American Healthcare Costs Versus The World

When patients in America need healthcare there can be panic if they do not have adequate provisions. While many Americans know that the cost of going to a medical provider can be expensive, many may not know the actual cost of each individual procedure. Whether you are going into hospital for a CT scan, or a C-section, the costs can be high.

However, this is not the case in other areas of the world, for instance a CT scan in the US can cost around $1,100 while in Holland the same procedure would cost you $140. A recent report from The Health Care Cost Institute has highlighted the difference between the prices being paid by private insurance throughout the United States, and the rest of the world.

According to the report, America is spending far more on almost every form of prescription drugs or medical procedures. Other rich countries usually pay at least half the cost for medical services of private insurers in America. Compared to the Netherlands, a country which is constantly rated as having one of the greatest health care services in the world, we are spending around four times as much as they do. For instance, procedures such as knee and hip replacements are only 25% of our costs.

However, there are some situations where the cost of a procedure can be nearly as much in the US, such as cataract surgery in New Zealand, or childbirth in the United Kingdom.

Embed from Getty Images

Prescription drugs are the same. Harvoni, a new cure for hepatitis C, costs 20% less in the Netherlands than it does in America. Arthritis drug Humira is another drug that is cheaper abroad, with patients in the United Arab Emirates only having to pay less than 50% to that of Americans.

While prices differed from country to country, anti-clotting agent, Factor VIII, was found to cost either half or less than the American price in each location surveyed. So why are Americans being charged so highly for medical services, procedures and prescription drugs? Unfortunately there does not seem to be a single answer.

While America is still the world’s richest country, it is also the home of the world’s most prominent bio-pharmaceutical industry and has the majority of the latest treatments, meaning patients from around the world head to our shores to receive medical attention.

While this could mean that our prices should be higher than anywhere else, there is also the issue of price regulation – or the lack of one.

More than half of Americans have private insurers who negotiate with drug companies and private providers to fix the costs of their products. Insurers do have some control, as they could refuse the drug company or the medical provider access to their patients, meaning they could get their prices reduced. Yet the prices are still far more restricted than many other nations.

It’s not just between countries that there is vast price differences, the costs can vary between states too, with CT scans costing between $250 and $1,500 depending on where you are in the country.

Embed from Getty Images

Even with these restrictions the US private insurance sector is still being charged ridiculously high prices.

While all medical provisions are a part of the private sector in America, there are many countries in the study that have a public sector too. For instance, the government in the United Kingdom employs doctors, nurses and other medical employees as well as owning the majority of the hospitals and doctors’ surgeries. Other countries, including Australia, have universal public insurance programs.

There are some countries that have privatized insurance schemes, such as the Netherlands, however they continue to enforce government controls on their prices – more than we do here. A common factor in single payer systems is the utilization of global budgets, meaning the costs the insurers will pay each year is capped once they know the cost of their customers medical requirements.

While the limit on health care spending for the year ahead is firm, payers and providers discuss the costs for each individual service. In America there is a more open-ended approach which creates the costs based on the level of medical care that is provided throughout the year. With America having such extortionate prices the industry has around $3.5 trillion invested which means that if prices are negotiated down – either through price setting, global budgets or some of the many other ways available – the health care providers see a decrease in their income.

This means that issues such as an unexpected out-of-network medical bill that some patients receive would be hard to control, due to the reduction in payments to providers.

America would do well to get our health care spending under control but the challenge would be a large undertaking that not many government administrations would want to tackle.