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Why does health care cost so much? It’s the prices

Written by Diane Archer

Why does health care cost so much in the US? It is not because we use more services than people in other countries. It’s the prices, the prescription drug prices, the hospital prices and the doctors’ prices.

One key way to address high health care costs is to regulate prices. That’s what every other wealthy country does. And, that’s what Medicare does for hospital and doctor services. The commercial health insurers are either unwilling or unable to rein in these prices. And, at the moment, neither the federal government nor the commercial insurers are able or willing to rein in prescription drug prices.

A January 2019 piece in Health Affairs by Gerard Anderson et al. explains the problem with prices in the US. The difference between what Medicare pays for hospital and doctor services and what commercial insurers pay has increased significantly in the last 18 years. Back in 2000, commercial insurers paid about 10 percent more than Medicare. Today, they pay about 50 percent more than Medicare.

The difference between what the US pays for prescription drugs and what other countries pay is even more significant.  At $1,011 per person (2015), the US spends almost six times more than Poland for prescription drugs.  The US spends about twice as much for prescription drugs as western European countries. Overall prescription drug spending growth in the US was 3.8 percent as compared to 1.1 percent between 2000 and 2015.

In addition to higher health care prices, we spend far more than other countries on administrative costs.

If you’re trying to understand the difference between Medicare for All, the Sanders and Jayapal bills that would improve and expand Medicare and other Medicare “buy-in” bills such as Medicare for America, the Schakowsky and DeLauro bill, check out what each does about prices and administrative costs.

Medicare for All regulates prices and reduces administrative costs significantly. Medicare for America and other proposals that allow people to keep the coverage they have or buy into Medicare neither regulates prices nor reduces administrative costs.

If you support Medicare for allplease sign this petition.

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