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Why Health Insurance is so expensive in America

There are many reasons – Why Health Insurance is so expensive in America. In America purchasing health insurance plan cost you double as compare to other developed countries. As per different survey reports American health insurance industry comprises of approximately $4 trillion. The average cost an American citizen sends in the name of health insurance is round about $7000 per annum.

Despite the huge American healthcare industry, America is ranked as the 37th position in the healthcare system. There are numerous reasons behind this factor that America is not among the top countries with the best healthcare system. Few of the reasons are being covered in this article and you will easily understand the reasons causing the 37th position despite the huge industry of healthcare.

  1. Administrative Cost

As per saying of Harvard economist, David Cutler, Administrative cost is one of the major reason for the highest healthcare costs in America. To run the healthcare system astronomically, a huge amount of money is needed. As per one survey around 25% of total healthcare, the cost is paid in administrative work which is much higher as compared to that of in other countries.

David Cutler presented the example at National Public Radio that Duke University Hospital is having 1300 no of clerks for managing billings of the hospital. In other countries, a single-payer system is used and no large number of clerks are required that is one of the major reason that in America healthcare costs are sky touching.

  1. Drug Cost

Another major factor behind the high healthcare costs in America is the Drug Cost. In other European and other developed countries costs of drugs are remarkably less than that of in America. For many countries, governments negotiate with the drug makers and compel them to control drug prices.

In America when Congress came into power and created Medicare Part D, Medicare Part D categorically denied the usage of negotiation power with drug manufacturers. SO in America, drug-making companies earn maximum profits over medicines and resultantly health care cost in America becomes so high.

  1. Treatment Expenses

In America, medical practitioners are habitual of using comparatively expensive treatment options. As per the OECD report for the year 2014, American practitioners use 3 times more mammograms, 3 times more MRI’s and 35% more cesarean sections. This practice results in more expenses on the technology-based diagnosis. Another reason for this high cost is that in America people use to get treatment from the specialist doctors while in other countries people use to go to primary care doctors who cost less than any specialist. This factor plays a key role in enhanced health care costs.

  1. Labor laws and Wages

In America, strict labor laws and high wage rates contribute to enhanced healthcare cost. High reimbursement cases are dealt with only specialist doctors. Current health care system with referral decision making costs a huge amount as the wage of a specialist doctor. This factor plays a vital role in the sky touching costs of the health care system. National Commission on Physician wages reforms was the first initiative to address this anomaly of high costs. Commission proposed 12 reforms to control the problem of high wages but tangible outcomes have yet to be received.

  1. Preventive Medication

Preventive medication is another major reason for highly increased healthcare cost. Doctors become extra conscious and they order the extra clinical tests even these tests are not required for the treatment of diagnosis. As per the Gallup survey, around $600 billion are spent in the name of preventive medication.

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