Trending
If you’ve ever stared at a medical bill in disbelief, you’re not alone. Whether it’s a monthly insurance premium, a hospital visit, or the price of a prescription refill, healthcare expenses in America seem to be spiraling without a clear explanation.
As costs go up, hospitals and doctor’s groups are closing at an alarming rate. According to the Wall Street Journal, we are experiencing a shortage of hospital beds in this country. How can the medical industry being facing financial crisis when our costs continue to rise? Where is the money going?
Reason 1: Best of the Best
The year I got married, I slipped and fell on the icy stairs of my apartment. I hurt my back pretty bad. At the time, I had a very-managed care managed care plan. They had their own medical offices a few blocks from my office. To be honest, I did not wait long to be seen by a doctor. He looked me over, felt a few things and told me to go home and take some Motrin. “What about an X-Ray?” He told me this was unnecessary and he wouldn’t approve the procedure.
I was irate. And I told the doctor as much. I demanded an X-Ray. He refused again.
My reaction was uniquely American in nature. As a overall cost and a percentage of GDP, the US spends more on healthcare than any other nation. But why?
My experience shows the first reason: We want the best of the best of care. If I had the same scenario in Berlin or London or Toronto, I would accept the doctor’s suggestion and gone home. Socialized medicine means managing care. You will get care, but not always the care you want in the timely manner you want it. You will wait in line and the ability to appeal or object is limited. That just doesn’t work for Americans. We believe we deserve the best no matter the cost.
Reason 2: Specialization Costs Money
Have you ever seen a specialist? Of course you have. Specialists are all the rage in medicine.
Why?
Because specialists make more money than general practitioners. And doctors, like all humans, prefer more money to less money, as a general rule.
So maybe you’re having heart problems. You want a cardiologist. But you’re over 80, so you want a cardiologist that has extensive experience with older patients. And maybe you’re from Northern Europe, which has unique complications associated with cardiovascular problems.
What you are looking for is an experienced cardiologist that specializes in elderly Northern European patients. That’s going to cost more than just your run-of-the-mill cardiologist.
Multiply this situations thousands of times a year and you can appreciate why health care costs are rising. It is financially beneficial for a doctor to refine their specialization. It also probably saves lives. But it costs a lot more for all of us.
Reason 3: Stay Tuned For This Commercial!
I remember about 20-25 years ago that one of the prescription cold medicine companies debuted a new drug to take over for their marquee medicine that was about to come off patent. There were commercials on every channel, during every commercial break.
Today, it’s worse than that. You can’t flip a channel without seeing some specialty medicine advertised on the television. You watch these commercials with their clever visuals and their own theme songs and wonder, “what sort of condition do you need to take that medication?” Odds are, you’re not on any of these meds. Nor are your friends and relatives. So why are they advertising?
Because these meds are very very very expensive. They don’t need a lot of patients to make money. In fact, they’d prefer to have fewer patients. More patients = more competition and likely a drop in prices as economies of scale start to kick in. Possibly the only exception are the five or six GLP-1 medications currently on the market.
In this country, we love our pharmaceutical advertising. It’s practically ensconced next to the Constitution and Declaration of Independence. And we’re likely the only nation that allows this level of pharmaceutical advertising.
You may not see an ad for these drugs in England or France or Canada. And the cost will be a fraction of what it is in the US. . . assuming it’s even available.
Drug companies advertise in the US because the majority of drug company profits – the ones they use to develop the next life-saving treatment – are made right here.
Do we outlaw drug company advertising like we did with tobacco advertising in the 60’s? And if we do, will it lead to fewer breakthroughs? I don’t know. But it’s a big part of why we pay so much for health care.
So Who’s to Blame?
There’s the rub. Who IS to blame? I can tell you. You won’t like it. Go look in a mirror. It’s you and me.
We love having choices. We love having the best of the best. And that leads us to want the latest and greatest drugs we see advertised on TV. It leads us to want the best specialist money can buy – because ultimately, it’s our insurance company paying, right?
If we all want the best of the best, we will all pay for it. And the only way to reduce costs is for all of us to accept a lesser level of care. I don’t know about you, but I don’t see that in our future.
Related: Beyond Retirement: How To Prepare Now for Care, Housing, and Dignity Later