The real reason American health care is so expensive
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
📊 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.
💸 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
💡Private insurance
💡Public insurance
💡Medicare and Medicaid
💡Single-payer system
💡Negotiation power
💡Healthcare pricing variation
💡Political power of healthcare industries
💡Healthcare consumption
💡European model of healthcare
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.
Transcripts
I cannot tell you how obsessed I am with this chart.
It shows exactly what is wrong with America's
conversation about health care.
On one level, you've seen this chart before.
It shows health care spending as a share
of the economy of a bunch of countries.
There's Germany and France and Japan and Canada
and oh! There's America.
But now I want to add something you haven't
seen to this chart.
This is how much of that spending in each country
is private and how much is public.
Here's what's amazing:
America's government spending on health care
on programs like Medicaid and Medicare and the VA -
our versions of socialized medicine.
It's about the same size as these other countries.
These countries where the government runs
the whole health care system!
And then there's our private spending.
It's the private insurance system that makes
health care in America so expensive.
Conventional wisdom says that the government is
more expensive than the private sector.
"It can't say no. It's corrupt, it's inefficient, it's slow."
"If you want something done right
you give it to the private sector."
That is what we hear in America all the time.
And yet here we are with the biggest private sector spending the most.
If you look at the data on physician visits
and hospital discharges, you can get rid of one theory.
Americans don't consume more health care
than people in these other countries.
We don't go to the doctor more than the Germans
or the Japanese. In fact we go to the doctor less.
The difference between us and them
is that we pay more.
Every time we go to the doctor for everything
from an angioplasty to a hip replacement
from a c-section
to a pain reliever.
In America, the price for the same procedure
at the same hospital, it varies enormously
depending on who is footing the bill.
The price for someone with public insurance
like Medicare or Medicaid is often the lowest price.
These groups he covers so many people
that the government can demand lower prices from hospitals and doctors
and they get those lower prices.
If the doctors and hospitals say 'No'
they lose a ton of business.
They lose all those people on Medicare
all those people on Medicaid.
But there are hundreds of private insurance companies
And they each cover far fewer people than
a Medicare or a Medicaid.
And each one has to negotiate prices
and hospitals and doctors are on their own.
And if you're uninsured, you have even less leverage.
Nobody is negotiating on your behalf.
So you end up paying the highest price.
One study found that most hospitals charge uninsured
patients four times
as much as Medicare patients for an ER visit.
Other countries, they don't have this problem.
Instead of every private insurance company
negotiating with every healthcare provider.
There's just this big list.
The country, the central government, they go
and they say, "If you want to sell to us, to all
of our people, then here's what you can charge
for a checkup. Here is what you can charge for an MRI
or a prescription for Lipitor.
And so then whether that bill goes to the
heavily regulated private insurance
companies in Germany or directly to the government
like in the UK.
Each country is telling the doctor or hospital
or drug company how much that bill will be.
And because the government controls access
to all of the customers. It's an offer that hospitals
and doctors and pharmaceutical companies
typically can't refuse.
"I'm going to make him an offer he can't refuse."
In America the idea is that you'll be a consumer.
That you'll do what you do when you go to Best Buy and buy a television.
But that just doesn't work in healthcare.
It doesn't work in healthcare because
you often come and get health care when you're
unconscious, in an ambulance,
when you're scared,
when it's for your spouse or your child
It is a time when you have the least bargaining power.
You are not usually capable of saying, 'No.'
You're not knowledgeable enough to do it,
you're not comfortable doing it,
or you're not conscious enough to do it.
That's why in other countries the government is a
person who can say 'No' for you.
You can say, 'No, that's too expensive
you're going to have to lower your price'
because they do have that power.
Anchor: A new push for single-payer health care
right here in the US.
Demonstrator: What do we want?
Crowd: Single-payer!
Demonstrator: When do we want it?
Crowd: Now!
Anchor: California and others are saying maybe
we should adopt the European model.
Klein: If we decided to create a single-payer system
with one of these huge price lists in the US
There would be nothing to stop
lobbying from hospitals from doctors from
drug companies. And those prices would get influenced.
So we could end up with a single-payer system
that is expensive. Even as expensive as
our current system.
It all depends on how much you negotiate down
the prices and now in America
these groups have so much power because they are so rich.
That it's really hard to get them to bring down the prices.
This is the irony of American healthcare:
It's so expensive that it's become hard to make it cheaper.
All that money they make, that becomes political power.
And years and years and years of overpaying -
those are huge industries now.
And they have a lot of influence in Congress.
Under a single-payer system
if we did drive prices down, doctors and hospitals
they would be paid less than they are right now.
That might mean some of them close
or some go out of business or some move.
It would be really painful. One person's waste
is another person's essential service or local hospital
or their income. But then single-payer
it's not an all-or-nothing choice.
For instance, there's a really interesting section
of Bernie Sanders Medicare-for-all bill.
Where he lays out this interim plan.
It's a plan he wants while he's setting up
his new single-payer system.
And in that plan, he expands Medicare
to cover vision and dental.
And he opens it to nearly everyone.
Not just people 65 and older.
All kids go on Medicare automatically
and most adults can buy in.
That plan, on its own, it wouldn't get American
health care spending far down overnight.
But it would at least begin to recognize
what we already know
and what most other countries already do:
That health care is one of those things the government
can do cheaper and better than the private sector.
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