Why is Healthcare in the US So Expensive Even with Insurance?

Modern medicine is widely recognized as expensive, thanks to advanced machines, exotic tests, and sophisticated scans. The highly specialized training required for healthcare professionals makes their salaries high. However, despite these justifiable costs, the inclusion of an insurance industry seems excessive. Insurance companies, often seen as middlemen, are cheered by the dividends they receive, yet they seem to offer little additional value in direct patient care. If all the money spent on health insurance were instead allocated to actual healthcare, the U.S. could potentially boast the world's healthiest population at a lower cost.

The Price of Middlemen

In the United States, healthcare costs are roughly double that of comparable care in most other developed nations due to a middle layer of insurance companies and gatekeepers. These intermediaries significantly increase costs, as they often require payments from both the public and private sectors. The result is that every time a patient needs to pay, they face two burdens: the cost to the insurance company and the cost to the healthcare provider, effectively doubling their expenses.

By contrast, nations with universal healthcare (UHC) systems absorb the profit-making layer into their government bodies. They operate with a single, managed insurance policy that covers hospitals and staff, ensuring care is available when needed. This streamlined approach eliminates the need for multiple middlemen who take a significant portion of the cost, leading to more efficient and less expensive healthcare.

The Unique Challenge of America's Healthcare System

The United States stands out as the only developed nation without a universal healthcare system. Every developed country with UHC not only has less expensive and more medically effective healthcare systems but also does not face the same issues that plague the American system. Here’s why:

Persistent Problems in the U.S. System

Exploitative Insurance Industry: American private, for-profit insurance companies take a large cut, often in the billions of dollars, which does not go to healthcare but to the industry. This phenomenon does not occur in UHC systems, making them inherently cheaper. Double Payment: Americans who have coverage end up paying both private insurance premiums and taxes for various public healthcare programs (VA, Medicaid, Medicare). This means per capita payments are twice as high compared to the most expensive UHC system, which is Switzerland's, and more than twice as high in every other developed nation with UHC. Administrative Costs: The U.S. system faces sprawling excesses of administrative costs, with private insurance taking the largest chunk while public options like Medicaid have their own administrative costs. This results in wasteful and redundant systems. Affordability Issues: Millions of Americans avoid medical care due to unaffordable deductibles and copays, which have risen to 28% of the population in 2022. This renders their coverage essentially useless for many. Medical Debt: Medical debt in the U.S. is higher than in the entire developed world with UHC. This financial burden often leads to more expensive, crisis-focused care rather than preventative care. Red Tape: Healthcare providers and staff must navigate a complex web of private and highly specific insurance rules, adding to operational costs. Lack of Centralized Negotiation: No single powerful system exists to negotiate pharmaceutical prices, leading to astronomically high drug costs in the U.S. compared to other developed nations.

The Argument Against Higher Taxes

A common myth is that UHC systems pay higher taxes, but the truth is, all UHC systems are inherently less expensive than the highly inefficient and wasteful U.S. system. If the U.S. were to adopt a single-payer system today, people would be paying less in total, since current expenditures on both premiums and taxes already exceed the cost of a properly functioning UHC system. Furthermore, a significant portion of the U.S. population cannot even utilize the healthcare system due to unaffordable deductibles and copays, making the current system even more ineffective.

In conclusion, while the idea of universal healthcare often prompts concerns about additional taxes, the existing U.S. healthcare model is woefully inefficient. Reforming to a UHC system would not only reduce costs but also provide more accessible and effective healthcare for all Americans.