Reasons Why Us Healthcare Is So Much More Expensive

Categories: Health CareMedicare
  • 2 major differences between Medicare and Medicaid and how have they affected care given to their beneficiaries?

Two major differences between Medicare and Medicaid are their funding sources and the populations they serve. More specifically, Medicare is considered to be an insurance program. As such, someone using Medicare has over time worked and paid into the system that will cover their medical costs. There may be some small costs involved including deductibles and monthly premiums. The program is designed to serve those over 65 regardless of their income.

Medicare is federally funded by the Centers for Medicare and Medical Services and no matter where you live in the United States the program is essentially the same.

In contrast, Medicaid is considered to be an assistance program. The population it serves have low-income and can be any age. Most often those covered by Medicaid pay nothing for their medical costs. Medicaid is considered a federal-state program. It can be different from state to state but it is run by state and local governments within federal guidelines.

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The impact of Medicare and Medicaid has been truly profound for their beneficiaries in the following ways:

When implemented in the mid-1960’s both Medicare and Medicaid programs required that health care institutions could not be racially segregated if they wanted to receive Medicare and Medicaid payments. This effectively stopped the racial segregation that was institutionalized in many hospitals and other facilities, thus expanding the availability to better health care for all Americans.

Medicare recipients live an average of five years longer than when the law was implemented , and a study by the Center for Children and Families concluded that children on Medicaid become healthier teens and adults, have greater academic achievement, and economic success.

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Some of the negative effects of Medicare and Medicaid are the huge costs of these programs on federal, state and local governments. This had led to decreasing reimbursement rates and long waits for reimbursement which can dissuade doctors from accepting patients covered by these programs. Additionally, physicians can feel micro-managed by Medicaid in particular – for example a test or procedure seen as medically necessary may be refused which is frustrating to doctors, and more importantly can negatively impact the health of patients.

  • 2 reasons why healthcare is so much more expensive in the United States compared to other countries. Provide 2 examples where the care in the U.S. is inferior to other countries and why is that the case.

The major reason why healthcare is so much more expensive (almost twice what it is in other developed countries) is because of huge administrative costs. Approximately 25% of healthcare cost in the U.S. is due to administration. In other developed countries with single payer systems the amount of staffing required to administrate is far lower due to the simplicity of their systems.

Another key reason for the high cost of U.S. healthcare is the high cost of pharmaceutical drugs. In the U.S., unlike other nations, the government does not negotiate drug prices with pharmaceutical companies. Additionally, the FDA long regulatory process makes drugs more expensive than necessary.

Despite all the money the U.S. spends on healthcare, we are ranked 37th in healthcare systems by The World Health Organization. We are ranked last in overall healthcare out of the top industrialized countries, according to The Commonwealth Fund. The U.S. health care system is inferior on measures of affordability, access, health outcomes, and equality between the rich and poor. Some examples of this are our infant mortality rates which are high and our life expectancy which is low – 60 years, compared to other developed nations. Additionally, our healthcare system has the highest rate of “mortality amenable to health care”—that is, deaths that are preventable by doctors and hospitals. Further, 28% of Americans have multiple chronic health problems (such as diabetes or arthritis), more than in any European country.

  • If you were in Congress now and would like to save the Affordable Care Act, what legislation might you suggest?

I would propose the following legislation to save the ACA: Extend open enrollment time, which President Trump has cut in half. This extention would allow more people to evaluate and sign up for health care coverage. I would re-evaluate and reinstate the healthcare mandate which, although not without it’s problems, will ensure that more American’s will have healthcare coverage (the CBO estimates that over 13 million Americans will lack insurance coverage by 2027). Additionally, I would reinstate cost sharing subsidies that reimburse insurance companies for decreasing their deductibles and out of pocket costs. Finally, I’d legislate that the contraceptive mandate be strengthened so birth control is accessible to all, no matter what job they hold.

  • Name 2 alternative methods for healthcare reimbursement other than fee for service and cite 2 pros and cons for each.

As the fee for service model is increasingly seen as outmoded, these are some new and promising models of care reimbursement to consider:

Accountable Care Organizations

The hallmark of an accountable care organization (ACO), also known as “shared savings” programs is increased coordination between healthcare providers. Some of the advantages in this system include the shared savings that would financially reward healthcare providers who each year adhere to standards of quality of care and who come under a benchmark spending goal. This model retains some structure of fee for service such as physicians and other providers getting reimbursed separately, but there is additionally an incentive to improve the quality of care and reduce or control costs so providers in an ACO share in savings if they collectively are able to provide high-quality care to their patients at lower costs.

One negative of an ACO is consolidation. There is the possibility of a practice becoming a monopoly in certain areas giving patients only one choice. As a result the potential for the ACO to raise its prices is also a serious concern. Another negative of an ACO is that they can be hard to implement. Because of the emphasis on information sharing, for facilities which do not have electronic medical records the costs could be a dramatic financial burden.

Bundled Payment

Instead of reimbursing per service, bundled payments give providers a set amount of money for a variety of services. This sum reflects the costs that can be expected for a specific incidence of care, such as a broken arm. Because the payment is fixed it encourages healthcare providers to give the care the patient needs and avoids unnecessary tests and procedures. Bundled payments encourage providers to eliminate unnecessary tests and procedures. Since reimbursement is dependent in part on meeting quality standards, providers also have an incentive to improve patient experience.

Some of the negatives of bundled payment are as follows: it can be risky for the provider in that defining the medical condition and the necessary follow-up that is included in the bundled payment can be complicated. Some procedures like knee replacements are well-suited to bundled payments, but a person can have numerous medical issues at once, thus making it more difficult to predict the interaction of the various conditions long term and ultimate outcome. Another negative is simply that bundled payments could encourage specialists’ (who typically see patients as single disease problems or procedures, rather than as a whole person) to diminish their sense of responsibility for the costs of illnesses not included in their particular bundled payment.

  • Has your perspective of Medicine changed since the beginning of the course?
  • If so, how?
  • If not, why?

My perspective of Medicine has greatly changed since the beginning of this class in the following ways: as a pre-med, my focus has been on the acquisition of knowledge in all aspects of biology. When I think about becoming a physician, I think about what it will be like to treat patients, to interact with other professionals and the hospital systems in this country.

This class has enlightened me to the deep questions of how medicine and business interface. I’ve learned it’s not always pretty – particularly in the U.S. where the healthcare system seems broken in many ways. This class has prompted me to think much more about universal, single payer models of healthcare, and to look at how other countries manage their care. The statistics on how dismal some of our healthcare outcomes are in relation to other developed countries has really struck me.

I’ve also been shocked by the extraordinary amount of time doctors’ report they spend on administrative functions. I hope that by the time I am a practicing physician the healthcare system will have changed such that business and medicine can co-exist in a healthy way.

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Reasons Why Us Healthcare Is So Much More Expensive. (2022, Jun 05). Retrieved from

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