Emergency Room Visit Graph

Cost of Services v Other Countries



Remember walking into the candy store when you were young?  As you looked around at all the wonders and sweets that caught your eye, only one thought ran through your mind—how much could you get?

You presented the cashier with the crumpled-up dollar hoping that magical green paper would buy you pure happiness.  It will indeed bring you happiness, but this time it won’t be in the form of candy but instead it will be health care.

The rising cost of health care in the United States has led to one of the most revolutionary actions to take place in our healthcare system.  This week marks the final week before the first major installment of the Affordable Care Act which begins Oct. 1.

The healthcare marketplace will open and allow individuals to compare and contrast various health insurance packages in order to find the one that best suits their needs.

However, before we get bogged down in the grueling process of translating and interpreting the ACA, it’s important that we, as students and individuals who will soon be purchasing, receiving and needing healthcare, understand the circumstances under which this revolutionary system came to be.

The United States spends exponentially more on healthcare than any other country in the world.

The Commonwealth Fund, an organization dedicated to the formation of a high-performing health care system, reported that the United States spends 17 percent of its gross domestic product on health care.  That is eight percent higher than any of the other top 13 developed countries in the world.  Not only does the United States lead the way in spending but it also leads in the cost of care patients, or in other words, us.

This increased cost can be attributed to many things.  The cost of drugs, research, technology, insurance, physician services and marketing, all drive up the price of medical care.

During the late ’80s and’90s the cost of insurance and care rose at an annual rate almost 10 percent, marginalizing more and more people who could not receive care.  What we have found to be true is that no matter which way we split up our funds the trade-offs are complicated.  Restricting access reduces accessibility to care and violates a human need to treatment and care.

Regulating prices also has its drawbacks in the research and development world.  Lower prices for drugs may lead to less research and drug development, which results in a decrease in the number of new treatments to target new diseases and fewer pharmaceutical discoveries. Reducing the amount we allocate for providers may lead to a decreased quality of care.

All of these consequences need to be weighed against potential opportunities and fragile household finances which become ostracized by the most expensive health care system in the world.  When it comes down it, our one dollar is split more ways than we know.

One percent of the income in healthcare is allocated to consumer service, provider support and marketing of the healthcare system.  Three percent goes to purely insurer profit, followed by six percent which is put towards government payments, compliance, claims processing and administrative costs.

This makes up the 10 percent which is associated with the healthcare system itself.  Before you ever see a doctor, that mighty strong dollar is already only 90 cents.

The remainder is broken down amongst the healthcare system. The Health Alliance reports in their breakdown of the healthcare dollar: 31 percent goes to physician services, 26 percent goes to outpatient costs, 17 percent goes to inpatient costs, 14 percent goes to pharmaceutical costs and two percent goes to other medical services.

As is evident in the breakdown, an exorbitant amount of that dollar goes towards outpatient and inpatient costs.  The United States stands alone as the leader in cost of medical services.

A hip replacement in the United States costs on average around $40,300, as compared to Spain where its average price is $7,700.

A routine colonoscopy in Switzerland costs $655 whereas in the United States it is an average of $1,200; just shy of double the cost.

And the real kicker: a year supply of the common blood pressure medication Lipitor cost $124 versus $7 New Zealand.

The cause of this outrageous hike in price stems from the approach the United States has on healthcare.

In places such as Great Britain, a nationalized healthcare supplier may be the manufacturer for every artificial replacement hip and is priced with a flat rate.

The United States, however, sets a price individually through each provider and each insurance plan.   And by the time the bill comes you break the other side of your hip when you fall of your chair at the sight of the bill.

Many economists view the United States healthcare system as being one of inelastic demand.  The insurance and medical companies set the prices and we are left with no choice but to pay up.

The ACA begins to address this rising cost of healthcare in various ways.  It decreases cost through preventative care by avoiding emergency room visits, which on average cost over $550, as compared to a routine doctor’s visit, which may only cost $121.

There is hope the ACA will be able to relieve some of the stress on consumers and the healthcare system.  Although things look promising, one thing is for certain: a dollar won’t buy you much and it certainly won’t get you very far.



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