Some, if not most, of this is a result of the insurance system. The insurance companies only pay x% of any given item, therefore the hospitals have to jack prices through the roof to collect enough to survive.
The problem with our healthcare system is that too much money goes to drug companies, medical device makers, and insurance companies and not enough makes it to the people actually providing the care. Its a bit more complicated than that, I'd admit, but that's the TLDR version.
Hospital beds aren’t inherently that expensive. The physical room + attention from medical professionals + deprecation on equipment doesn’t add up to such an extreme number as to be particularly problematic.
It’s a huge range of negative feedback loops that drive US medical costs into insane territory. For example insurance companies require more documentation which means doctors can treat fewer people and thus need to change each of them more. High costs mean fewer people can afford services which means more time in collections and charging those who can pay more. High medical costs drive up malpractice payouts for medical treatment which drives up malpractice premiums which drive up medical costs. etc etc.
Sorry are you saying the rates that are negotiated by insurance companies are too low to cover the actual costs of the hospital? That still doesn't explain where the money is going and why healthcare is so expensive. Why would the hospitals' costs be so high?
It's really, really easy to be broke with a six figure salary. All you have to do is spend 99.9% of it every year.
Have you seen the lavishness of the modern US hospital? The art pieces, high vaulted ceilings on every floor, solariums, gardens, decorative architecture... These things are not free. They are very, very expensive! And at the same time, they are fucking worthless in regards to making people healthy. I pay my insurance because I want to be healthy, not so the hospital I go to looks pretty. They are marketing machines that live outside their means, and I should not owe them $5k for stitches. It's fucking insane, and it's greed to use those massive markups on people who are in life or death situations. It's equivalent to wartime profiteering.
Hospital profit margins are razor thin in the US. Their pricing is so convoluted because they have to come up with inane contracts with insurance companies to squeeze out every dollar they can.
In some instances, doctors in private practices have told me that taking Medicare or Medicaid means making less than minimum wage for certain procedures because the rates are fixed at such low values. In other cases, ER and intensive care units make nothing because they cannot legally turn anyone away for not being able to pay.
All of that has to be made up somewhere, and bilking insurance companies when they can are how they stay afloat.
Big companies can take the hit on high insurance rates. Drug makers live in boom and bust cycles (drugs are either fabulous money makers or bottomless pits that suck money from research, to testing, to the famously expensive FDA approval process).
The people hurt the worst are the small business employees and owners, the self employed, and the part time workers who can't afford to have the hospital come after them.
I have some questions about American health care system.
If patients are being charged this much for anything, the money must be going to someone? Who's making all the money? Drug companies? Hospitals? Health insurance? Doctors or nurses? Why don't people honestly follow where the money end up and actually solve the problem once and for all. Increase the supply of X or many other bottlenecks by deregulation and result in decreased price?
The costs are absurd because of insurance. People are too isolated from prices and all the money the government pumps into the system inflates prices.
The whole healthcare cost problem would disappear almost immediately if people paid medical bills directly and were reimbursed for only the truly unforeseen medical expenses. If doctors and hospitals were forced to compete on price like normal businesses, costs would plummet. It's the lack of a real market that's the problem. What other business has no prices out on display or in advertisements? Try calling up a hospital and asking the cash price for a procedure. It typically doesn't even exist; they're only set up to bill insurance companies and the government at different rates.
"Healthcare in the US is socialism without a central plan and capitalism without markets or prices."
Hospitals charge exorbitant fees because they know that insurance will only pay for a fraction of whatever they ask for.
The real crime is how much of our healthcare dollars fund a behemoth of a bureaucratic apparatus for this cat and mouse game where insurance companies deny payment on technicalities and hospitals file counterclaims and overbill to compensate. An obscene amount of money is burned here and not a cent of it adds any value to patient care.
This is a big reason of why we spend so much more on healthcare than European countries and don't have better results. And it's an excellent datapoint against the idea that the private sector is always less wasteful than the public sector.
As an aside, the vast majority of what the hospital does collect goes to the hospital itself, not to the physician. If the sticker of price a surgery is $50000, you can expect the surgeon to get about $1000 of that.
Except that every company involved in the healthcare industry in America (drug companies, insurance companies, hospitals, etc.) make hundreds of billions (or trillions) in profit each and every year.
The reason for the high prices is because healthcare in the US is an extremely, extremely lucrative for-profit industry.
Cry me a river. The more I've learned about it, the more it seems like hospitals are the ones making the majority of the profit in the US's strange and byzantine healthcare system. The cost of their services are generally absurd, and not adequately balanced by customers and competition because 'insurance will pay for it'.
High charges of low cost items are because of the amount of free care hospitals provide. I'm a physician in South Carolina and I take care of a tremendous number of fully employed people with no health insurance. Those of us with insurance pay for those without by paying higher costs. This gentleman would have probably received the same treatment in the US (at least at my facility) and received a $300,000 bill, of which he would probably never pay (bc he cannot). That artificial aortic graft sewn in probably cost the hospital $1500. It doesn't receive that for free. Nor does it expect the 7-8 people in the operating room or the post operative care to work for free. My hospital has an operating profit of less than 1% mainly because it provides so much free care. All I have to do to take care of a patient is declare it an emergency and there is no stopping of whatever care I feel is necessary to care for the patient, e.g., a newly diagnosed cancer patient. This, I believe, is true throughout the USA. And most of the people I take care of have jobs, but no insurance. Ask how many people that clean hotel rooms have insurance. How about people that work call centers? That, plus monopolist practices of the pharmaceutical industry and you have high costs.
And if you want physicians to make 100k - 150k, don't expect me to work 80+ hours a week, not including call. Attorneys give me $500 / hr for consultations, but in my real job I make $80 / hr, but just work a ton more hours a week (no overtime bonus, tho). I don't get sick days. I don't get vacation days. When I don't work, I don't get paid. When I was in private practice, when I didn't work, I not only didn't get paid, but still had to pay rent / malpractice / insurance / electric / employees which was about $5000/week for me. So taking a week off cost me lost revenue and $5000/week. Medicare pays $600 for taking out a gallbladder. Do the math to see how many have to be done to take care of the bills.
The problem with healthcare is that inefficiency and lack of transparency is profitable.
The government has deep pockets, and everyone is trying to get as much money as they can from it. Pharmaceutical industries, insurance providers, healthcare facilities, etc.
Pharmaceutical research is important and expensive, but there must be a way for that research to happen without doing stupid shit like making insulin expensive.
Labor costs in healthcare are high, but there must be a way to not make a bag of water with salt not cost $500.
People pay for costs that are completely unrelated for the products and services they are receiving.
A big element here is that the free market is being choked out. Consumers walk into healthcare facilities without any idea what they will be paying when they walk out, and therefore have no ability to choose one facility over another based on price.
Because that ability doesn't exist, there is no downwards price pressure anywhere at the consumer level for medical services.
I think we'd see a lot more results if we asked 'why aren't these facilities putting more efforts into reducing costs' rather than asking 'what makes this so expensive?'
The main issue with healthcare in the u.s. actually has to do with Medicare, Medicaid, and social security.
All of the state options pay only ~10% of what they are billed no matter how large the bill (there is also usually a cap). This forces hospitals to charge exorbitant prices. Private insurance options pay larger percentages: 12 - 50%. People without insurance usually will pay either 100% or 0%, with some people negotiating in between.
Honestly, the easiest way to fix it is to get rid of Medicare, Medicaid, and social security or force everyone to pay 100% as opposed to negotiating lower rates.
Fyi I worked in a medical billing office for 5 years. We did payment processing for about 30% of all hospitals on the east coast and Midwest
That's kind of the core of the problem with healthcare in the US. We treat it like a market where you can't see the prices and where customer are forced to buy the product or die. Then we wonder why it's so expensive.
And the reason that healthcare costs $1,000/month, is because this system has caused prices to spiral completely out of control, beyond the level of lunacy. Due to multiple agents in the market behaving of their own free will.
Every other developed country manages to provide equivalent care for a fraction of the price. So much for the free market optimizing for better outcomes, eh?
After years of covering the healthcare industry I would argue it is actually an easy answer: people have been too far removed from the actual cost of healthcare. Nobody knows who and how their healthcare is paid for which is why one night in an emergency room can cost $15,000, completely defying all the laws of supply and demand. Without getting into pricing theory, a general rule of thumb is that if you provide a service that is unaffordable even to the rich (so 99.9% of society), market forces will put downward pressure on your pricing. This doesnt happen in healthcare because everyone but the individual pays for it (it either comes from your work, your insurance company, subsidized by someone else or the government).
The problem with our healthcare system is that too much money goes to drug companies, medical device makers, and insurance companies and not enough makes it to the people actually providing the care. Its a bit more complicated than that, I'd admit, but that's the TLDR version.
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