Explain the factors that contribute to the high costs of healthcare in the U.S.

Question

What will be an ideal response?

Answer 1

1. High costs for healthcare are not adequately explained through analysis of individual-level decisions and behaviors around health. They are more adequately explained by analyzing the structure of the system.
2. The U.S. healthcare system has high administrative costs because the private system for healthcare makes is such that each insurance company has its own complicated policies and procedures for submitting claims.
3. Prescription drug prices are not negotiated by the government (as they are in other affluent democratic nations), and as a result Americans pay the highest prices in the world for drugs.
4. Doctors in the U.S. order more tests and perform more medical procedures than doctors do in other countries. This serves to help pay for the expensive diagnostic equipment they might own and/or to increase their earnings through a fee for service payment structure.
5. Americans also use emergency rooms more than people in other countries do because they often do not have access to affordable preventive care. Emergency care is always more expensive than preventive care.
Learning Objective: 12.2.4 Outline the possible explanations for the high cost of healthcare in the United States.