The oversimplified answer is because we allow it to be expensive. For-profit insurance companies, for-profit hospitals and the "free" market are just some of the culprits. When your motive is to generate revenue and you have stockholders to report to, what is your incentive in making health care more affordable?
Stick to med school. You haven't the slightest clue of how economics or the supply-and-demand model works. This topic is probably covered in the very first chapter of any economics textbook...what an absurd thing you have just said.
There are reasons why healthcare is so expensive, but the exact cause of which is debated. There are many. The biggest is the bureaucratic nightmare that is the FDA. Another is that insurances are practically state-endorsed monopolies. Insurances also cannot compete across state lines. A smaller market means less competition. The effect of this latter statement is debatable, though. Malpractice suits drive up the cost of healthcare. Drug patents and anti-competition is rampant among pharmaceutical companies. Off the top of my head, I can think of hgh vs. synthetic peptides (ie ghrelin analogues). HGH is incredibly expensive compared to ghrp-6 stacked with a GHRS. Bodybuilders and powerlifters have long known that these peptides are much more affordable and do the job well, but big pharma prefers to keep this a secret. HGH is more profitable. Under a true free market, innovation would resolve this issue. Under the FDA, we will shell out 100x more money for a similar product
🙄 Another example is testosterone replacement therapy, which is totally idiotic in most cases and has created a huge underground market that harms the consumer.
The lack of competition is the problem. Doctors are not competing well enough, drugs are not allowed to compete as they would in a free market, and the price of insurance goes through the roof.
Another huge problem is the extensive litigation if something goes wrong.
I can also attest to unscrupulous doctors and residents. I had an operation for appendicitis several years ago. Every 45 minutes, a resident would come in briefly for a minute or two to "see how you're doing." These visits continued through the entire night, even at 3 and 4 am. They continued despite persistent urges to stop. They were also rude when confronted.
At the time, I thought it was just a case of the residents being too nice. A while later, the bill from the insurance showed hundreds of dollars extra tacked on for these visits. I forget how much they each cost exactly, but it was a considerable amount...er,, WASTE of money. I'm going to go out on a foot here and say that this is rampant all over the country because I went to a big hospital with well-trained staff...in New York City of all places. This is a well-known issue. Over-utilization of things like scans and test forces us to pay more for them. And if a doctor refuses to order tests he knows are probably useless? He leaves himself vulnerable to losing his career.
Most people look at that and say **** it, the insurance is paying that, not me. Right? WRONG. It's laughable to think corporations will absorb that cost. They'll just add it to their spreadsheets, plug in the numbers in, and charge each consumer extra for the unnecessary treatments.
All the problems stem from the same things:
1) Lack of Competition (Get rid of the ****ing FDA please, AKA one of the most corrupt and inefficient allocations of resources in the western hemisphere)
2) Litigation
Healthcare is expensive in the USA because we keep applying free-market principles to a system that operates outside the free market. Essentially in a free market, when you increase the supply of a good prices tend to fall. In the free market, demand directs supply. In healthcare, the exact opposite occurs wherein supply directs demand......
....In healthcare, when we increase the amount of treatments, medications, devices we increase the supply which triggers an increase in demand. The demand then rises to swallow the excess. The more beds a hospital has, the more CT scanners they have, the more cancer drugs we have available, the more we tend to use them.
Also, we have perverse system where we reward doctors/healthcare providers/hospitals for doing more. The more we do, the more we pay and hospitals don't have an incentive for making themselves more efficient. If they become more efficient, they lose money.
Lastly, doctors and hospitals need to move in the direction of electronic records/information technology. Some hospitals and doctor groups are entering the electronic age but we have a fragmented electronic system so that your digital medical records at one hospital are not readily accessible to another hospital which you might be admitted to. So we need a national electronic medical record standard. This can make the system more efficient because doctors can collaborate more easily, it can reduce medical errors because papers and charts don't get lost. Additionally, it would be a great boon to researchers because we can more easily understand which treatments work and which don't work.
tl;dr
1) you cannot force a free-market system on healthcare because healthcare operates outside the traditional laws of economics
2) we have a system that rewards hospitals/doctors for doing more. We pay for quantity and not really quality
3) we have to implement a national standard when it comes to electronic medical records and have everyone use it.
Yeah, health insurance company's make nice profits and pharmaceutical company profit handsomely as well. And those should be targets for reform too.
You misunderstand the word demand in an economic context.
