A few years ago, after my older sister unwittingly ate a tart filled with kiwifruit (to which she is severely allergic), she had to self-administer epinephrine using an EpiPen on the way to the emergency room. It may have saved her life. Like my sister, many other Americans rely on their EpiPens (which are automatic, pre-dosed injectors of epinephrine) to handle potentially fatal allergic reactions. So it was no wonder that many of us were outraged when EpiPen manufacturer Mylan Pharmaceuticals more than quadrupled the cost of the life-saving drug this year (raising the price from about $150 per dose to $600 per dose). Why did Mylan raise the price so drastically? For the same reason that Turing Pharmaceuticals in 2015 raised the price of the drug Daraprim, used by some people with HIV, overnight from $13.50 to $750.00 per tablet: because they could.
Overpriced drugs—and unaffordable health care in general—are not new phenomena in the U.S. In 2013, the U.S. spent over 17 percent of its Gross Domestic Product (GDP) on health care; by comparison, our spending on education and the military in recent years were 5.4 percent and 4.5 percent of GDP, respectively. Moreover, America is an anomaly when it comes to the magnitude of our health care spending: In 2012, for example, we spent 42 percent more on health care per person than the next-highest-spending country, Norway, 85 percent more than Canada, and more than twice as much per person as France, Sweden, and the U.K.
Maybe we could justify this if our outcomes were better than those of other countries. But they aren’t. Despite our out-of-control spending, the U.S. sees worse results than other high-income countries on several key health outcomes, including life expectancy and prevalence of chronic disease. In fact, for some aspects of U.S. health care, such as maternal mortality rates in certain parts of the country, the outcomes are downright awful. This is America. Women are not supposed to die during childbirth from preventable causes. And children should not be headed off to school and play dates without their EpiPens simply because their parents cannot afford them. But that is what is happening.
Health care: a private good vs. a social good
The Affordable Health Care Act (ACA), also known as Obamacare, has helped ensure that more Americans are insured than ever before, and it appears that overall health care spending costs are slowing. But the ACA doesn’t fix the heart of the problem. “The issue is how we define health care,” says Richard Scheffler, PhD, a professor of health economics and public policy at UC Berkeley. “Is it is a private good or a social good—something you get simply because you are a member of society?” Whether you like it or not, in America health care often is treated like a private good, available only to the lucky ones who can afford it.
This makes America an outlier among almost other developed countries, where some level of health care and coverage for prescription medications are almost always viewed as social goods. In the U.K., for example, which has nationalized health care, the National Health Service buys all covered medications directly from the pharmaceutical company. This, Dr. Scheffler says, allows for serious price negotiations because a large entity (a country) buying all the medication has some real negotiating power. Granted, in the U.K., not all procedures or medications will be covered by the NHS; you have to be willing to cut some things in order to cover the more common necessities for the largest swath of the population.
But, in the U.S., we don’t have a national health care system that can negotiate on our behalf to obtain pharmaceuticals at lower costs. Unless you are covered by Medicare, Medicaid, or the Veterans Administration, you don’t have an automatic right to receive health care or affordable drugs. Yes, you can go to an emergency room and get treated for your broken leg even if you are uninsured (or underinsured), but you will also get a hefty bill.
Indeed, in our country, we don’t think that you deserve medical care just because you are a citizen. Instead, we purchase into a confusing system of all sorts of different health insurance companies that offer different policies and different coverage for different drugs and treatments. And because health care costs are not transparent, consumers with insurance usually have no idea whether they are getting charged more or less than they would if they had gone to a pharmacy or hospital down the road.
Medicare is big enough to drive down pharmaceutical prices all over the market, adds Dr. Scheffler, if only it could negotiate them. But it can’t: In 2003, Congress passed the Medicare Modernization Act, which expressly prohibited Medicare from negotiating directly with drug companies to set prices. That’s right. You can negotiate with a car company to get the best price on your new Ford, but the federal government cannot negotiate on your behalf to get the best price on prescription medication. So, senior citizens are left with whatever price their particular Medicare Part D plan has agreed to pay. Unfortunately, until Medicare has the power to negotiate prices, the rest of us who are stuck with private insurance don’t have much chance of getting drug prices down at all.
America continues to cling to the notion that the “market” will solve our entire problem. But health care doesn’t work like the typical supply and demand market. For one thing, unlike almost all other sellers of consumer products, health insurers are looking for consumers who won’t actually use the product—that is, healthy people—because that keeps their costs down. For another thing, when you are having a medical emergency, you don’t have the privilege of shopping for the best price; and, even if you had the time, there is no way to do so. And this can leave consumers blindsided. I should know: A few years ago, my husband had an emergency that required a procedure that was out-of-network for our insurance. Although we tried to find out in advance how much it would cost, both the provider and the insurer said it was impossible to know. Two weeks later, we received a bill for $28,000—payable within 14 days. Thankfully, our insurance ended up paying most of it, but we suddenly appreciated how a family could go bankrupt, or deplete nearly all of their savings, just to pay a medical bill.
I don’t purport to have a workable solution to the American health care problem. But I am convinced that until we begin to truly view medicine and healthcare as a social good—until we as a community actually start believing that we all have a right to being healthy—we will continue to go down this untenable path.
Also see Why American Health Care Is Sick.