This article went massively viral, “Why American ambulance rides are so expensive?” The focus is on ambulances, but it applies to all aspects of the US healthcare system. Ambulances are expensive for the same reasons the rest of American healthcare is expensive. There are factors unique to healthcare, and especially in America, that makes it especially resistant to being affordable.
Paying for healthcare is not at all like buying a car, which is often paid in installments, compared to healthcare, which is upfront and all at once. People don’t need it until they suddenly do, and then no expense is spared. The instinctive response is, “Why do I need to pay for healthcare when I am feeling well?” This mindset makes people less willing to invest in preventive care or pay into insurance before they actually need it.
Unlike other consumer goods, healthcare is also heavily subsidized. But this is not the root cause of it being expensive. It’s more like the response to it being expensive, not the cause, as healthcare is deemed essential, unlike that “8k” big screen TV or a vacation to Italy. A lot of discourse gets this causality backwards. The patient is billed upfront for a large amount, but in the end very little is actually paid. This can include ambulance rides or treatment. Consumer goods are the opposite.
Americans have high expectations of their healthcare. The ambulance must arrive soon after it’s summoned and have life-saving equipment and trained staff. I’m sure the ambulance coming late in Russia is not going to garner the same bad press, regulatory action, and lawsuits as in America. Slow ambulances are apparently a common problem in Canada and the UK. If this happened as often in the US, the press and lawyers would be all over it, enticed by juicy settlements.
Lawsuits and regulation are major cost drivers, particularly in the US. Similar to the “call option”, part of what you’re paying for is the option to sue the hospital, doctors, or anyone else involved in your treatment if something goes wrong. Relatively few patients ever exercise that option, but malpractice litigation is expensive, and those costs are ultimately passed on to everyone in the chain of treatment through higher healthcare prices.
By comparison, it’s much harder to sue the NHS for malpractice, and the payouts are much smaller. Socialized healthcare systems offer far fewer legal remedies if something goes wrong. Medical tourism is becoming increasingly popular in response to high costs in the US, but you also waive your rights to legal redress. A common response is, “If there were less regulation, healthcare would be cheaper, like veterinary care.” The obvious objection is human healthcare has much smaller margins for error, and that humans live much longer. Trying to map human healthcare onto pet care doesn’t really work.
Blaming overregulation also falls short too when one considers examples of things which are expensive despite being much less regulated in terms of pricing, such as sports cars, stadium box seating, or private jet chartering. Or personal computers in the ’90s, which cost in today’s dollars between $3,000-4,000 (compared to typically < $1,000 now). There were many brands (e.g. Dell, Compaq, Gateway, IBM, etc.) competing to sell computers in what could be considered a “free market,” yet they were still expensive. The same is true of private jets or sports cars, in which there are also many brands competing (e.g. Bombardier vs. Gulfstream).
Rather, healthcare is expensive, not so much because of too much regulation, but because everything about healthcare is inherently expensive owing to the high demands placed on it and little room for error, from developing cutting-edge drugs, to life-saving hospital accommodations, modern machines, expert doctors and other staff, or transporting patients in what are effectively mobile hospitals.
It’s like asking, “Why can’t we make sports cars affordable?” Because sports cars cost a lot of money to build for the performance expected of them. Likewise, healthcare is expensive because patients expect the latest and most effective drugs and other life-saving measures. The failure rate of drug development is very high, and this cost must be passed on to patients or the government for companies to have an incentive to develop drugs. Foreign countries have lower prices for the same brand drugs, because much of the cost of pharmaceutical R&D is recouped in the US. Drug companies develop drugs knowing that the US government will subsidize them, but the upside is newer and better treatments.
There is no outrage about the unaffordability of luxury cars or private plane chartering, because obviously those are not deemed essential. You can just fly commercial or buy a non-luxury car and get the same transportation value or utility. If healthcare likewise were limited to old drugs and non-life-saving accommodations and slow transportation, costs would fall, but so would survival rates. The public rightfully would be livid at this and demand that something be done. Opting for second-best works perfectly fine for consumer goods, such as choosing the 4k TV instead of the 8k one, but watching TV is not life or death.