Why we spend so much on healthcare

Why we spend so much on health care.

The main reason for our abnormally high health care costs is that our politicians let the hospitals, drug makers, device makers and diagnostic labs set the price and gouge the system.

Health Care doesn’t work like a free market because it is either more like a monopoly or hostage situation. Even when it could work like a market, the control of knowledge makes smart consumerism basically impossible. So, all sensible countries do the same thing when dealing with essential and unavoidable monopolies, they regulate prices, as we do with utilities.

In single-payer countries, this is obviously done as an inherent part of having only the one government insurer. In other countries like Japan, Germany, or Switzerland, they use all-payer. This is where the federal or local government works with the providers and insurers to establish a fair, uniform pricing system. Not only do negotiations result in lower prices, but it doesn’t have the massive amount of administrative waste you see in our system. When you have thousands of insurers independently negotiating with thousands of providers, the system needs to spend huge amounts on paperwork, billing, coding, and processing claims, to name just a few.

So, with data around the world looking as it does, why were politicians talking about bending the cost curve, IT, accountable care organizations, more individual health care cost consciousness, and smarter insurance markets, but not all-payer or single-payer? The answer is good old fashion corruption.

The drug makers don’t want reforms that would allow regular Americans and the government to pay 1/3 less for their products. So, big health care industry players take just a small amount of the billions in profits they make overcharging us and use it to spend hundreds of millions on lobbying Congress, ensuring our politicians will ignore the solution and choose to allow the corrupt system to flourish and continue.