Insurance acts as intermediary between buyer and provider and has no incentive to provide a better price or higher quality. This is especially true in the movement from the medical model to the business model of health care. “The United States spends more on healthcare than any other country in the world, in 2008 US healthcare costs were 2.3 trillion or 7,000 per capita. The US per capita cost is 45% greater than our northern neighbor Canada, and 33% greater than Norway”. (Organization for Economic Co-operation and Development (OECD), 2011). The business model is profit based. Requiring a profit almost always includes streamlining of services and mandating cost controls. Both of which limit the insured’s access to services, drugs, and new technology.
Insurance providers are also functionally fragmented. Private Insurers This fractionalization of insurance providers between a myriad of (66%), the Government (15%) and the Non-insured (15%) decrease the bargaining power in the business based model. Lowering costs to members is often achieved by limiting coverage to certain services and controlling costs. Conversely in Canada all citizens comprise one group and pharmaceutical prices are negotiated by the government. A significant price drop is achieved when compared to the fragmented US consumers. “Using only median US pharmacy prices, the US ordinary shopper would pay 44% more than the Canadian ordinary shopper” (Gooi and Bell, 2008, p.3) illustrating the benefits of the unfragmented group.
Gooi, M., & Bell, C. (2008). Differences in generic drug prices between the US and Canada. Applied Health Economics And Health Policy, 6(1), 19-26.
Kaiser Family Foundation, (n.d.). U.S. health care costs. Retrieved from http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/Background-Brief#footnotel
Miller, G. (2013). "The Best Health Care System in the World"?. Social Work, 58(2), 181-183.
References: Shi, L & Singh, D. (2012). Delivering health care in America: A systems approach (5th Ed). Retrieved from University of Phoenix eBook Collection Database. U.S. Food and Drug Administration. (2014). Proposed changes to the nutrition facts label. Retrieved from http://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/LabelingNutrition/ucm385663.htm