Here’s something interesting I discovered the other day.
A massive 96 percent of US consumers believe that the cost of prescription pharmaceuticals makes up more than 15 percent of the total cost of American healthcare today. Worse still, 63 percent of American consumers believe that prescription drug costs account for between 40 and 79 percent of the total healthcare cost. No wonder they think that drugs are expensive!
The problem, of course, is that these beliefs are not true. The actual cost of prescription drugs in the USA today is somewhere between 13 and 14 percent of the total cost of healthcare. And for 2007, the Department of Health and Social Services recently advised us that that total cost of healthcare was $2,105.5 billion. This means that the total cost of prescription drugs was about $285 billion last year (on average, that’s about $950 per person in America).
Just for comparison, the total cost of hospital services in 2007 was about $631.7 billion or about $2,105 per person in America!
What is it that is giving consumers such a misguided impression about drug costs?
Once you start to think about it, it’s not that difficult to work out. Most people think of their healthcare costs in terms of what they pay in out-of-pocket expenses (co-pays to see the doctor; co-pays for drugs at the pharmacy; new glasses; etc.). For many people, the out-of-pocket costs for drugs probably are somewhere between 40 and 79 percent of their total out-of-pocket costs. When I did the sum for my own healthcare expenses in 2007, this was confirmed. My total out-of-pocket expenses for the year were about $2,250 (including drugs, doctors, and dental expenses), and the drugs accounted for 47 percent!
Of course this poses an immediate question, “How do we reinform the American public that their perceptions are incorrect.”
Filed under: Health and drug costs | Tagged: drug costs, health care, out-of-pocket costs, perception
