Why Does Health Care Cost So Much?

Why Does Health Care Cost So Much?

About two weeks ago, I got into my first car accident. I was backing out my friend’s minivan to park it in another spot (and if you’ve ever been to Westwood, you know how much of a nightmare parking is) when out of nowhere a Toyota Prius slammed into me at 30 miles an hour. When the uncomfortable sound of crunching metal and shattering glass ceased, I slowly snapped out of my state of shock and climbed out of the car through the passenger window to confront the other driver. Thankfully, neither I nor the other driver was injured. In a frenzy, I called my parents to tell them what happened, frantically explaining that the other driver was going way too fast and that I shouldn’t be liable for damages caused to either vehicle. My dad calmed me down, reminding me that insurance would cover the damages. More importantly, as long as I wasn’t injured, there was nothing to worry about. After all, you can’t put a price on your health.

You can’t put a price on your health, he said. I knew exactly what he meant by this, but I couldn’t help but think to myself, of course there is cost to your health. And it just so happens to be higher in the U.S. than any other country in the world. In 2015, health care expenditures reached an absurd $3.2 trillion, up 5.8 percent from the previous year (3). This roughly equates to $9,990 per person, which is more than $2,000 greater than the second biggest health care spender, Switzerland (3). 17.8 percent of our overall economy was devoted to covering these gargantuan figures, the majority of which consisted of hospital care and physician and clinical services (3). So what does all of this have to do with my car accident?

Well, it got me thinking about just how lucky I am, in a multitude of ways. One, I managed to come out of the accident uninjured. Two, had I been injured, the burden of medical treatment costs would have been covered by my health insurance company. Three, my family is well off enough so that the cost of health insurance is an afterthought, a luxury not afforded to many Americans. While the Affordable Care Act (ACA) managed to extend coverage to millions of additional Americans in 2014, it did little to slow the continued growth in health care spending. Fast forward to 2017, and we have on our hands a recently proposed GOP healthcare plan that threatens to do away with some key components of the ACA. Under this new proposal, the elderly and low-income citizens are hit the hardest in terms of availability and affordability, which is further thing from a solution to what ails our country.

If health care coverage and health care cost are two different issues, the question becomes how to maximize the former while minimizing the latter. Many European countries, Sweden being the best example, have a largely centralized, government-provided and funded health care system that runs on taxes (2). Despite having more elderly people than the average developed nation, Sweden manages to keep its costs low while ensuring that all of its people have access to health care. The U.S. would be hard-pressed to emulate this system, for a couple of different reasons. For one, half our population is opposed to the idea of de-privatizing health care because like many other things, it is a business (and a profitable one, at that). Lobbyist groups in favor of private health insurance will always exist. However, even if we did agree enough to convince the government to take action, our political infrastructure makes it very difficult to enact and enforce new entitlement programs (4). Notwithstanding the number of hoops we would have to jump through just to implement a government-funded health care system, the costs required to create the organizations necessary to oversee this endeavor would be astronomical. Therefore, I am proposing a new solution – one that targets the providers and the insurers individually, rather than the system as a whole.

At its most basic level, health care is a relationship between patient and provider. The patient comes in with a problem, and the provider attempts to fix this problem, and is subsequently compensated for associated costs as well as time and labor. Issues begin to arise when hospitals, physicians, and caregivers begin to mark up these associated costs. Drugs and specific procedures are perfect examples of overcharged items. If provider costs increase, then insurance premiums must increase to offset this; thus, we are left with more expenses on the hands of patients, and more of a burden on private insurance companies. I believe that our health care issues must be tackled first on a provider level, starting with the physicians themselves. Avoiding extraneous surgeries and procedures, prescribing fewer drugs, and streamlining treatment as a whole are keys to lowering exorbitant costs. Furthermore, hospitals must be financially rewarded on the basis of how efficiently they are able to treat patients, which will hopefully incentivize providers to improve their quality of care (1). With regards to insurance companies, making coverage universal will without a doubt help with the risk pool by adding more healthy individuals into private insurance. Doing so will help increase their profits so they will not have to raise premiums on low-income clients any further.

Health care costs is one of the biggest issues facing our country today. As the baby boomer generation ages, we will have more at-risk, elderly patients in need of care than ever before. We aren’t doing this for the young, the healthy, or the wealthy. We’re doing this for the people that have chronic conditions, the elderly, and the poor. The arrogance in our society is thinking that change will come. This is simply not true – we need to be the ones to initiate that change, and the number one way to do that is to understand. Educate yourself on health care, because the more knowledge you possess, the more ideas you will be able to contribute to the discussion. This is going to take a concerted effort on all of our parts, but I believe that together we can fix our country’s healthcare system.


1)    https://blogs.wsj.com/briefly/2016/07/21/5-prescriptions-for-fixing-health-care/

2)    http://www.swedishhealthcare.com/about-sweden-and-swedish-healthcare/swedens-healthcare-system/

3)    https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/highlights.pdf

4)    http://theconversation.com/three-reasons-the-us-doesnt-have-universal-health-coverage-67292/

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