Why Health Care is so Expensive in U.S.

U.S. Healthcare sector is worth more than $3 trillion. If we consider it as a country, then it will be fifth largest economy. This amount is more than twice, what is spent in any other developed country. However U.S. is top spender in medical sector, but its healthcare system has never ranked in top 25 countries. Why is it so ? U.S. spends the most on healthcare sector, but its healthcare is not even in top 25. There must be some reason behind that. Here we will try to analyse the reasons behind that. This article might be an eye opener for some of us.
On an average every person in U.S. spends around $8000 every year on healthcare expenses. It includes insurance premiums as well, but still it is a large sum for a family with lesser income resources.

Why Health Care is so expensive in U.S. ?


  • Higher Administrative Cost: 25% of total healthcare cost is spent on administrative sector. The count of billing clerks in some hospitals is far more than number of beds in that hospital. No other country employs so much administrative staff.
  • Higher Drugs Cost: In U.S. the government have lesser power to control drug prices, while some other developed countries can control the drug prices. If U.S. government make some laws to negotiate drug prices then this factor can be easily handled, but it will negatively influence the earnings of some top drug manufacturers.
  • Doctors are afraid: Doctors in U.S. don't directly prescribe the medicines without doing all necessary tests, even when they are sure about disease (due to their experience). They remain fearful to get sued for prescribing medicines which should be given only after positive test results. It cause additional expenses on defensive medicine and higher expenses on medical tests. It also increases the duration of treatment.
  • Specialists are preferred: U.S. population prefers to get treated by a specialist instead of a primary-care doctor, even when specialist is not necessary. It increases the treatment cost. In other countries people visit a specialist only when recommended by a  primary-care doctor.
  • More usage of technology: People of U.S. believe in technology much more than any other country. Mammograms are used thrice, MRI are used two-and-a-half times, and C-sections are done 31% more than any other country. It increases the equipment cost at every medical facility and ultimately gets paid by end user.
  • Branding in Medical Sector: Some top most medical facilities can demand much more for the same treatment which is available at lower cost at a lesser known medical facility. Everyone thinks that more price means better treatment and thus overall income of medical sector increases. Sometimes prices are made depending on who is going to pay it.

Affordable Care Act (ACA) has helped in lowering the medical expenses, but still a lot is necessary to get U.S. a good rank in WHO rankings. The higher medical cost often make some people move towards medical tourism to get treated at lower cost and get a better treatment.
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