The American healthcare system is highly fragmented and complex. With each state responsible for managing its own healthcare system, and a wider system that makes health insurance essentially mandatory, the sector is perpetually exposed to price gouging, monopolisation and lobbying. Patients regularly discover hidden costs, even when they are covered by insurance, and may lose their health insurance leing them unable to access healthcare altogether.
All this complexity adds huge administrative costs. Indeed, administration is one of the biggest black holes in the American healthcare economy – adding between 15–25% extra to healthcare expenditure, amounting to between US$600 billion to US$1 trillion per year.
Hospitals are for-profitUnlike in countries where healthcare is subsidised or government-funded, many hospitals in the United States are owned and operated by private companies. As many as 81.5% of hospitals in the US are privately owned, with around a quarter being for-profit hospitals.
A for-profit hospital seeks to maximise returns on behalf of its shareholders. This means they strive to provide the highest standard of healthcare, so that patients will choose those hospitals over less expensive options; but it also means the price of services, procedures and drugs will be higher in these hospitals compared to others.
Specialists’ salariesDoctors and other medical specialists in the US are among the highest paid in the world. With an erage salary of US$261,226, they come second only to Switzerland, earning nearly US$100,000 more than doctors in the UK (US$169,868) and twice the salary of doctors in countries including Japan, Spain and Sweden.
Because of the cost of employing doctors, patients in the US are expected to pay more for medical appointments and procedures. This is especially true if they are being consulted by highly-trained specialists. The highest-earning doctors in the US are neurosurgeons, who earn an erage of US$763,908 per year.