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Two Reasons Why Health Care Costs So Much


The holder of an MBA from Kellogg School of Management, Amir Pirnia is a hands-on manager with over 15 years’ experience in software architecture and information technology. The vice president of engineering at Hixme, Amir Pirnia develops technology strategies to improve the effectiveness and affordability of health care insurance for Americans. 

The United States spends an estimated $3.4 trillion on health care every year. That’s just lower than the GDP of the fourth-largest economy on earth. Why is America’s health care so expensive? Two things may contribute to the problem: health care waste and doctors who do not know the cost of medical procedures. 

It is estimated that up to a third of America’s health care budget is wasted on unnecessary treatments and low-medical-value procedures in addition to under-use of preventive practices. Controlling spending on unnecessary procedures and preventing major illnesses before they occur will reduce health care costs. 

Another solution is educating physicians and patients on the true cost of medical procedures. Often, doctors recommend procedures without knowing their costs. Because these costs are never really “advertised,” they only become evident after a patient is charged and the insurance company pays for them. Hiding these costs kills competitiveness, which is why fees for medical tests and procedures in the country are three or more times higher than in other developed countries. Nobody would pay $25 for a cup of coffee if they knew it cost $2 in the store across the road. Promoting awareness of medical costs will help health care patients make better decisions.

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