Reasons Your Healthcare Costs Are Going Up

The blatant price gouging of life-saving medicines that topped recent news  headlines should serve as a signal to the public about the kinds of  bottom-line-oriented strategies that continue to drive up American
healthcare costs.

News of the practice started to surface in February when Canada's Valeant  Pharmaceuticals International Inc., purchased the rights to two heart drugs— Isuprel and Nitropress — and on the same day jacked up the prices on
those drugs 212 and 515 percent, respectively.

"Our duty is to shareholders to maximize [product] value," Valent's  spokeswoman told The Wall Street Journal. The newspaper noted in its  coverage that the practice of buying the rights to undervalued drugs and  then promptly increasing the prices of those medicines is becoming  increasingly common among pharmaceutical companies.

Then, Turing Pharmaceuticals announced in September that it planned to  dramatically increase the price of Daraprim, a medicine that's use to treat  a rare but deadly infection, from $13 to $750 a pill. Turing and it's  32-year-old CEO, Martin Shkreli, were immediately the center of a public  relations firestorm that included presidential candidate grandstanding.

"Pharmaceutical companies that acquire an existing affordable drug that  people rely on and then turn around and charge a fortune for it just bet on  the fact that desperate people will find some way to pay for it," Hillary  Clinton said during a campaign stop. "That's price gouging, pure and  simple."  Shkreli has since been dubbed "the most hated man in America" and "the face  of corporate greed."  The company's public and media relations crisis grew so big so fast that it  threatened Turing's financial stability. Turing has subsequently announced  that it will back down from the $750-per-pill price on Daraprim (without  actually announcing what the new price of the drug will be.)

Hedge Funds Over Humanitarianism


Just because one "Big Pharma" company was forced to recoil from its  money-grubbing, which ultimately resulted in a devaluation of Turing stock,  there remain other factors within mainstream medicine today that have  equally dramatic effects on the overall cost of medical services and  products. These factors play a much bigger role in the increased cost of  healthcare than the issue's most common scapegoat: medical malpractice  lawsuits.

That fact is that medical malpractice cases only account for about two  percent of American healthcare dollars spent, according to 2010 research  from the Harvard School of Public Health. And that amount is falling.  Other studies have pegged the impact of medical malpractice at no more than  0.5 percent of healthcare costs.

A Fragmented System

Although the Affordable Care Act means that more Americans than ever now  have health insurance, Congress has yet to address the fact that multiple  healthcare agencies within the medical system offer duplicate services
within a single community.

That's because where a person receives their healthcare is largely dictated  by their personal economics.

For instance, while a high-paid worker with premium health insurance can  probably select from a number of nearby doctors, low-income Americans are  shuffled into facilities that specifically accept Medicaid. And other  groups of Americans, such as the self-employed or service personal and  their families, have other specially designated care facilities.

In addition to making each stop along this healthcare continuum that much  more expensive, this fragmented service dynamic also leaves neighborhood  hospitals struggling to cover the demands of expenses related to treating
the very seriously ill.

The High-Tech Chokehold

It is one of the major ironies of contemporary business: Technological  advancements tend to make work easier, faster and cheaper in most  industries. But in medicine, economists say new machines and drugs only
serve to make the cost of healthcare more expensive.

Research suggests that this is due to the vast array of available  treatments, some of which are effective while others are less so, and an  insurance system that favors expensive solutions.  Those who study this issue note that American spending on medicine and  healthcare doubles about every decade. It currently makes up about a fifth  of the country's economy and is expected to grow in the next 25 years to  ensconce a third of the federal budget. The challenge, notes one healthcare  economist, is: "How do we move from cost-increasing to cost-reducing[medical] technology?"

One thing is for sure: medical malpractice is commonplace and it is not a  significant factor in the cost of healthcare. Many people, when faced with
severe injuries or the death of a loved one due to medical malpractice,  turn to experienced medical malpractice lawyers to investigate their cases  and get them some measure of justice.

 

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