medicalIt’s a question asked by anyone who’s been hospitalized in the U.S. The numbers seem to have no rhyme or reason. Particularly when you consider that the cost for an appendectomy here in the U.S. is almost $30,000, while the cost to have the very same procedure performed in Europe would be just $4,000 – without measurable differences in outcomes.

Here are a few of the reasons why American health care costs are so excessive:

  • Hospitals inflate charges to offset discounts – Because hospitals build their own private list of assigned charges (charge master) for the services they provide, they can inflate charges by as much as 1,000%.
  • PPO “discounts” have little impact on hospital charges – PPOs get paid per employee per month, so there is little incentive for them to negotiate a reduction in charge master fees.
  • Prescription drug costs are out of control – High research and development costs, legal fees, marketing expense ($31.7 billion) and a poor distribution system are significantly inflating drug prices in the U.S.

An experienced benefits administrator consistently monitors these cost drivers and can design and manage plans that reduce health care expense and guide members toward health care options that deliver on both cost and quality.