause administrative inefficiencies, leading to wasteful practices. The consolidation of hospitals which is a byproduct contributes to a lack of general competition, allowing pharmaceutical companies such as Big Pharma to exploit pricing power more easily.
This matters a lot to the increasing costs, especially since the US spends a WHOLE LOT on medical care, yet in some prospects, it lags behind other countries that spend much less (per person) on the same elements of healthcare, like in obesity or the infant mortality rate. These outrageous costs put a strain on our struggling economy and fiscal-health-per-capita. But unfortunately, our country is built upon it.
It also doesn’t help that companies in Big Pharma (most likely through price gouging) are increasing prescription drug prices. It’s projected that between 2010 - 2025, prices are expected to increase by 136%. Chronic diseases are very expensive to treat in the US with 86% of healthcare costs in the US being for chronic diseases. The amount of patients and people getting ill are also not stopping due to the general trend of the American lifestyle only getting unhealthier every since the 90’s.
All these elements of the US healthcare system beckon the same question: how can we, as residents, combat these price hikes? There are many thrown-out-there solutions, the most striking being regulating the price of healthcare so pharma companies won’t go out-of-control. If the US government acts directly on medical consolidation, and encourages competition just enough, it might help decrease prices. Many have argued to just make healthcare free, which comes with its own benefits and drawbacks. Many other countries across the world have been making healthcare freely given by the government, but arguments arose in the past talking about how the current state of the US’ healthcare costs could not handle the pressure of growth from that radical change.
As these discussions go on, the price and healthcare spending costs of the US are only going to increase little-by-little. So, if we don’t take action, the healthcare costs might be just too much for the American people to bear!
Bibliography:
Irving, D., 2022. The Astronomical Price of Insulin Hurts American Families. [online] Rand.org. Available at: <https://www.rand.org/blog/rand-review/2021/01/the-astronomical-price-of-insulin-hurts-american-families.html> [Accessed 31 July 2022].
Pgpf.org. 2022. Why Are Americans Paying More for Healthcare?. [online] Available at: <https://www.pgpf.org/blog/2022/02/why-are-americans-paying-more-for-healthcare#:~:text=How%20Much%20Does%20the%20United,to%20over%20%2412%2C500%20per%20person.> [Accessed 10 August 2022].
"Why Does Healthcare Cost So Much?". Bcbs.Com, 2022, https://www.bcbs.com/issues-indepth/why-does-healthcare-cost-so-much#:~:text=The%20price%20of%20medical%20care,new%20medicines%2C%20procedures%20and%20technologies.
Chernew, Michael et al. "Reducing Health Care Spending: What Tools Can States Leverage?". Commonwealthfund.Org, 2022, https://www.commonwealthfund.org/publications/fund-reports/2021/aug/reducing-health-care-spending-what-tools-can-states-leverage#:~:text=Key%20Findings%3A%20States%20may%20pursue,targets%20and%20promoting%20payment%20reform.
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