Why U.S. Health Care Is So Expensive (and What You Can Do About It)

If you live in the United States and you don’t live under a rock, you know that the cost of health care in this country is expensive—very expensive. Health care in the U.S. costs roughly twice as much as it does in the rest of the developed world. Some perspective: if our country’s $3 trillion health care industry was its own country, it would be the world’s fifth-largest economy.

And for those of you thinking, ‘I have health insurance so someone else is paying these high costs,’ you’re wrong. Health care costs that are so high means we are all paying too much for health insurance.

Health care coverage comes down to pooling risk, which is a good thing on one hand because it protects us against the unexpected very high costs that can come with getting sick or injured. The downside to pooling risk when health care costs are expensive, however, is that insurers are compelled to ask everyone to pay bigger premiums to cover these high costs.

Our Healthcare System is Expensive Because it’s the Best in the World…Right?

Wrong. The care that we spend so much may not be as good as you think.

In 2000, the World Health Organization (WHO) issued a now infamous report ranking the world’s best health care systems. The U.S. did come in first in something—first in overall health care expenditure, per capita. Our health care system came in 15th in overall performance, even though we spend the most. Shockingly, America’s overall ranking was 37th, behind countries like Costa Rica, Chile, Finland, Morocco, Singapore, Oman, etc.

A 2013 Commonwealth Fund study looked at the health care systems of 11 developed countries. In that study, the U.S. came in fifth in overall quality and was at the bottom of the list for infant mortality. Our country was also the worst at preventing deaths stemming from treatable conditions, including certain treatable cancers, diabetes, strokes and high blood pressure.

The Cost of Prescription Drugs

One of the biggest contributors to the expensive prices we pay for health care comes from pharmaceutical companies. In the U.S., we leave drug pricing up to market competition, and as a result pay higher prices for drugs than other countries where medicine costs are either directly or indirectly controlled by governments.

Our country is by far the most profitable market for drug makers (a dubious distinction). According to Express Scripts, the largest manager of drug plans in the U.S., prices for the top brand-name drugs in this country jumped 127 percent between 2008 and 2014. During the same period, the costs of common household goods only increased 11 percent. It demonstrates that despite the outrage from the Turing Pharmaceuticals debacle, huge price increases are not an isolated incident. Unfortunately, pharmaceutical drug price gouging is actually quite commonplace in America.

(NOTE: This is not to say that Turing and it’s boss Martin Shkrelli are without fault; quite the opposite. Shkrelli is absolutely deserving of the title given to him by the Daily Beast as the “most-hated man in America,” even surpassing the dentist who killed Cecil the Lion)

Reuters came out with an analysis this week looking at the prices of 20 of the world’s best-selling medicines. Conducted by researchers from Britain’s University of Liverpool, the study found that, on average, the world’s best selling medications are three-times more expensive in the U.S. than they are in the United Kingdom. The study also found that U.S. prices were consistently more expensive than in other European markets.

U.S. drug prices were found to be six-times higher than Brazil and 16-times higher than the lowest-price country, which was frequently India.

While the Reuters review is thorough and provides valuable data, it asks more questions than it answers. Why are health care costs so high? Simple: we have a political system dependent on pharmaceutical company campaign contributions, and we have law firms, lobbyists, and print and broadcast journalists dependent on pharmaceutical company clients and advertising.

If you drop enough money, the simplest questions become very complex, requiring decades of debate and study. Rather than address the problem, we get paralysis by analysis, and the whole problem is compounded by a weak regulatory structure and an underfunded U.S. Department of Justice.

What Can be Done to Make Health Care Less Expensive?

See something wrong? Report it – Health care fraud costs our country tens of billions of dollars on an annual basis and puts patient health in jeopardy. On a national level, fraud results in higher insurance premiums for all of us while also compromising the quality of care we receive. Recent cases show that greedy medical professionals are frequently willing to risk patient harm in furtherance of making money via fraud schemes.

So if you suspect that health care fraud being committed, please consider reporting it to a whistleblower attorney who can help you file a claim. It can have a domino effect of saving taxpayer money, cutting health care costs and improving the quality of care we all receive. You may also be eligible for a reward.

Find out what your actual cost of care is – Many insurance companies will disclose at least some negotiated prices to those on their rolls. If your health insurance plan offers this information (especially for things you can plan in advance like imaging tests), take advantage of this benefit. A real world example: people who were scheduled for CT scans or MRIs were called and told about cheaper alternatives of equal quality. Just by questioning the costs associated with their care, these people ended up saving hundreds per scan. More importantly, the move toward cheaper alternatives forced the more expensive providers to reduce their prices.

Look for a smaller insurance network – According to Consumer Reports, signing up with an insurance plan that has fewer providers can save you about 20 percent on premiums. This is because providers give the insurance company price breaks in exchange for fewer competitors. Before you sign up for this type of network, however, make sure that the plan includes all of the doctors, hospitals, labs, etc. that you require, and that all are within a reasonable distance from your residence. Also be sure to ask if they will accept new patients.


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