Why Healthcare Is So Expensive

By Joseph Franz

Healthcare in the United States costs more than in other countries because we want it that way. As a culture we strive for the best. We also want choices. According to

The Atlantic


the average routine office visit in the U.S. costs three times more than in France and Canada and almost ten times more than in Spain and Argentina. Hospital stays also costs more, as does the cost of prescription drugs. Why is this? Why is U.S. healthcare so expensive? This is one of the most common questions I get from my patients. There are several factors that contribute to the high cost of healthcare in the U.S., but in my experience the main reason are patient choices, system complexity, litigation, and government regulations.

How Patient Choices Affect Prices:

In the 40s and 50s you paid the doctor in cash and sometimes chickens or eggs. The doctor did not have a lot of overhead and therefore charged less. Then the government started adding regulations, which increased the doctor and hospital costs. The baby boomers came along increasing the demand for services as well as the type of services demanded. Prices increased as supply exceeded demand. Baby Boomers wanted more choices, more tests, more technology, and more litigation. As customers demanded more services, costs increased again by segmenting the healthcare market to meet the differing demands of the customer. Next came the HMOs who demanded a forty percent discount on what doctors charge and added more complexity to the way care was provided and paid for. The doctors responded by doubling office visit charges and hiring staff to handle the growing regulatory burden. Also, in the U.S doctors pay for their own cost of schooling, which is now in the hundreds of thousands of dollars. Foreign doctors, in many cases, have schooling paid for by the government. Insurance companies also add to the cost of healthcare as twenty cents from every dollar paid to health insurance companies goes to profit, marketing, underwriting and administration; another thirty cents goes to legal costs. Also, lawyers looking for new markets and more money started suing healthcare providers, adding costs to the health system.

System Complexity:

Unlike other countries that have one health insurance plan for all their citizens, the U.S. health care system is incredibly complex. There is, for example, a separate health care system for seniors, veterans, military personnel, federal employees, children who are under 16 in a poor family, and those who are over 16 in a poor family. In addition to those, there are hundreds of other private plans. Each plan has its own policies and procedures.

Government Regulations:

Government regulations are the leading cause of high cost health care. There are hundreds of statutes, code regulations, and contract compliance requirements for those participating in public programs. These regulations are complex and result in high administrative costs for doctors, hospitals, insurance companies, and other healthcare providers. There are also multiply government agencies overseeing different segments of the healthcare provider continuum. For example, CMS (Center for Medicare Services), Department of Health Services, and OSHPD all regulate skilled nursing facilities and hospitals. Assisted living facilities are regulated by the Department of Welfare. There are also duplicate city, county, state, and federal agency responsibilities.

At Encinitas Nursing and Rehabilitation Center, we understand that healthcare is expensive, and we work with our patients to make the best decisions to help mitigate those costs without compromising their health. For questions about skilled nursing and rehabilitation care of you or a loved one, please visit us at

or call us at (760) 753-6423.