# Why is US healthcare so expensive? **URL:** \ **Category:** Factual Questions\ **Created:** [May 7, 2014, 4:19am UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870 "2014-05-07T04:19:09Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [May 8, 2014, 3:24pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/41 "2014-05-08T15:24:16Z")
> [@bubba\_jr](#): > > The same reason a lot of things are more expensive in this country, > Assholes in suits, and his asshole friends in suits… > > A lot of unnecessary overhead, simply to pay for the assholes in suits… > > A lot of unnecessary paper pushers, which much like the assholes in > suits will never cup you balls and ask you to cough… They have nothing to do > with “health care”, but they add to the expense… > > Much like education, too top heavy, and the people at the top make tons > of money, while the people actually performing the services, doctors, nurses > (teachers on the education front) are taking it in the shorts… > > We also have this giant mess called insurance companies, which is nothing > but paper pushers and assholes in suits… That’s 20% of healthcare dollars right > there. Pretty much every first world country but the US doesn’t have that burden. Very similar to what I once told my bosses about contract programmers… The only thing stupider for our company, than essentially buying a Ferrari for A to do the same job an employee can do… Is buying a Ferrari for A when he pays B the same wage as an employee to do the same job an employee could do… All that medical insurance overhead and processing has to cost something. A hidden benefit with single-payer UHC - every doctor has the same fee schedule, knows what is covered, does not have to have a extended back-and-forth conversation to get approval for a treatment, which may or may not be covered in any one of 1000+ plans that nobody really knows all the details for. Then process the billing paperwork for each… differently. ---
**Author:** ![elfkin477](https://avatars.discourse-cdn.com/v4/letter/e/a9a28c/32.png) [@elfkin477](https://boards.straightdope.com/u/elfkin477)\ **Post date:** [May 8, 2014, 11:16pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/42 "2014-05-08T23:16:34Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Most medical supplies _are_ sold much more cheaply elsewhere. That may be due to (a) government mandates, (b) economies of scale, or (c) the reduced cost of doing business (or all of the above.) It doesn’t hurt that consumers in the US bears the brunt of a huge percentage of drugs’ R&D costs for the entire world’s benefit except our own. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [May 9, 2014, 2:11pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/43 "2014-05-09T14:11:05Z")
> [@elfkin477](#): > > > [@](#): > > > > Originally Posted by **Really Not All That Bright** > > Most medical supplies are sold much more cheaply elsewhere. That may be due to (a) government mandates, (b) economies of scale, or (c) the reduced cost of doing business (or all of the above.) > > It doesn’t hurt that consumers in the US bears the brunt of a huge percentage of drugs’ R&D costs for the entire world’s benefit except our own. A lot of the $100 aspirin and $30 tongue depressors are a simple side effect: - the insurance companies want an itemized bill; the cost for sitting in the hospital with all associated services is very large. Rather than bill “1 day in hospital …$10,000” the insurance companies want a breakdown - so the hospitals nickel-and-dime every bit. Nurse came to give you an aspirin? $100. Dressing needed changing? $100 for the bandage and $200 for the nurse to change it. Sheet service today? $300… and so on. As for R&D costs for the world - well, if you guys want to pay that, if your lawmakers want to make it illegal to get the same drug from Canada (even if you visit personally), if your lawmakers want to make it illegal for the government-mandated seniors’ drug programs to negotiate prices, etc. … Well, sucks to be you. There are plenty of other people in the world, who pay moderately high but usually reasonable prices for drugs and the companies make decent profits, based on the fact they still ship to the rest of the world. Companies being too mercenary in other countries face the threat that the government will mandate prices or license generic copies - almost like lawmakers there care about their constituents. ---
**Author:** ![Desert\_Nomad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/desert_nomad/32/177_2.png) [@Desert\_Nomad](https://boards.straightdope.com/u/Desert_Nomad)\ **Post date:** [May 9, 2014, 3:53pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/44 "2014-05-09T15:53:49Z")
The shielding of costs plays a big role. I needed an MRI and had no insurance. I called around and a well-known place in town wanted $1600 including the reading by a radiologist. I called a local hospital, told them that I was paying cash, and was charged $400. My wife recently got an MRI at the first place. She has insurance so doesn’t care what the insurance company pays. They are paying the full $1600 cost. Obviously the real cost of providing an MRI is less than $400, but the first place make a huge profit - which is why they advertise on TV and billboards and have a new fancy building. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [May 9, 2014, 5:04pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/45 "2014-05-09T17:04:59Z")
Depends what you mean by “real cost”. Electricity and the tech’s time - less than $400. Add in maintenance costs, amortize original purchase of equipment, cost of space in hospital and janitorial/maintenance of that space, the cost of the admission desk procedure, share of assorted liability insurance, etc. - you name it - probably higher. The insurance companies are paying extra in covering the cost of taking care of people who would otherwise die messy deaths in pain because they cannot afford insurance. They also do this with $100 aspirin tablets. Any stats on what proportion of patients end up paying little if anything of their treatment costs? I also once read that the jacked up prices are to compensate as well for the much lower Medicare fee schedules. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [May 9, 2014, 5:08pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/46 "2014-05-09T17:08:35Z")
> [@Desert\_Nomad](#): > > The shielding of costs plays a big role. I needed an MRI and had no insurance. I called around and a well-known place in town wanted $1600 including the reading by a radiologist. I called a local hospital, told them that I was paying cash, and was charged $400. > > My wife recently got an MRI at the first place. She has insurance so doesn’t care what the insurance company pays. They are paying the full $1600 cost. > > Obviously the real cost of providing an MRI is less than $400, but the first place make a huge profit - which is why they advertise on TV and billboards and have a new fancy building. That’s a bit misleading, because the insurer has already done the shopping for you. The providers in their network are the ones they were able to negotiate advantageous rates with. ---
**Author:** ![Desert\_Nomad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/desert_nomad/32/177_2.png) [@Desert\_Nomad](https://boards.straightdope.com/u/Desert_Nomad)\ **Post date:** [May 9, 2014, 5:17pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/47 "2014-05-09T17:17:42Z")
It does not seem like it. When I needed an MRI I called every MRI place in town asking for the “no insurance cash rate”. Place A said $1600, Place B said $400. Obviously I went with the $400 place. My wife recently needed an MRI and because she has insurance, she went to place A (her doctor referred to them). Insurance is being billed their $1600 price. Why couldn’t the insurance company go pay the $400 across town? It is from an auto accident so we know what the insurance company is paying. It seems the $1600 price that place A charges is the same with or without insurance and the $400 price at Place B is available to anyone with cash - and presumably the insurance company too. ---
**Author:** ![The\_Second\_Stone](https://avatars.discourse-cdn.com/v4/letter/t/bbe5ce/32.png) [@The\_Second\_Stone](https://boards.straightdope.com/u/The_Second_Stone)\ **Post date:** [May 9, 2014, 5:27pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/48 "2014-05-09T17:27:24Z")
US healthcare is on a for profit model at every step of the way. Doctors, testing, hospitals, billing depts, etc. It is like FedEx split over several different internal markets, each taking a slice. Government health care is like the post office, all in one, and nobody makes a profit. It cost 50 cents to send a letter via USPS, and $30 to send a letter via FedEx. (Keep in mind that FedEx has huge discounts for volume users.) ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [May 9, 2014, 5:34pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/49 "2014-05-09T17:34:22Z")
> [@Desert\_Nomad](#): > > It is from an auto accident so we know what the insurance company is paying. That’s completely different. Liability insurance carriers don’t have networks, and in fact state law usually provides that the patient has unfettered choice of providers. ---
**Author:** ![lazybratsche](https://avatars.discourse-cdn.com/v4/letter/l/ba8739/32.png) [@lazybratsche](https://boards.straightdope.com/u/lazybratsche)\ **Post date:** [May 9, 2014, 5:59pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/50 "2014-05-09T17:59:09Z")
> [@Lord\_Feldon](#): > > [Only around 20% are run for profit.](http://www.aha.org/research/rc/stat-studies/fast-facts.shtml) True, but many technically “nonprofit” hospitals earn substantial profits by any ordinary definition. They just don’t hand their profits over to shareholders. Rather, they use these profits to pay high administrative salaries and bonuses, and for aggressive expansion. To quote again from the “Bitter Pill” article linked to previously: > [@](#): > > …For the fiscal year ending September 2011, Stamford Hospital — in a midsize city serving an unusually high 50% share of highly discounted Medicare and Medicaid patients — managed an operating profit of $63 million on revenue actually received (after all the discounts off the chargemaster) of $495 million. That’s a 12.7% operating profit margin, which would be the envy of shareholders of highservice businesses across other sectors of the economy. Its nearly half-billion dollars in revenue also makes Stamford Hospital by far the city’s largest business serving only local residents. In fact, the hospital’s revenue exceede all money paid to the city of Stamford in taxes and fees. The hospital is a bigger business than its host city. > > There is nothing special about the hospital’s fortunes. Its operating profit margin is about the same as the average for all nonprofit hospitals, 11.7%, even when those that lose money are included. And Stamford’s 12.7% was tallied after the hospital paid a slew of high salaries to its management, including $744,000 to its chief financial officer and $1,860,000 to CEO Grissler. > > In fact, when McKinsey, aided by a Bank of America survey, pulled together all hospital financial reports, it found that the 2,900 nonprofit hospitals across the country, which are exempt from income taxes, actually end up averaging higher operating profit margins than the 1,000 for-profit hospitals after the for-profits’ income-tax obligations are deducted. In health care, being nonprofit produces more profit. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [May 9, 2014, 7:09pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/51 "2014-05-09T19:09:31Z")
I seriously doubt any hospital administrator In Canada comes even close to $500,000 let alone $1M. I googled for Canadian health care salaries at random, [http://www.kitchenerpost.ca/news/hospitals-release-exec-compensation-records/](http://www.kitchenerpost.ca/news/hospitals-release-exec-compensation-records/) > [@](#): > > Grand River Hospital president and CEO Malcolm Maxwell has an annual base salary of $320,000, while St. Mary’s General Hospital president Don Shilton takes home a minimum of $228,000. They added about 50% for performance according to the article. So yeah, close to half a mil. and this is the funniest one - [http://www.winnipegsun.com/2011/06/29/wrha-makes-us-sick](http://www.winnipegsun.com/2011/06/29/wrha-makes-us-sick) > [@](#): > > That’s right, on top of all the community and regional directors, executive directors, middle managers and public relations hacks, the WRHA needs 10 vice presidents to run its affairs. > > Or at least it thinks it does. > > They’re all very well paid, too, with two cashing in salaries of more than $200,000 a year and one taking in more than $300,000 annually. > > Even senior deputy ministers who run large departments in the provincial government don’t make that kind of dough. Most deputy ministers make between $130,000 and $160,000. > > But apparently at the WRHA, money is no option when it comes to funding one of the most bloated bureaucracies around. > > Former WRHA CEO Brian Postl retired from the health authority but cashed in his final $450,340 in 2010, the top paid bureaucrat at the WRHA last year. > > Brock Wright was the WRHA’s top-paid vice president last year. He finished second on the fat cat list, taking in a cool $334,556. > > Catherine Cook was the WRHA’s second highest paid vice president last year, with a salary of $227,603. That’s up a staggering 23% from what she was paid in 2008. A 23% raise in two years. Must be nice. The guy that runs a the health organization looking after ALL hospital activity for a moderately large city (I think Winnipeg is just under 1 million people) makes less than half a million dollars a year and the Winnipeg Sun thinks this is far too much. The second highest paid VP makes $227,000 and that’s too high. One US hospital pays its CEO $1.8M and that’s normal for US business. Every wonder where Occupy Wall Street got its inspiration? At least you know why aspirin costs $100 each. ---
**Author:** ![Guinastasia](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/guinastasia/32/5751_2.png) [@Guinastasia](https://boards.straightdope.com/u/Guinastasia)\ **Post date:** [May 10, 2014, 5:05am UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/52 "2014-05-10T05:05:54Z")
> [@Desert\_Nomad](#): > > It does not seem like it. When I needed an MRI I called every MRI place in town asking for the “no insurance cash rate”. Place A said $1600, Place B said $400. Obviously I went with the $400 place. > > My wife recently needed an MRI and because she has insurance, she went to place A (her doctor referred to them). Insurance is being billed their $1600 price. Why couldn’t the insurance company go pay the $400 across town? It is from an auto accident so we know what the insurance company is paying. > > It seems the $1600 price that place A charges is the same with or without insurance and the $400 price at Place B is available to anyone with cash - and presumably the insurance company too. Wanna hear something really sick? I’ve had doctors turn me down for NOT having insurance – even when I offered to pay out of pocket! In fact, I had to stop going to my neurologist, because they no longer accepted self-pay. So now when I make an appointment with a new doctor, I always ask up front if they take self-pay. ---
**Author:** ![Urbanredneck](https://avatars.discourse-cdn.com/v4/letter/u/ea5d25/32.png) [@Urbanredneck](https://boards.straightdope.com/u/Urbanredneck)\ **Post date:** [May 10, 2014, 10:03am UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/53 "2014-05-10T10:03:44Z")
Getting back to the OP. He mentioned India. There must be some reason so many doctors from India move to the US. I’m guessing its because they just dont make much money in India. A huge amount of American doctors are foreign born. ---
**Author:** ![mandala](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mandala/32/95_2.png) [@mandala](https://boards.straightdope.com/u/mandala)\ **Post date:** [May 10, 2014, 12:04pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/54 "2014-05-10T12:04:33Z")
> [@Urbanredneck](#): > > Getting back to the OP. He mentioned India. > > There must be some reason so many doctors from India move to the US. I’m guessing its because they just dont make much money in India. A huge amount of American doctors are foreign born. It’s not necessarily only money (though that counts for a lot). There are many reasons Indians (and pretty much everybody else) want to end up working in the US. It’s not only doctors either. Also, Indian doctors usually make a packet of money. Medical practice is one of the most profitable ventures in India. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [May 10, 2014, 12:19pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/55 "2014-05-10T12:19:07Z")
> [@mandala](#): > > It’s not necessarily only money (though that counts for a lot). There are many reasons Indians (and pretty much everybody else) want to end up working in the US. It’s not only doctors either. > > Also, Indian doctors usually make a packet of money. Medical practice is one of the most profitable ventures in India. In _Big Bang Theory_, Kuthrapali’s father is a gynecologist… _“We’re not rich. We only have four servants and two of them are children!”_ There’s a lot more appeal to living in the USA than money. But there’s a downside. A fellow down the road from me a few years ago had three daughters who were nurses and ended up working in the USA for a while because the money was better and the US was actually hiring. He’d mentioned that two of them returned after a while because they did not enjoy the work - in Canada they had not been exposed to the business of turning people away from the hospital because they lacked insurance. ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [May 10, 2014, 1:33pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/56 "2014-05-10T13:33:15Z")
I know a doctor who came back to Canada from the States for a similar reason: said he was tired of treating people with serious conditions that could have been cured if they had come in much earlier. The standard answer to “why didn’t you come in earlier?” was “cost”. ---
**Author:** ![mandala](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mandala/32/95_2.png) [@mandala](https://boards.straightdope.com/u/mandala)\ **Post date:** [June 5, 2014, 4:12am UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/57 "2014-06-05T04:12:12Z")
> [@md2000](#): > > In _Big Bang Theory_, Kuthrapali’s father is a gynecologist… > _“We’re not rich. We only have four servants and two of them are children!”_ > > There’s a lot more appeal to living in the USA than money. But there’s a downside. A fellow down the road from me a few years ago had three daughters who were nurses and ended up working in the USA for a while because the money was better and the US was actually hiring. He’d mentioned that two of them returned after a while because they did not enjoy the work - **in Canada they had not been exposed to the business of turning people away from the hospital because they lacked insurance**. This happens in the US? Practically everybody I have spoken to have said that US hospitals cannot turn back patients based on their ability to pay. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [June 5, 2014, 4:53am UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/58 "2014-06-05T04:53:11Z")
> [@mandala](#): > > This happens in the US? Practically everybody I have spoken to have said that US hospitals cannot turn back patients based on their ability to pay. They cannot refuse to treat life-threatening ailments, I think is the rule. However, even then, once the patient is stabilized, they send them home. If it’s not life-threatening, then they need not treat everyone who shows up at their door. So if you’d been like my father - bending over to load the dishwasher, he suddenly started vomiting wildly. He was taken to the hospital emergency room, and a doctor looked at him. This was Canada, so after they diagnosed him with a serious inner-ear infection throwing off his sense of balance, he was admitted to the hospital for a few days. My understanding is that a US hospital would have said “you’re not going to die, if you don’t have insurance, here’s a prescription you can get filled, we’ll call a cab to take you home.” People with minor problems and no insurance probably try to self-treat, or hope the problem goes away, until it’s so severe they are forced to go to Emergency. The guy in occupying the desk beside mine is a diabetic since childhood. In the USA, he would never be able to afford the specialist visits that seem to happen every three months or so (and he’s a long-distance jogger, no real medical issues). Without doctors regularly watching him for glaucoma, circulation problems, blood tests, etc. - in the USA he’d probably never see a doctor until he had problems so serious that he’d end up hospitalized. If nobody checks you for adult diabetes - you may find out when you black out and have a car accident; if nobody checks you for glaucoma as you age, your first clue may be severely limited vision. And so on… ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [June 5, 2014, 9:41am UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/59 "2014-06-05T09:41:47Z")
> [@mandala](#): > > This happens in the US? Practically everybody I have spoken to have said that US hospitals cannot turn back patients based on their ability to pay. For reasons **md2000** gives, this half-truth is way off-base. It’s a falsehood useful to both those on the right (“we don’t need ACA, the poor already get free care”) and those on the left (“subsidizing the poor has no added cost, we already give them free care”). It’s mostly nonsense. And this “free” care isn’t free anyway! The indigent patients will be billed. Present assets and future wages can even be seized. My mother got her “free” appendectomy … after signing over all of her savings. ---
**Author:** ![Duke\_of\_York](https://avatars.discourse-cdn.com/v4/letter/d/f6c823/32.png) [@Duke\_of\_York](https://boards.straightdope.com/u/Duke_of_York)\ **Post date:** [June 5, 2014, 12:47pm UTC](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870/60 "2014-06-05T12:47:54Z")
The hospital care in Australia is really fantastic. I’ll give you an example, last year I had an infected toe and was admitted to a public hospital, even though I had medical cover entitleing me to a private hospital. I had my toe removed and was put on 24 hour antibiotics. After 8 days I was sent home and was required to visit every few days for treatment. All this was totally free, there was no cost to me at all, despite having medical insurance, which they were aware of. The cost of my antibiotics was around $250 per day over a 6 week period. This cost was not billed to me. [Previous page](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870.md?page=2) [Next page](https://boards.straightdope.com/t/why-is-us-healthcare-so-expensive/687870.md?page=4)