The real reason American health care is so expensive

Vox

30 Nov 201705:41

Summary

TLDRThis video critiques America's healthcare spending, highlighting how government programs like Medicare and Medicaid spend about the same as fully public systems in other countries. However, private sector costs in the U.S. inflate overall expenses, leading to higher prices for medical procedures, regardless of service consumption. The video argues that healthcare isn't like other consumer services, where competition drives costs down. It advocates for a single-payer system that could potentially lower prices, though entrenched interests make reform difficult due to political and economic power.

Takeaways

📊 America's health care spending, especially in the private sector, is significantly higher than other developed countries.
💡 The U.S. government spends about the same amount on public health care (Medicare, Medicaid, VA) as other countries with fully public systems.
💰 It's the private insurance sector in the U.S. that leads to higher overall health care costs.
🚫 Conventional wisdom that private sector is more efficient than government doesn't hold true in health care, as private insurance makes U.S. health care expensive.
🔍 Americans do not consume more health care than people in other countries, but they pay much higher prices for the same services.
🏥 Prices in U.S. health care vary greatly depending on who is paying the bill—public insurance like Medicare often gets the lowest rates.
🤝 Other countries have centralized systems where the government negotiates fixed prices for health services, controlling costs.
📉 The fragmented private insurance market in the U.S. weakens its bargaining power, leading to higher prices, especially for uninsured patients.
💼 The U.S. health care system doesn't allow consumers to make choices like in retail, as people often seek health care during emergencies or when they lack knowledge or bargaining power.
⚖️ Moving to a single-payer system in the U.S. could potentially lower prices, but powerful medical and pharmaceutical lobbies may resist, keeping costs high.

Q & A

What does the chart in the script illustrate about health care spending in America compared to other countries?
-The chart shows that America's government spending on health care, through programs like Medicare and Medicaid, is comparable to other countries where the government runs the entire health care system. However, America also has a much higher private sector spending, which significantly drives up overall health care costs.
Why is private health care spending in the U.S. so high compared to other countries?
-Private spending in the U.S. is high because private insurance companies cover fewer people than government programs like Medicare, leading to higher prices. Additionally, uninsured individuals face the highest costs, as they lack negotiating power.
Is the high cost of health care in the U.S. due to Americans consuming more health care services?
-No, the script notes that Americans do not use more health care services than people in other countries like Germany or Japan. The difference is that Americans pay more for the same services, procedures, and treatments.
How do Medicare and Medicaid manage to secure lower prices for health care services?
-Medicare and Medicaid cover a large number of people, giving the government significant leverage to demand lower prices from hospitals and doctors. Providers cannot afford to lose all the patients covered by these programs, so they agree to lower rates.
What is the problem with private insurance companies negotiating prices individually?
-Private insurance companies each cover fewer people than government programs, and they negotiate prices individually with hospitals and doctors. This fragmentation weakens their bargaining power, leading to higher prices for procedures and treatments.
Why do uninsured individuals pay the highest prices for health care services?
-Uninsured individuals have no negotiating power, so they are often charged the highest prices for health care services—sometimes up to four times more than what Medicare pays for the same service.
How do other countries avoid the issue of fragmented price negotiation in health care?
-In other countries, the government often sets a centralized price list for health care services. Whether the bill goes to private insurance companies or directly to the government, there is a set price for each service, ensuring consistent and lower costs.
Why is it difficult to lower health care costs in the U.S. even if a single-payer system is adopted?
-Lobbying by hospitals, doctors, and drug companies makes it difficult to lower prices in a single-payer system. These groups are very powerful and wealthy, making it challenging to drive down costs through negotiation.
What is the political challenge of implementing a single-payer system in the U.S.?
-The U.S. health care industry is a huge economic sector with significant political influence. Reducing prices would affect incomes and lead to resistance from hospitals, doctors, and pharmaceutical companies, many of whom have strong lobbies in Congress.
What is Bernie Sanders' interim plan for health care reform before a full single-payer system is established?
-Bernie Sanders' interim plan proposes expanding Medicare to cover vision and dental services and allowing nearly everyone, including children, to access Medicare. This would begin to lower health care costs gradually without fully transitioning to a single-payer system overnight.

Outlines

00:00

📊 America's Complex Healthcare Spending Problem

The speaker expresses their obsession with a chart highlighting what's wrong with the American healthcare system. It shows health care spending as a share of the economy across various countries. Surprisingly, America's government spending on health programs like Medicare and Medicaid is on par with other countries where the government runs the whole system. However, the private insurance sector in America is responsible for making healthcare significantly more expensive. Despite the conventional belief that the government is inefficient, the reality shows the private sector drives costs higher.

05:01

💸 Why Healthcare Costs So Much More in America

Contrary to the theory that Americans consume more healthcare, the speaker emphasizes that Americans actually visit the doctor less than people in countries like Germany or Japan. The difference lies in the costs: Americans pay more for each visit or procedure. Prices vary depending on whether the patient has public or private insurance, with uninsured individuals often facing the highest prices. Unlike in other countries where the government regulates healthcare prices, in America, each private insurance company must negotiate prices individually, leading to inconsistencies and higher costs.

⚖️ How Price Negotiation Works in Other Countries

In other countries, there is a standardized price list for healthcare services negotiated by the government. Whether the insurance is public or heavily regulated, healthcare providers are bound by these prices because the government controls access to a large number of customers. This centralized price control allows countries to keep healthcare costs manageable, a stark contrast to America's decentralized and fragmented system, where negotiation power is scattered among numerous private insurance companies.

🏥 The Problem with 'Consumer' Healthcare in America

The speaker criticizes the idea that healthcare can function like consumer goods, where patients act as price-conscious shoppers. In reality, people often seek healthcare when they are vulnerable, unconscious, or in need of urgent care, making price negotiation impractical. In contrast, other countries have governments that negotiate prices on behalf of their citizens, ensuring affordability and preventing individuals from being overcharged in moments of distress.

📢 Single-Payer Healthcare Push in the US

The concept of single-payer healthcare is gaining traction in the US, with calls for adopting European models. However, the speaker highlights that creating a single-payer system in America could still be expensive due to lobbying from powerful hospital, doctor, and pharmaceutical groups. These industries have amassed wealth and political influence, making it difficult to drive down costs even under a unified system.

⚡ The Political Power of the Healthcare Industry

America's healthcare system is so expensive that reforming it has become increasingly difficult. The industries benefiting from overcharging have gained significant political power, making it challenging to lower prices. Moving to a single-payer system might cause financial strain for some hospitals and providers, potentially leading to closures. Nonetheless, single-payer healthcare is not an all-or-nothing decision, and incremental changes like expanding Medicare could offer a solution.

👩‍⚕️ Expanding Medicare as a Gradual Reform

Bernie Sanders’ Medicare-for-All bill proposes an interim plan that expands Medicare to cover vision and dental while allowing most adults to buy into the system. This plan would not drastically reduce healthcare spending overnight, but it would mark a shift towards recognizing that government involvement in healthcare can be more cost-effective and efficient than private-sector alternatives. The proposal aligns with what other countries already do to make healthcare more affordable.

Mindmap

Keywords

💡Health care spending

Health care spending refers to the total amount of money a country or system spends on healthcare services, including hospitals, doctors, medications, and insurance. In the video, the comparison of America's health care spending to other countries illustrates how the U.S. spends significantly more, despite not achieving better health outcomes. The high costs are primarily driven by the private sector, unlike in other countries where government spending controls the prices.

💡Private insurance

Private insurance refers to health insurance plans that are provided by non-government entities, often through employers or purchased individually. In the U.S., private insurance plays a large role in driving up health care costs, as highlighted in the video. It contrasts with public systems in other countries, where government involvement keeps healthcare costs more controlled.

💡Public insurance

Public insurance refers to government-funded programs like Medicare and Medicaid, which cover healthcare costs for specific populations such as the elderly, low-income individuals, and veterans. The video explains that the U.S. public sector already spends as much on health care as other countries, but the additional costs from the private sector make the system more expensive overall.

💡Medicare and Medicaid

Medicare and Medicaid are U.S. government programs that provide healthcare coverage to older adults, people with disabilities (Medicare), and low-income individuals (Medicaid). The video points out that Medicare and Medicaid can negotiate lower healthcare prices because of their large patient base, a power that private insurers and uninsured individuals lack.

💡Single-payer system

A single-payer system is a healthcare model where a single public or government agency handles health care financing while providers remain private. In the video, countries with single-payer systems are shown to have lower health care costs because the government can regulate prices directly. The video discusses proposals for implementing such a system in the U.S., with potential benefits and challenges.

💡Negotiation power

Negotiation power refers to the ability of large groups, like governments or major insurers, to negotiate lower prices for healthcare services because they control access to large numbers of patients. In the U.S., Medicare has this power, while private insurers and individuals do not. This lack of negotiation power for private insurers leads to higher overall costs, as described in the video.

💡Healthcare pricing variation

Healthcare pricing variation refers to the large differences in prices for the same medical procedures depending on who is paying. In the video, it is noted that uninsured individuals or those with private insurance often pay significantly more for the same services than those covered by Medicare or Medicaid due to the lack of a centralized price control system.

💡Political power of healthcare industries

The political power of healthcare industries refers to the influence that hospitals, doctors, and pharmaceutical companies wield over policymakers due to their wealth and size. In the video, this is cited as a major obstacle to reducing healthcare costs in the U.S., as these industries use their influence to resist price regulations that would lower their profits.

💡Healthcare consumption

Healthcare consumption refers to the use of healthcare services, such as doctor visits, surgeries, and medications. The video debunks the myth that Americans use more healthcare services than people in other countries, noting that Americans actually consume less healthcare but pay much more due to higher prices for each service.

💡European model of healthcare

The European model of healthcare generally refers to systems in which the government either directly provides healthcare or tightly regulates healthcare prices. In the video, this model is contrasted with the U.S. system, showing that countries like Germany and the UK manage to provide universal healthcare at a lower cost by having the government negotiate prices or set standardized price lists.

Highlights

The chart reveals that the U.S. government’s healthcare spending is similar to other countries with fully socialized systems.

Private sector spending in the U.S. is what drives the high overall healthcare costs.

The conventional wisdom that the private sector is more efficient than the government is contradicted by U.S. healthcare spending data.

Americans do not consume more healthcare services than citizens in other developed countries, but they pay more for the same services.

Medicare and Medicaid patients pay the lowest prices because the government can negotiate better rates with hospitals and doctors.

Private insurance companies, covering fewer people, lack the negotiating power of Medicare and Medicaid, leading to higher prices.

Uninsured Americans pay the highest prices for healthcare services, sometimes up to four times what Medicare patients pay.

In other countries, the government sets fixed prices for healthcare procedures, creating a more streamlined system.

The consumer model of shopping for healthcare, like buying a TV, doesn’t work in the U.S. because of timing and emotional stakes involved.

Americans lack the bargaining power to negotiate lower healthcare costs, especially in emergencies or when unconscious.

The idea behind single-payer healthcare is that the government could negotiate prices and lower overall costs.

Lobbying from hospitals, doctors, and pharmaceutical companies in the U.S. could prevent a single-payer system from reducing costs effectively.

The U.S. healthcare system is so expensive and entrenched that it’s difficult to reduce prices without severe economic disruption.

Bernie Sanders’ Medicare-for-all bill includes an interim plan that expands Medicare coverage and opens it to more people.

Expanding Medicare wouldn’t drastically reduce healthcare spending overnight, but it would recognize that the government can provide healthcare more efficiently.