Why an MRI costs $1,080 in America and $280 in France
March 7, 2012 6:19 PM Subscribe
There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher. I wonder how much malpractice insurance factors into the cost in the U.S. vs France.
This post was deleted for the following reason: Single link blog op-ed on well-trod territory. -- jessamyn
I'm sure prescription prices being radically higher in the US has nothing to do with it.
posted by nevercalm at 6:27 PM on March 7, 2012 [2 favorites]
posted by nevercalm at 6:27 PM on March 7, 2012 [2 favorites]
Capitalism just doesn't do some things well. This and schooling being two.
posted by nevercalm at 6:28 PM on March 7, 2012 [5 favorites]
posted by nevercalm at 6:28 PM on March 7, 2012 [5 favorites]
My best friend from high school is in sales/management for the dark side one of the biggest private health insurance companies in the country, and he's actually been making this argument for years -- basically, that providers (particularly hospitals, he says, far more than doctors) are the ones that need greater regulation, not insurers, because they can drive prices as high as they want.
posted by scody at 6:30 PM on March 7, 2012 [1 favorite]
posted by scody at 6:30 PM on March 7, 2012 [1 favorite]
You're a patient, you're a profit center. Unsurprisingly, that's not for people.
posted by Brandon Blatcher at 6:30 PM on March 7, 2012
posted by Brandon Blatcher at 6:30 PM on March 7, 2012
Most of the world is free-riding. For things like drugs, there are huge development costs, and somewhat lower cost-of-manufacture. Europe (and Canada, and in fact nearly everywhere except the US) legally mandates that drugs be sold for a small markup over cost of manufacture, which means they don't pay the amortized cost of development.
Americans do, and that's why it costs us more. But if we stop doing so, as well, then there won't be any money for developing new stuff. Everyone can't free ride; someone has to pay full fare.
posted by Chocolate Pickle at 6:31 PM on March 7, 2012 [1 favorite]
Americans do, and that's why it costs us more. But if we stop doing so, as well, then there won't be any money for developing new stuff. Everyone can't free ride; someone has to pay full fare.
posted by Chocolate Pickle at 6:31 PM on March 7, 2012 [1 favorite]
Shocking that a big fat layer of profit taking makes thing more expensive.
posted by octothorpe at 6:38 PM on March 7, 2012 [7 favorites]
posted by octothorpe at 6:38 PM on March 7, 2012 [7 favorites]
Most of the world is free-riding. For things like drugs, there are huge development costs, and somewhat lower cost-of-manufacture. Europe (and Canada, and in fact nearly everywhere except the US) legally mandates that drugs be sold for a small markup over cost of manufacture, which means they don't pay the amortized cost of development.
Americans do, and that's why it costs us more. But if we stop doing so, as well, then there won't be any money for developing new stuff. Everyone can't free ride; someone has to pay full fare.
Even if your argument is correct for cutting–edge medications and treatments, which is isn't, it wouldn't account for all medications and treatments being cheaper in Europe. Even a hospital stay is dearer in the US. Have they done that much groundbreaking development in hospital stays lately?
posted by Jehan at 6:39 PM on March 7, 2012 [8 favorites]
Americans do, and that's why it costs us more. But if we stop doing so, as well, then there won't be any money for developing new stuff. Everyone can't free ride; someone has to pay full fare.
Even if your argument is correct for cutting–edge medications and treatments, which is isn't, it wouldn't account for all medications and treatments being cheaper in Europe. Even a hospital stay is dearer in the US. Have they done that much groundbreaking development in hospital stays lately?
posted by Jehan at 6:39 PM on March 7, 2012 [8 favorites]
Americans do, and that's why it costs us more. But if we stop doing so, as well, then there won't be any money for developing new stuff. Everyone can't free ride; someone has to pay full fare.
How about those of us that are the test beds of bad drugs that get pushed on us by bad doctors, that are huge profits for the companies? I'll give you a perfect example, zyprexa. The fallout from hiding that it caused obesity (weight gain of 20 to 100 pounds) and high blood sugar, huge lawsuits, and the payouts are also a good reason they charge so much for the drugs.
posted by usagizero at 6:41 PM on March 7, 2012
How about those of us that are the test beds of bad drugs that get pushed on us by bad doctors, that are huge profits for the companies? I'll give you a perfect example, zyprexa. The fallout from hiding that it caused obesity (weight gain of 20 to 100 pounds) and high blood sugar, huge lawsuits, and the payouts are also a good reason they charge so much for the drugs.
posted by usagizero at 6:41 PM on March 7, 2012
Everytime a study talking about US health care costs comes up, I'm always amazed that nobody is pointing to the actual culprits - the AMA and the "medical industrial" complex.
The AMA keeps the supply of doctors artificially low, making doctors really expensive compared to just about everywhere else (and also entices money grubbers who care nothing about people to be doctors, but that's another story). The pharmaceuticals sell the same drugs for $1/pill in Europe and $15/pill in America. A diagnostic machine that costs $50k in Argentina will cost $500k here.
Nearly every single facet of health care in the US is well above other countries. No surprise the total is higher!
posted by zug at 6:43 PM on March 7, 2012 [3 favorites]
The AMA keeps the supply of doctors artificially low, making doctors really expensive compared to just about everywhere else (and also entices money grubbers who care nothing about people to be doctors, but that's another story). The pharmaceuticals sell the same drugs for $1/pill in Europe and $15/pill in America. A diagnostic machine that costs $50k in Argentina will cost $500k here.
Nearly every single facet of health care in the US is well above other countries. No surprise the total is higher!
posted by zug at 6:43 PM on March 7, 2012 [3 favorites]
Americans do, and that's why it costs us more. But if we stop doing so, as well, then there won't be any money for developing new stuff. Everyone can't free ride; someone has to pay full fare.
what is this i don't even
posted by radiosilents at 6:44 PM on March 7, 2012 [2 favorites]
what is this i don't even
posted by radiosilents at 6:44 PM on March 7, 2012 [2 favorites]
Malpractice insurance and defensive medicine are responsible for a single digit percentage of the cost difference, despite their prominence in political discussions.
The factor I haven't seen investigated is the rent extracting nature of hospitals themselves. There are a lot of private equity groups who buy hospitals and hospital networks, knowing that they can cut quality of service with few repercussions.
Patients who live nearby have few options. Unhappy doctors have houses and families, and so will put up with some degradation in their working conditions without mass exodus.
Thus, these PE firms can do a leveraged acquisition of the hospital, throw down $15MM of their own money on a $150MM hospital, use debt to fund the rest, and then cut services and increase prices to pay off the borrowed $135MM. After seven years, they sell the hospital (which has now paid much or all of the debt) and pocket a windfall.
Maybe I'm wrong. Maybe rent extraction from predatory investors is just a rounding error on the costs, but it certainly feels like a big source of the cost.
posted by grudgebgon at 6:48 PM on March 7, 2012 [2 favorites]
The factor I haven't seen investigated is the rent extracting nature of hospitals themselves. There are a lot of private equity groups who buy hospitals and hospital networks, knowing that they can cut quality of service with few repercussions.
Patients who live nearby have few options. Unhappy doctors have houses and families, and so will put up with some degradation in their working conditions without mass exodus.
Thus, these PE firms can do a leveraged acquisition of the hospital, throw down $15MM of their own money on a $150MM hospital, use debt to fund the rest, and then cut services and increase prices to pay off the borrowed $135MM. After seven years, they sell the hospital (which has now paid much or all of the debt) and pocket a windfall.
Maybe I'm wrong. Maybe rent extraction from predatory investors is just a rounding error on the costs, but it certainly feels like a big source of the cost.
posted by grudgebgon at 6:48 PM on March 7, 2012 [2 favorites]
Have they done that much groundbreaking development in hospital stays lately?
Yes - Prescott Pharmaceuticals Vax-A-Room. A room in a pill - or at least the room moves in a rotational way.
Everyone can't free ride; someone has to pay full fare.
Or perhaps instead of spending wads of cash at the end of life for an extra 6 months - why not a bit of prevention for the 80 years before the end?
and, while "we" are discussing the "costs" - who's paying for the research into the effects of, say Turmeric? Or for the more hazy green Blue-ites .... Mary Jane's possible benefits?
posted by rough ashlar at 6:49 PM on March 7, 2012
Yes - Prescott Pharmaceuticals Vax-A-Room. A room in a pill - or at least the room moves in a rotational way.
Everyone can't free ride; someone has to pay full fare.
Or perhaps instead of spending wads of cash at the end of life for an extra 6 months - why not a bit of prevention for the 80 years before the end?
and, while "we" are discussing the "costs" - who's paying for the research into the effects of, say Turmeric? Or for the more hazy green Blue-ites .... Mary Jane's possible benefits?
posted by rough ashlar at 6:49 PM on March 7, 2012
I notice that the NHS costs aren't on their graphic, the NHS tariff is widely available, so it's a weird omission. A coronary artery bypass graft which costs $68,000 in the US appears to cost about $13,000 to the NHS.
posted by Jehan at 6:50 PM on March 7, 2012
posted by Jehan at 6:50 PM on March 7, 2012
Having attended US University with a number of pre-med students, I now give US medicine as wide a berth as possible.
posted by telstar at 6:57 PM on March 7, 2012
posted by telstar at 6:57 PM on March 7, 2012
Of course the prices are high; you don't expect that nice man who runs McKesson to work for FREE, do you?
posted by armoir from antproof case at 6:59 PM on March 7, 2012
posted by armoir from antproof case at 6:59 PM on March 7, 2012
Through the Great Recession, healthcare has remained profitable. Medical specialty companies who make surgical implements, drug companies, hospital supply, doctors, for-profit hospitals, health information companies that make the databases your doctor is looking at instead of talking to you, etc. The hospital may have to provide emergency care to everybody, but when doctors open a clinic to provide day surgery, they charge the same, but they don't have to provide charity care. Every component of US health care has layers of profit built in. For the cost, we should have astonishingly great health and health care, but we don't. The business directive is "Maximize shareholder value" which doesn't create a great care system. Come to think of it, the health care system is an excellent example of why I'm not a Libertarian.
posted by theora55 at 7:00 PM on March 7, 2012 [4 favorites]
posted by theora55 at 7:00 PM on March 7, 2012 [4 favorites]
There is one enormous monster cost in American healthy care, namely the 30% or so consumed by the insurance companies, an enormous fragment of which they spend avoiding paying for expensive treatments.
There are ridiculous costs on the provider side as well, but they break down somewhat more :
- Americans consume more risky new fancy patented drugs while elsewhere people favor better tested off patent drugs.
- American providers expend an enormous amount dealing with insurance company games. A French doctor has no secretary, no staff, etc.
- American doctors take an unnecessary cut for processing laboratory work they don't even do themselves. A French doctor gives you separate pharmacy and laboratory prescriptions. All the tests are done by the laboratory, just like all the drugs are dispensed by the pharmacy.
- American doctors are by necessity financially ambitious people because they must acquire an awesome school debt, that makes American doctors more expensive, less dedicated, and less good. A French doctor never owed any student loans, selected medical school because he liked medicine, cares more about his craft, etc.
In particular, a French medical school would actually fail out poor students, while American medical schools feel they must do all selection at intake. Do you really imagine an admissions officer is more capable than a professor at selecting the future doctors?
posted by jeffburdges at 7:05 PM on March 7, 2012 [6 favorites]
There are ridiculous costs on the provider side as well, but they break down somewhat more :
- Americans consume more risky new fancy patented drugs while elsewhere people favor better tested off patent drugs.
- American providers expend an enormous amount dealing with insurance company games. A French doctor has no secretary, no staff, etc.
- American doctors take an unnecessary cut for processing laboratory work they don't even do themselves. A French doctor gives you separate pharmacy and laboratory prescriptions. All the tests are done by the laboratory, just like all the drugs are dispensed by the pharmacy.
- American doctors are by necessity financially ambitious people because they must acquire an awesome school debt, that makes American doctors more expensive, less dedicated, and less good. A French doctor never owed any student loans, selected medical school because he liked medicine, cares more about his craft, etc.
In particular, a French medical school would actually fail out poor students, while American medical schools feel they must do all selection at intake. Do you really imagine an admissions officer is more capable than a professor at selecting the future doctors?
posted by jeffburdges at 7:05 PM on March 7, 2012 [6 favorites]
In the US, our revolutionary constitution theoretically establishes a fundamental right to life, but nobody ever said we could expect to go on exercising that right indefinitely for free... Besides--there's gold in them there pills!
posted by saulgoodman at 7:12 PM on March 7, 2012
posted by saulgoodman at 7:12 PM on March 7, 2012
There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher.
When did Tautology Club start writing for the Washington Post?
posted by radwolf76 at 7:15 PM on March 7, 2012 [1 favorite]
When did Tautology Club start writing for the Washington Post?
posted by radwolf76 at 7:15 PM on March 7, 2012 [1 favorite]
Capitalism just doesn't do some things well. This and schooling being two.
You left out "promoting the general welfare".
posted by uosuaq at 7:19 PM on March 7, 2012
You left out "promoting the general welfare".
posted by uosuaq at 7:19 PM on March 7, 2012
There is a simple reason mortality rates in the United States are higher than anywhere else: people die more.
posted by XMLicious at 7:20 PM on March 7, 2012
posted by XMLicious at 7:20 PM on March 7, 2012
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