Why is health care so expensive?


By Jack Stevenson - Guest columnist



Jack Stevenson


Analysis by the World Health Organization indicates that 36 countries have better health care than the United States. Yet, America’s health care is, on average, twice as expensive as other developed countries. We spend three trillion dollars a year for health care. That amount is more than $9000 per year for every man, woman, and child in America. If you live for 75 years, that figure would put your health care bill in the $700,000 range. Obviously, something is wrong, wildly wrong.

Martin Shkreli made the news, recently, because he purchased legal rights for a medication that had been on the market for several years and sold for $13.50. Shkreli increased the price to $750. Shkreli isn’t the Lone Ranger; his behavior just happened to be noticed by the news media. Other parts of the medical industry have also been inflicting exorbitant price increases on medicines because there isn’t anything preventing the overpricing of medicines. The U.S. Government funds a lot of medical research. Federal law allows individuals or companies or research universities to patent and own the patent rights to medicines or discoveries that were funded by the U.S. taxpayers. If the research produces a new medicine, the patent holder enjoys a monopoly and monopoly pricing for twenty years or longer. Less expensive “generic” versions of the medicine cannot be introduced until the patent expires.

Federal agencies purchase medicines for Medicare. Federal law prevents those agencies from bargaining for price; they have to pay whatever the drug manufacturer demands. The manufacturer of a drug that sells for a high price in the United States may sell the same drug in Canada or Mexico or other countries for a much lower price. But it is a violation of federal law to import those medicines. Other countries regulate the prices that drug manufacturers can charge. Former U.S. Congressman Billy Tauzin maneuvered the Medicare price bargaining prohibition through congress. Then he resigned and went to work as a drug industry lobbyist at a salary of two million dollars per year.

In some places, especially urban areas where there is a concentrated population, hospitals have merged into conglomerates that wield extensive pricing clout. These conglomerates buy all of the hospitals and clinics and doctor’s practices they can, thus forming medical empires that set their own prices, often as much as 50 percent higher than would be the case in a competitive market. Medical insurance companies pay the higher prices because they have no alternative if they want to sell medical insurance. Insurance companies also expect to make a profit. All of these conditions produce high cost insurance premiums, large co-pays and deductibles, and a requirement to use only doctors and facilities in the insurance company’s network where prices have been pre-negotiated between the insurance company and the medical service provider.

Pharmaceutical companies (drug manufacturers), account for a substantial amount of medical costs. They don’t like to spend research money on drugs that prevent disease or cure disease; they like to sell medicines that are needed for a lifetime. But they do conduct research. One pharmaceutical company recently introduced a new medication to treat spinal muscular atrophy, a condition that often takes the lives of young children. The price is $375,000 per year.

Richard Florida, writing in the July/August 2017, MIT Technology Review, states that “…low-wage service workers…now make up more than 45 percent of the national workforce… .” Obviously, we have to reduce the high cost of American medical care before any health care delivery system can work well.

In 2009, the Obama administration began looking at health care legislation, apparently with the best of intentions. But they were immediately overwhelmed by lobbyists with unlimited amounts of money, lobbyists representing doctors, hospitals, pharmaceutical companies, medical insurance companies, medical device makers, and more. The 2010 U.S. Supreme Court decision called Citizens United v. Federal Election Commission gave constitutional sanctity to the contention that money is speech and the spending of unlimited amounts of money to influence government or elections cannot be restricted. That notion has become a threat to American democracy. Even the most diligent and conscientious members of congress are subject to being targeted by propaganda and lobbying organizations if they vote against the interests of powerful lobbies. Members of congress need to be protected from self-serving lobbies so the congress can represent the best interests of citizens. To accomplish that goal, we are going to have to make it emphatically clear that elections, laws, and regulations are not for sale.

Jack Stevenson
http://www.clintonnc.com/wp-content/uploads/2017/07/web1_Jack-Stevenson.jpgJack Stevenson

By Jack Stevenson

Guest columnist

ReachJack Stevenson is retired, served two years in Vietnam as an infantry officer, retired from military service, and worked three years as a U.S. Civil Service employee. He also worked in Egypt as an employee of the former Radio Corporation of America (RCA). Currently, he reads history, follows issues important to Americans, and writes commentary for community newspapers.

ReachJack Stevenson is retired, served two years in Vietnam as an infantry officer, retired from military service, and worked three years as a U.S. Civil Service employee. He also worked in Egypt as an employee of the former Radio Corporation of America (RCA). Currently, he reads history, follows issues important to Americans, and writes commentary for community newspapers.

comments powered by Disqus