The Affordable Care Act: is an Attempt to Create Competition and Reduce the Cost of Healthcare in the U.S?

Americans pay phenomenally high prices for health care, higher than most developed country in the world. The common response to this fact is that citizens in countries like Australia, Canada, and the United Kingdom receive “free health care” because they pay higher taxes. This is false. The United States actually has equal if not higher taxes for health care per capita than most other countries. In addition, most of those taxes do not provide health care to the majority of people.

Only 28 percent of American citizens use government-funded health care – the elderly, the poor, and government officials. Private health-care, which is usually provided by employers, is a different story. Americans pay substantially more for private health care than any other country. In total, the United States spends 18% of its GDP on health care cost, while Australia in comparison only spends 9%. This can be seen in the huge discrepancy in the costs of procedures/medicine. For example, the average price of an angiogram in the United States is $914; in Canada the average price is $35.

The average price for a colonoscopy in the United States is $1,185; in Switzerland the average price is $655. The average cost of a hip replacement in the United States is $40,364; in Spain the average cost is $7,731. It makes sense that certain procedures would cost a little more because the United States is a wealthier country. However, most procedures do not cost a little more, they cost a lot more. Why? Some will attribute it to the fact that Americans have more hospital/doctor visits. This again is false. Americans visit doctors/hospitals less than most European countries. The hesitancy of hospital visits by Americans does make sense. The cost of seven nights in a Dutch hospital is equivalent to one night in a U.S. hospital. Crucially, this huge discrepancy in prices does not provide better results. This is proven by the fact that the United States is #33 in life expectancy among all countries in the world and many independent studies have shown American health care as sub par in many aspects. Americans pay more for health care due to various reasons. One reason is malpractice suits and defensive medicine. Doctors will do excessive testing to ensure they do not get sued in case something goes wrong. This does have an effect on health care. However, states such as Texas have created reforms to prevent mal-practice lawsuits. This caused health care cost to reduce but only by a measly .1%. Other small factors include doctors and nurses in America being paid more and excess administrative costs (paperwork, marketing, etc.).

Americans also pay one hundred billion more dollars on drugs than other countries in relation to the size of our economy). This is not because Americans take more drugs; it is due to the drugs we take costing more. For example, one month of the drug Lipitor cost an average of $126 in the United States, while in New Zealand a month of Lipitor will cost an average of $6. The main reason we pay more for health care is due to expensive in-patient/out-patient care, which amounts to excess expenditures being five hundred billion dollars per year. This is due to the lack of negotiation in the United States with health care provides, drug manufactures, etc. The UK and most other countries aggressively negotiate with health care providers. For example, the United Kingdom will go to hip-replacement manufacturers and choose one to provide replacement hips for everyone covered under the National Health Service (NHS) in the country. Manufactures thus charge substantially less so they can have a contract with the government to produce the huge amount replacement hips. Without these negotiations manufacturers can charge outrageous prices because it is difficult to put a price on survival/treatment. The upcoming Obama-care reform is an attempt to create competition between health care providers, which in turn would reduce the cost of care.

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