The debate about healthcare costs in the US seems to be a recurring topic and has once again become a key issue in the 2020 presidential elections. Many have heard how Big Pharma is charging astronomical fees for prescription drugs and how the average citizen struggles to pay for them. Even though the issue of high healthcare costs has received plenty of media attention during the 21 century it seems as though the problem has only gotten worse. Why are US citizens struggling to pay for their healthcare and is there a solution in sight?
According to a study made by the American Journal of Public Health in 2019, the leading reason for US bankruptcies is medical issues which make 66,5% of all bankruptcies. These bankruptcies amount to about 530 000 cases annually and are in many cases filed despite people having health insurance. It is estimated that the national medical debt is about 81 billion dollars and is affecting over 2 million people. The research considering health care costs is highly debated probably due to conflicts of interests. Nonetheless, it is safe to say that medical expenses are causing financial difficulties to many Americans.
American health care costs are one-third higher compared to other OECD countries. In addition, the health care costs as part of GDP has risen from 6% to 17% from the 1970s to this day according to OECD statistics. The increased spending is largely due to higher medical costs but it is also important to mention that chronic illnesses such as diabetes have been increasing and about half of Americans suffers from one of them. Nevertheless, if you were to be hospitalized in the US you would have to pay 60% more compared to the average prices in Europe.
Prescription drugs make a big proportion of medical costs and according to the American Association of Retired Persons, their prices have been rising faster than inflation for consecutive years. This has led to about 19.1% of Americans to become financially burdened by medical costs. The high prices have pushed Americans to buy their medicine from Mexico, Canada or by mail. The US customs estimated that about 10 million citizens are bringing medication through land borders every year. As a part of Bernie Sanders presidential campaign, he travelled on a bus to Canada to buy Insulin. The insulin they bought was one-tenth of the price charged in the US. He then went on to blame the greed of the pharmaceutical industry for this price gap.
The healthcare industry has been blamed for increasing medical costs. In reality, the situation is much more complex. Insurance companies, physicians, pharmaceutical companies, hospitals and shareholders all play a role in the increasing healthcare costs. Corruption is also a factor that can’t be left out even though it might be difficult to prove. The pharmaceutical industry alone has 1274 lobbyists in Washington D.C and have spent over 2.5 billion dollars on lobbying and funding political campaigns in the last decade. This has enabled them to gain political power which has led to increased market power. Market power, patents and lack of government subsidization has enabled pharmaceutical companies to gain the power to increase prices. On the other hand, the pharmaceutical industry usually defends itself by claiming that they need the money for R&D expenses which will lead to new improved drugs. Identifying the problem has become even more difficult as the pharmaceutical companies now fund research which will benefit themselves. This has led to increased controversy about what should be done but, nevertheless, it is clear that medical costs in the US are higher than anywhere else.
The need to reform the healthcare system has been on the democratic party agenda for the 2020 presidential elections. This time there seems to be a growing consensus between the candidates that the health care system is not working properly but the debate lies in how the problem should be fixed. The medicare for all reform has been proposed as a new alternative where one national health insurance plan would cover all Americans. Bernie Sanders argues that this reform would increase the amount people are able to pay in taxes due to improved health and thus the costs due to the reform would be covered. The reform has also been criticised mostly by Republicans as being socialistic and too costly. However, almost all other developed countries are able to provide basic health care for their citizens for reasonable prices and it is obvious that the US could be doing much better than it currently does.