One of the factors behind the rising healthcare costs in the U.S. is the growing power of healthcare providers. The mergers and partnerships are common in the U.S. healthcare sector, and such actions often have the undesirable effect of reducing competition and giving more pricing power to the healthcare providers .
Another reason behind the high healthcare costs in the U.S. is administrative costs which accounts for about one-fourth of the overall healthcare spending . The healthcare sector in the U.S. is managed by the private sector to a greater extent than it is in other developed countries. As a result, the healthcare costs remain higher because the private sector doesn’t have the same negotiation leverage that a government has .
One of the most effective solutions to containing rising healthcare costs in the U.S. would be a greater government role in the provision of healthcare services. Even though it may not be possible due to the intensive lobbying efforts of the private healthcare industry, the U.S. would greatly benefit if a single-payer system were to be implemented in the country, just like many other developed countries. First of all, the healthcare costs would rise because the government would have greater negotiation leverage against drug manufacturers and healthcare services providers. Thus, the government would be able to achieve discounts due to factors such as volume buying. A single payer system would also significantly reduce the administration costs which are major contributor towards the high healthcare costs in the U.S.
The healthcare costs may also come down because a single-payer system would lead to a reduction in unnecessary medical costs that drive up costs. The government role may also lead to more efficient use of healthcare facilities which should also drive down healthcare costs.
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- Cutler, D. (2013, November 19). Why does health care cost so much in America? Ask Harvard’s David Cutler. Retrieved March 19, 2016. Web.
- Fuchs, V. R. (2014, July 23). Why Do Other Rich Nations Spend So Much Less on Healthcare? Retrieved March 19, 2016. Web.