Dr. Martin Hash Podcast

There are a variety of reasons healthcare in the U.S. is so expensive; most people know that insurance is a poor way to handle healthcare costs because insurance is the practice of everyone pooling their money for rare, expensive events, but healthcare is not rare, everyone needs it regularly; therefore the insurance strategy is the main culprit; but there are other, less known and more insidious reasons for the high cost of American healthcare:

• First, the 1973 HMO Act allowed the development of for-profit healthcare organizations; before that they were nonprofit, not Capitalism-based. The profit motive of hospitals adds layers of investors and managers that simply aren’t needed.

• Secondly, the reason Emergency Room costs are so outrageous is that since hospitals are reimbursed by the government for healthcare to non-paying patients, they make the prices as high as they can. Insurance companies have negotiated away those high costs so only the government and people without insurance pay the super-high prices. Obamacare exacerbated this exploitation.

• Plus, there’s perverse incentives for hospitals to charge an exorbitant amount to cash-buyers but accept a reasonable amount from insurance companies because of kickbacks to mysterious insurance brokers that work behind the scenes to manipulate prices.

Another huge component of healthcare cost is psychological; first there's the democracy component: as long as a considerable voting block gets free healthcare, they don't much care if the other people have to pay high prices. And who wants “choice” in healthcare? Everyone wants the very best; and because there’s a status-prestige aspect to healthcare, it becomes a fashion statement: “My Dr. went to Yale,” “My clinic has escalators,” “My nurse held my hand the whole time.” American healthcare offers the very best in glass & chrome medical palaces because the cost of the facilities are presumably indicative of the care. In these circumstances, why would anybody be surprised American healthcare is the most expensive on the planet?