How the US Healthcare System Stacks Up

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4 min readSep 12, 2018

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by Joanne Peng

The United States spent $3,500,000,000,000 on healthcare in 2017. This 13-figure price tag currently accounts for just over 1/6th of the nation’s GDP (1). In comparison, the government spent roughly $590 billion on defense in the same year (2).

What are the reasons for such high costs, and how does the burden fall on America’s consumers?

It is a simple additive effect in the healthcare delivery system: beginning with the costs of drugs and finishing with the cost of treatments, almost all factors are generally more expensive in America than it is in any other country. Here are 4 factors in America’s healthcare delivery system that are drastically different compared to their counterparts.

Drugs are more expensive. In five of the six selected drugs, America pays the most per month. Adding up the total costs, the expensiveness of America’s drugs in comparison to China and the United Kingdom is evident. An average American using pharmaceutical drugs would have to pay almost three times the cost of drugs in UK, and almost double the cost of drugs in China (4).

Figure 1: Total Cost Per Month of Selected Six Drugs from Top Ten Drugs

Figure 2: Selected 6 of Top 10 Drugs in the World, Cost Per Month Including Discounts (3–5)

2. Tests are more expensive. Simple diagnostic tests such as the MRI and CT scan cost 1/9th of the expenses in China, and a day in the hospital is ten times more expensive in America than it is anywhere else. When 1 in 4 Americans refuse medical care because they cannot afford it, expensive but necessary tests in hospitals are a prime suspect.

Figure 3: Cost of a Hospital

Figure 4: Selected Tests(4,6)

3. Treatments are more expensive. According to the selected treatments, on average UK residents spend about 62.5% less money total on standard treatments and surgeries than American citizens. In particular, bypass surgery is about $50,000 more expensive in the US than in the UK, one of the most common but necessary heart surgeries performed each year.

Figure 5: Selected Treatments (10)

4. Administrative costs are more expensive. In the United States, administrative costs account for more than 8% of total costs. In other countries, this ranges from 1% to 3% (11).

Figure 6: Administrative Costs in USA versus Other Countries

The $3.5T continues to grow from year to year, and the burden will be on citizens to, quite literally, cough up what money they have. At the end of the day, the American healthcare system does indeed stack up high in costs against its counterparts.

But what the healthcare system does do is promote innovation. The United States is home to a global hub of healthcare innovation that rivals and almost outstrips any other country’s. America tops global research charts. It has the highest number of Nobel laureates. It has the largest market for clinical trials. It has filed the largest number of international patents (12). And it headquarters many of the world’s largest technology companies (13).

The $3.5T healthcare market provides unparalleled benefits to innovation and unparalleled costs to citizens. And what America needs to do is reconcile the costs with the benefits.

Upsured is a disruptive healthcare company aiming to reduce costs and expand scope of care. We provide an affordable “add-on” to conventional high-deductible health insurance plans to help young people cover unexpected medical bills.

We are reimagining health insurance to decrease the burden of medical bills on millennials. Even after employer offered insurance, millennials are being faced with deductibles that they cannot afford. We are using risk sharing to create an insurance “add-on” that is removing the weight of high premiums and deductibles. For a per employee rate, we allow companies to leverage the healthfulness of the employee majority to cover the sick minority. By covering deductible costs for a calendar year, we are making sure millennials get the healthcare they deserve. To get in touch and learn more, visit www.upsured.com.

References

How the US Healthcare System Stacks Up

Written by Upsured