white hospital beds
Why exactly is it so costly to go to the doctor or get medicine in this country? Healthcare spending in the U.S. may reach about 20% of the GDP by 2032. Credit: Pixabay

A court recently ruled that the deadline to bring an indictment against Luigi Mangione could be extended to Feb. 17. But that’s not the only reason the case involving the UnitedHealthcare CEO’s killing in Midtown Manhattan is far from being in the rearview mirror. As deductibles and maximum out-of-pocket expenses reset in January, high health care costs are on everyone’s minds.

“It isn’t a thing to take lightly,” said Mustafa Hussein, PhD, an assistant professor of health policy at CUNY’s Graduate School of Public Health. “We’ve seen that very recently with the murder of the UnitedHealthcare CEO — it’s becoming a tear, a growing tear, in the social fabric of this country.”

Why exactly is it so costly to go to the doctor or get medicine in this country? It’s a wide-reaching problem that’s likely not getting any better. According to some projections, health care spending in the U.S. may reach about 20% of the GDP by 2032. Local public health experts share their insights on why and what, if anything, we can do about it. 

We spend much more than other countries

Compared to other wealthy Western nations, the United States simply spends a lot more on health care. The U.S. spends 17-18% of its GDP on health care, nearly double that of “peer” nations like Switzerland. This high spending covers things like doctor’s visits, surgeries, tests, vaccines, and medications. 

But we’re not necessarily getting what we pay for: “It’s crazy how much we spend, and our outcomes aren’t that great compared to other countries,” said Wendy Weller, PhD, an associate professor in the department of Health Policy, Management & Behavior at the University at Albany.  

Calling our health outcomes “not that great” might be an understatement. The U.S. has the lowest life expectancy and highest suicide rates among 11 high-income nations, including Canada and certain Central European and Scandinavian countries. The U.S. also has the highest rates of chronic disease and an obesity rate that’s twice as high as in the average peer nation. 

The hidden costs that add up 

The U.S. pays a steep price for its health care brokers. Studies have found that nearly 40% of the difference in spending on hospital and physician care between the U.S. and a peer nation like Canada was administrative costs. This includes the costs of coordinating between insurance companies, hospitals, and other players. 

We’re also facing a physician shortage, especially in primary care. This shortage worsens access to care and drives up costs over time. When patients can’t see their PCP, they might turn to more expensive care settings, like emergency rooms, for non-emergency issues. 

emergency signage
When patients can’t see their PCP, they might turn to ERs for non-emergency issues. Credit: Pixabay

The U.S. also relies heavily on advanced medical technology, which is expensive. That includes MRIs and specialized procedures like hip replacements, which Americans use more per capita than people in other high-income countries. 

“Once you have the technology out there, people … want to use it,” Weller said. “It’s just so hard to start reining things back in.” 

Why are prices so high?

The main reason for the high costs, though, boils down to prices, experts say. From hospital stays to prescription drugs and medical devices, everything costs more here than in other countries. 

Unlike other nations, the U.S. doesn’t negotiate prices in any real way, according to Hussein. Insurance companies negotiate prices with doctors and hospitals, but these negotiated rates are still much higher than in other countries. 

“If you leave matters into the hands of private businesses [in health care], even if you try and classify them as nonprofit [hospitals], they’re going to seek their bottom line,” Hussein said, adding that maximizing profits is just rational behavior on their side. So the onus is on the U.S. government to invest more into managing health care prices, he says. 

The price-setting power of physicians

Meanwhile, physicians in the U.S. have a lot of power in setting prices. A physician-led volunteer group, the Relative Value Unit Update Committee (RUC), advises Medicare on how much physicians’ services are worth. Medicare usually just goes along with these recommendations. 

While most physicians outside the U.S. are salaried employees of the health care systems they work in, in the U.S., they bill for themselves. So if you go to a hospital, you really get two bills, Hussein says. You get a facility bill from the hospital itself, and a physician bill from the contracting or billing service physicians hire. That adds up. 

Apart from the RUC, the American Medical Association (AMA), a lobbying group of physicians and medical students, “has been the single most effective entity opposing every single attempt … to reform the health insurance system in the U.S. towards a single-payer system,” Hussein said. 

He points to the AMA’s campaign in the 1940s against President Harry Truman’s plan to make health care accessible to everyone, including the middle class. They pushed for private insurance instead, calling it “the American way” — and the idea took off. Today, most doctors and hospitals are private businesses. 

The supremacy of private insurance

The shift to private insurance is why most people in the U.S. get their health insurance from their jobs. It’s also why so many people lose their insurance when they lose their job. 

COBRA is supposed to be a stopgap, but it’s typically more expensive than the employer-sponsored health plan you had before you lost your job. For instance, if you and your employer together pay $1,000 a month for your insurance, COBRA would make you pay $1,020 a month to keep it, Hussein says. That’s a lot of money for someone who just lost their job, he adds. 

handing out of documents
Compared to other wealthy countries, the U.S. spends a similar share of our taxes on publicly funded health care. But that’s where the similarity ends. Credit: RDNE Stock project

At the same time, private insurance accounts for a lot of why we spend much more on our health care system compared to other wealthy countries. Our system is similar to theirs in terms of how much public funding — our taxes, including payroll contributions to Medicare — is spent on the health care system. But we spend much more on private insurance from the marketplace or employment-sponsored plans. And this setup makes the system very expensive because private companies are focused on making profits.

Too many players and pushback

This capitalism problem is compounded by the sheer number of groups involved in the U.S. health care system: doctors, insurance companies, pharmaceutical companies, and even patients. Anytime someone tries to lower costs, another group pushes back.

It’s not just about profits, either. For consumers, it might also be about the classic American ideal: choice. Everyday people want options, according to Weller — even if it makes health care more expensive. Patients often resist measures that would limit their access to certain doctors or treatments, even if those changes could help control costs.

“I may go for things I don’t really need because I have health insurance,” said Weller. 

When people use less health care, does it help lower costs?

But Hussein thinks high health care costs, for many Americans, do the opposite. Deductibles are meant to stop people from wasting money on health care, he says. The idea is that if you pay more upfront, you’ll be more careful. But deductibles make people skip all kinds of health care. They avoid things like insulin shots, doctor visits for chronic conditions, or small treatments for illnesses like the flu, he says. 

When people miss out on preventative care, it drives up costs in the long run. Chronic diseases like heart disease, stroke, diabetes, and obesity are the leading drivers of health care costs in the U.S., according to the CDC. Complications both from unmanaged chronic disease and a missed vaccine to prevent worse conditions makes a high-cost visit to the emergency room more likely. 

And while deductibles may reduce health care use, they don’t solve the core problem: high prices, according to Hussein. The real reason health care costs so much in the U.S. is because services are expensive, not because people use too much care, he says. 

“It has been a misplaced concern in the U.S. health policy — the concern about high volume and about encouraging people to actively shop [for cost-effective services] … when it comes to addressing the overall cost of the system,” Hussein said. The cost is almost entirely driven by prices, he says. 

What can everyday people do?

While this is a problem that everyday Americans have very little control over, it’s still possible to send a strong message — without resorting to violence, of course. 

Hussein advises people to talk to your representatives: “Tell them you’ve been priced out of the system for too long.” 

He suggests urging lawmakers to regulate prices across the health care system, from insurance to hospital services. “The system is such a labyrinth, especially when you have problems or you’re being charged something that you shouldn’t be charged,” Hussein said. 

It takes a lot of time and effort to address these cost issues, and most people aren’t equipped to navigate these problems, he says. That’s why we need to pressure elected officials to mandate insurance companies to do better, he says. 

Read more of our health stories here. If you need help fighting an insurance claim denial, here’s what to do

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.