Why are medical costs in America so high?

There are several reasons for the high medical costs in our country. First and most important, physicians are joined in one of the most powerful trade unions, the American Medical Association. This union campaigns for quality healthcare and regulations in the health industry. Why is this bad? Of course, because of the nature of big, powerful, and influential unions, labour costs increase. This effect is magnified when one’s ability to practice medicine is strongly limited by a lengthy educational requirement. So, in America, medical labor costs are especially costly. These costs are passed onto the consumer. Hence, we have high medical costs. There is also a lengthy argument about the AMA’s power in Capitalism and Freedom, Chapter 9, if one has the interest in further exploring this topic.

Second, the insurance system encourages irresponsibility. The collective nature of insurance is comparable to Hawaii’s old Universal Healthcare system, in which people bought all they want medically because it was “free”. Of course, the result is an increase in insurance costs and a faction within the insurance company that rations medical expenditures. So, the collective insurance system is responsible for some of the aggregate healthcare costs in America.

Finally, America is one of the few remaining developed countries with no public healthcare system. The result is that almost all healthcare innovation must come through American companies. This investment in new cures, vaccines, and medicines comes out of the pocket of the consumer indirectly, and the result is more expensive medicine.

There are plenty of other reasons that don’t need explanation. Americans pay for top notch healthcare treatment not available in other countries. More people are vaccinated in America than anywhere else. Regulations exist that limit medical competition. All of these are also reasons why our costs are so high.

How can we battle this? What is the true answer to limiting healthcare costs? Disappointingly, conservative talk show hosts don’t even have real answers.┬áMost propose subsidies. However, here is how we can cut these costs:

  • Cut regulations that strengthen the American Medical Association
  • End government mandates requiring the purchase of insurance
  • Encourage other countries to privatize their healthcare systems
  • End regulations that limit interstate competition between insurance companies
  • Cut licensing requirements for doctors and nurses

Yes, we can cut healthcare costs without creating an oppressive universal healthcare system. All we have to do is get our voices heard.

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2 Responses to “Why are medical costs in America so high?”

  1. roylatham Says:

    The AMA might like to control the supply of physicians, but they could be easily overridden, and there are many more health care workers than just physicians. Nursing schools get many more qualified applicants than they have the resources to educate. Government could play a role in expanding the capacity to educate physicians, nurses, and technicians. a possibility is to fund educating Americans to be educated overseas, if enough faculty cannot be mustered here.

    The lack of a public health care system does not affect the cost of health care. It affects who pays the cost. Having the government sponsor R&D would increase, not decrease, the total costs. That’s because funds would be allocated for political reasons rather than as a consequence of market forces, and because government lacks the expertise and incentives of the private sector.

    One of the most important reasons that health care costs more in the United States is that Americans have the poorest health lifestyles, so they need more treatment. Diet and exercise are major factors, but also the U.S. maintains a very expensive emergency response system. Traffic accidents, drug overdoes, and violence are heavy contributors to the needs.

    You minimize the factor of receiving better care, but that is important. For example, cancer treatment is very expensive and American survival rates are twice those of Britain.

  2. Judel Morrforus Foir Says:

    I believe you’ve misunderstood my arguments. I am not calling for a national system; however, other nations having national healthcare systems shift R/D burdens onto us. All innovation must come from America, and this causes costs to increase. The FDA amplifies this effect even further by increasing innovation costs.

    Lifestyles and quality also contribute, but in an ordinary situation, the poorer would be able to buy lesser quality healthcare, but the FDA has imposed regulations preventing that from happening.

    Further, your response ignores the history of the AMA’s intervention into the supply of the healthcare workforce. Back in the fifties, there was an increase in the supply of immigrant doctors. This lowered the pay of members of the AMA, and they found a way to leave them out of the workforce: new regulations were lobbied for that would require the licensing test be taken in English.This is only one example; there are many others.

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