Healthcare costs are outrageous in the United States. Yet, despite all of the chatter from politicians and industry leaders on lowering costs for citizens, expenses continue to skyrocket. What – if anything – is the solution to this problem?
Solving America’s Soaring Healthcare Problem
According to a recent Kaiser Health Survey, 80 percent of Americans say the costs associated with prescription medications are “unreasonable” and that the government isn’t doing nearly enough to solve this growing problem. Even more alarming is the fact that one in four people have trouble affording the medication that their doctors prescribe.
While high healthcare costs aren’t really new, the rise has certainly become steeper in recent years. Just take a look at what’s happened this century, and you’ll get an idea of what Americans are up against.
“[From 2000 to 2018] medical care experienced an average inflation rate of 3.49% per year,” one expert explains. “This rate of change indicates significant inflation. In other words, medical care costing $1,000 in the year 2000 would cost $1,855.33 in 2018 for an equivalent purchase. Compared to the overall inflation rate of 2.12% during this same period, inflation for medical care was higher.”
What, if anything, can be done to combat these high costs and make healthcare affordable for all? If the answer were as straightforward as some would like to believe, we would already have it figured out. But it’s also not as challenging as lawmakers would like the general public to believe.
Canada, for example, seems to have it figured out. When an American goes to purchase a prescription drug in the United States, it may cost hundreds or thousands of dollars. But at a Canadian pharmacy, that same drug might be one-tenth of the price. Why is this?
For one, the Canadian government works on behalf of its citizens to set realistic prices for prescriptions and health services. As a result, any prescription that’s considered too expensive isn’t approved until costs come down.
Secondly, the Patented Medicine Prices Review Board (PMPRB) regularly checks prices of existing drugs to ensure they remain at fair market value. Not wanting to lose relationships with Canadian businesses, many drug manufacturers work out special deals to sell medication at lower prices than what’s found in in the U.S. (even though it’s the exact same drug).
While many Americans take pride in the fact that the healthcare industry operates in a free enterprise system where prices can be set according to the laws of supply and demand, it may be time to acknowledge that a new system – like what takes place in Canada – would be better for all citizens.
Telemedicine is another potential solution. Research shows that it’s a cost-saver for both the provider and patient. (Roughly 93 percent of those who have used telemedicine say it’s lowered their costs.)
The technology already exists for telehealth – i.e. remote medical services – yet very few clinics, hospitals, doctors, and patients are fully utilizing it. Part of this has to do with the outdated ways of thinking and lack of patient education. When this friction is overcome, prices for visits and consultations will inevitably come down.
In addition to lowering drug prices and making telehealth services more widely available, there would be tremendous benefit to increasing competition among healthcare providers – something that’s become virtually non-existent over the last couple of decades.
At a recent healthcare summit, economist Martin Gaynor estimated that roughly 1,700 hospital mergers have occurred over the last 20 years. Most urban areas now have just one to three hospital systems – a steep decline from previous years. And he believes that the lack of competition has a large part to do with the rising costs of healthcare. Introducing fresh competition could make an impact in years to come.
Work Remains to Be Done
America has some of the most expensive healthcare costs in the entire world. And while people talk about the problem, nobody ever does much about it. It’s time for the American people to put pressure on politicians, lawmakers, and healthcare companies. Until there’s enough support for a revolution, the status quo will continue.
