What Influences Medical Cost in the U.S. Today?

Authored by: Nisha Sodhi

Art by: Michelle Choi

For many American families, the most daunting part of a medical visit comes towards the end of the visit: when receiving the bill. Out-of-pocket medical expenses are significantly higher in the United States than other industrialized countries. Despite lower rates of physician visits, fewer days spent in hospitals, and smaller percentages of inpatient services than other OECD countries, patients treated in the United States are faced with much higher medical costs [1]. The question is, why is that the case? Despite being a highly industrialized and progressive country, why is the United States falling behind when it comes to making medical procedures affordable for citizens? Are these exorbitant costs necessary or do they provide insight into a faulty system that seems to prioritize monetary profit over patient welfare? This article focuses on addressing the aforementioned questions by exploring what goes into establishing medical bills, and then exploring the importance of attaining health literacy for successfully navigating the healthcare industry. 

When assessing American medical costs through a comparative lens, it is clear that these high prices are not a global occurrence. Prior to 1970, the United States had similar medical costs  as many other OECD countries. One explanation for the rise in medical costs after 1970 is the introduction of managed care health insurance plans, in which insurance companies provided services at a reduced cost. However, despite the implementation of such plans, health care expenditures rose from 6% in 1970 to 12% in 1990, suggesting that the managed care plans did little to decrease medical costs [2]. Therefore, since the incorporation of private insurance companies did not yield a significant outcome, there must be other factors that were overlooked when assessing medical billing. 

Another possible factor contributing to increased medical costs are due to how service costs can be left to the discretion of physicians and hospitals. This gives physicians and hospitals the ability to unethically add superfluous costs to a medical bill. These superfluous costs can arise by incorrectly describing certain aspects of one’s medical procedure, such as the amount of time taken up by the physician or the magnitude of the procedure. These actions are more likely to be carried out by profit-seeking healthcare providers [3]. Such practices can be damaging towards the patient-doctor relationship, causing distrust among American patients that prevents them from seeking or accepting medical help. Therefore, finding ways to decrease medical bills would benefit both the business of physicians and hospitals, while also promoting better physical and mental health in American patients [4]. 

To avoid paying for unnecessary costs in one's medical bill, it is important for patients to be aware of the malpractices that occur, and to also feel confident in interpreting and questioning medical billing information. The case study of Jamie Holmes, a patient from Washington state, demonstrates the importance of developing health literacy skills. Holmes was billed for two independent operations instead of one main operation and a smaller procedure for a medical issue the doctor detected while performing the first operation. Even though the doctor said the additional procedure would not cost much, the cost ended up being equivalent to that of a second extensive operation [5]. Since Holmes was able to recognize this discrepancy, she was able to converse with her healthcare provider regarding this subject and demand for a reassessment of her bill. Unfortunately, individuals who lack health literacy will not be able to act as Holmes did, and may end up burdened by a bill that they can not afford to pay. Health literacy is an important tool that allows citizens who do not understand medical jargon to still develop an understanding of the medical procedure performed and the bill created. Furthermore, health literacy provides the patient with the capability to detect any errors that may arise in the medical bill, which would ultimately reduce medical cost, and thereby improve patient quality of care.

There are several factors that influence medical costs. One such contributor could be the establishment of private health insurance plans. However, a greater contributor of exorbitant medical costs appears to be unethical practices in the medical field. Addressing this issue would require effectively assessing the reasonable outlays for a certain physician through analyzing economic efficiency and clinical effectiveness of a procedure [6]. However, to place such a solution in effect, a more proactive effort from the healthcare industry and patients would be required. Furthermore, to combat financial barriers that may arise with the medical bill, it is crucial that patients develop health literacy. Through health literacy, patients would be able to understand the factors influencing the summation of a bill, and ultimately gain autonomy over their healthcare visit.

References

1. Gale, A. (2019). It’s the prices, stupid: Why the United States is so different from other countries. Missouri medicine. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6390800/

2. Wallack, S. S. (1992, March). Managed care: Practice, Pitfalls, and potential. Health care financing review. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4195142/

3. Langston, C. (2024, January 13). How to exercise integrity in medical billing: Don’t distort prices, don’t free-ride on other physicians. The Journal of medicine and philosophy. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10787110/

4. Cunningham, P. J. (2009, March). High medical cost burdens, patient trust, and perceived quality  of care. Journal of general internal medicine.  https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2642571/

5. Leys, T., & Siner, E. (2024, August 19). She was on the surgical table just once but was billed  for two operations. NPR. https://www.npr.org/sections/shots-health-news/2024/08/19/nx-s1-5072975/she-was-on-the-surgical-table-just-once-but-was-billed-for-two-operations  

6. Jencks, S. F., & Schieber, G. J. (1992, March). Containing U.S. health care costs: What bullet to bite?. Health care financing review. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4195141/