In the article, "Even Small Medical Advances Can Mean Big Jumps in Bills", I learned that it is extremely expensive to be sick and especially so if you're diagnosed with Type 1 diabetes. Diabetic patients need an array of treatment supplies including insulin, test strips, an insulin pump, disposable tubing, batteries, and lancets and there are very few suppliers in the market. Few suppliers and a constant need for treatment allow drug companies to drive their prices up.
Initially, treatment for diabetes was relatively cheap because patients were expected to tightly control their diets and check their insulin levels. However, the introduction of the insulin pump gave patients more dietary freedom and made it easier to control blood sugar. Diabetics can purchase some components of the pump at low to no costs, but additional necessary supplies can be expensive. For example, test strips can be $1.50 at the pharmacy, but cost only pennies to make.
Other countries cover all costs associated with treatments of chronic diseases, including diabetes. In countries with this system, prices are negotiated so that the price of treatments is a fraction of what drug companies charge in the United States. Britain and Germany are just two examples of countries where governments heavily negotiate diabetic supply prices. Margins for these drug and equipment companies may be low, but the burden is mitigated for the chronically ill patient.
In all, I learned that treating Type 1 and Type 2 diabetes cost the United States nearly $200 billion dollars in 2012, which was equivalent to around 7% of the entire U.S. health care bill. Furthermore, companies are continuing to release new models and are developing add-ons that can only be used with that specific brand or model. Like Apple customers, diabetics are urged to purchase new materials because they no longer have access to past models. As a whole, consumer's out-of-pocket costs continue to rise. Although patients may experience health benefits by purchasing new diabetes products, they are definitely experiencing greater financial hardships. This was extremely disheartening to me because, as an Economics major, I've been taught that more technology should lower costs in the long run. Drug and equipment companies may be able to use revenues for more research and development, but prices are set too high and patients that are sick, through no fault of their own, are being punished.
It is very well written analysis, Hannah. On your point about technological advances lowering costs, in the long run, I would like to add that such economic principals are only applicable in the commodity market and the US healthcare industry is a free market with the consumers having no market power. In free markets generally, the providers end up having the last say about product prices and hence the exorbitant price for the end user.
ReplyDeleteA change in the way healthcare system operates in the US- as a free market- can surely put this dichotomy to rest.
Ah, if it were only that simple... It used to be like this, when the government provided these services. But now making a gazillion dollars for CEOs seems to be driving force.
DeleteNicely written article. I would like to mention about a trend which is catching up in US healthcare industry - Preventive Healthcare. With the soaring cost of care, many insurance companies and providers have come up with this concept in recent past to provide the monetary benefits to patients who take care of themselves better. This saves money for every single entity who participates in healthcare domain and provide better results.
ReplyDeleteI think this is a good strategy to offset the dietary freedom which consumers enjoy now a day. Take a look at this link for more insights:
http://www.npr.org/sections/health-shots/2016/03/23/471583523/hhs-says-diabetes-prevention-program-will-save-medicare-money
Exactly. Preventative health and the incentives around that may in face make a difference. Good article.
DeleteVery well written analysis, Hannah, one of the things you covered in your response was about how other countries outside the United States cover all the costs associated with treatments of chronic diseases. This is one of the biggest problems in the United States which is the drug companies are in it for the money and not for the well-being and greater health of the American people. I think that is one of our biggest problems is that we as the United States need to regulate and negotiate the prices of these treatments.
ReplyDeleteThank you for providing such a valuable information and thanks for sharing this matter.
ReplyDelete