It’s opaque by design; but ultimately a wide range of medical device manufacturers, suppliers, distributors, etc who are able to push products that are more and more expensive into the system. Because there is not much systemic incentive to push back against high prices caused by astronomical R&D costs (these drugs are very complex and the process of testing a drug in the US is very expensive). The US market basically pays R&D costs for the medical care for the rest of the world because we can’t get our act together around coordinated buying.
Basically, treatments / devices are developed without market demand, priced at a premium, and adopted because they are incrementally more effective than the previous version — but the people paying for them ultimately just pass the costs on to another middleman in the form of insurance companies. Patients often have little / no choice in the treatments they receive, but they’re the ones ultimately paying for it. This causes people to avoid the medical system until they’re deathly ill, which ends up costing the whole system more.
Edit: also, the laws don’t help. For example, health insurance companies are required to spend 85% of revenue on direct medical expenses, which means they get 15% to fund operations and take a profit. How do you get more profit with the same operations spend? Just increase medical spend, and increase premiums / copays (revenue) accordingly. They actually have a disincentive to keep costs down. Things are starting to change but I suspect Amazon Health is going to be revolutionary for this reason alone.
Basically, treatments / devices are developed without market demand, priced at a premium, and adopted because they are incrementally more effective than the previous version — but the people paying for them ultimately just pass the costs on to another middleman in the form of insurance companies. Patients often have little / no choice in the treatments they receive, but they’re the ones ultimately paying for it. This causes people to avoid the medical system until they’re deathly ill, which ends up costing the whole system more.
Edit: also, the laws don’t help. For example, health insurance companies are required to spend 85% of revenue on direct medical expenses, which means they get 15% to fund operations and take a profit. How do you get more profit with the same operations spend? Just increase medical spend, and increase premiums / copays (revenue) accordingly. They actually have a disincentive to keep costs down. Things are starting to change but I suspect Amazon Health is going to be revolutionary for this reason alone.