My girlfriend and I are from Europe and we have been in the US for a year now while she finishes her university degree. Half a year ago she (we?) got pregnant, and we are paying more than triple the money for doctor visits than it would be back home. Not only that - but the money we're paying is just 20% of the "real" cost, the insurance she paid $7000 per year for is paying the rest. So we're paying $180 per visit and the "real" cost of each half an hour long doctor visit is about $900!
Now you might argue it's better service, but in my very subjective view, I highly doubt it and it doesn't feel like it at all. To add insult to injury: We got a 3D sonogram and the amount we paid (mind you, 20% of the "real" cost) was twice the amount our friends at home have paid for 3D sonogram taken by a private company (and the government is not paying a cent).
IMO, America is one fantastic country if you're rich - but it seems much much harder to live here than in Europe on meager salaries.
No, because there is nothing that can properly be called "the American health-care system".
America has a large number of different public and private health care financing systems (e.g., insurance and insurance-like programs), a large number of different and uncoordinated public and private health care delivery systems, and extremely inefficient, costly, and poorly standardized interfaces between all those different health care financing and delivery systems.
> IMO, America is one fantastic country if you're rich - but it seems much much harder to live here than in Europe on meager salaries.
Careful. Hospitals and doctors often report the amounts that insurance companies report based on a master price list that bears no relation to what the insurers actually pay. Insurers are presumably fine with misleading reports that puff up their value.
The problem isn't the insurance negotiating a discount - it is that if your insurance has agreed to pay 80% of the cost of your care, and then is able to negotiate a discount, you should pay 20% of the discounted price, not 20% of the pre discount price.
I've never not had my co-insurance portion be anything but the percentage of what their negotiated rate was. I don't know if it is fraud, but breach of contract would probably apply if you did (assuming it wasn't in the fine print).
Retail prices in hospitals take into account a high-percentage of non-payment...which is why they are high to begin with! They have complete correlation with reality: an uninsured person is more likely not to pay, so prices are higher so that works out. Now, the higher prices lead to more non-payment, and a vicious cycle ensues.
This is why the mandate in Obama care is so important, to stop this cycle.
At every hospital I've ever been to (N=3) that answer is a firm "no". With one hospital the price was automatically knocked down 75% before any negotiations took place and this policy was advertised everywhere. At another hospital I simply had to speak to a account manager to get a drastic reduction (> 80%). The third hospital took a harder line, but ultimately caved. If you are uninsured you should never pay more than 15% spread out over 6-12 months (less if you're going to pay in a lump sum). Everything is negotiable.
So, basically, the list price is just an inflated number they can use so insurance companies pay them just enough to cover what they'd charge everyone else. This, my friends, is what madness looks like.
When you're sick or dying, there is no "free market". You pay what you have to to the health cartels, and you don't have either the energy or will to negotiate.
A real driver for the inflated price is so that they can cover the marginal loss they're taking on every Medicare patient. That loss is only going to get worse as the program expands.
The whole joke about it is that they aren't taking a loss they are just not profiting as much, which is a completely different thing. It's like me saying I don't have a drinking problem because I only drank 2 bottles of vodka before lunch, instead of the 3 I could've drank.
In any other industry the practice of inflating the value would be illegal, specially when done in the cartelesque way it's done in health insurance/healthcare. 'Luckily' the health insurance industries has managed to lobby its way into getting all kind of exceptions, and our representatives are hard at work to keep it that way.
A close friend of mine is an ophthalmologist. The Medicare reimbursement rate for a cataract surgery is a little over $300. This is surgery that restores eyesight. How much would you pay to have your eyesight restored? It's clearly not market rate.
I guarantee that at least in this situation his practice is not turning a profit on these surgeries. $300 certainly doesn't cover the labor expense.
This story is, of course, anecdotal. I'd be eager to hear of similar stories of Medicare reimbursing appropriately.
Off-topic, but I hate the abuse of the English language which is "we are pregnant" (except when the speaker and another are both pregnant women). Pregnancy is a physiological state, not a psychological or sociological state.
It's a common way of describing that shared experience. There's no need to restrict our speech or feelings to the strictly literal. If you don't like the phrase you don't have to use it, but to many couples the experience is meaningful enough that the phrase is also meaningful.
Meaningful to whom? Seems to me that the existence of an internal feeling experienced by some couples is not enough to warrant misusing a precise term.
There's something called an "uncompensated care pool" that serves as a perverse incentive for medical providers to issue insanely high bills.
Say they charge $10,000 for a procedure that costs them $500. They collect $1000 from the insurance company and claim a loss of $9000 in the "uncompensated care pool" for which they can apply for a government rebate at the end of the year.
The practice originated to help reimburse hospitals that provided charity care, but it's morphed into something entirely different.
How is your girlfriend paying $7,000 per year for insurance as a university student? My wife and I each paid $2,300/year while we were in school, and like your plan ours covered 80% of the cost of pregnancy and birth (capped at $2,000).
Ah, I guess I hadn't considered that her plan covered him too. Still, pretty expensive for a plan that only covers 80%, especially if the $7,000 is before the kid.
Don't forget that university student plans are often unusually cheap because the enrollment requirement ensures a relatively inexpensive risk pool. They can also come with unusual restrictions (e.g. your PCP must be at the campus health center), though I think PPACA may no longer allow some of those practices.
In any case, since it sounds like he isn't a student, they probably don't qualify for a student plan and are falling back to something more expensive.
Of course our prices are ridiculous. We have a horrible hybrid government-market system that has completely divorced consumers from providers in terms of pricing.
Consumers buy flat rate plans through their employers. They make use of services without much thought or knowledge of costs since they don't see bills.
Doctors over-test and over-treat because it makes them money, patients don't protest the cost, and they're covered better legally.
Insurance companies don't really care because they pass on their costs by increasing premiums.
Employers don't care since they write off the benefit to their employees and pass on much of the costs through premiums.
The entire mess is a runaway train with no brakes.
The sub 65 population is not really that high a percentage of overall healthcare costs in the US. And the US government actually covers over 50% of all healthcare costs in the country, it's just that young people end up subsidizing elderly care in a vast number of direct and indirect ways.
Medicare and Heath insurance are obvious, but also many end of life bills are simply unpaid which causes hospitals to increase there billed costs etc.
I guess I'm not seeing where the government enters the picture here. Is it just the tax deductibility of group health insurance? If so, can you explain how the market would be structurally different if those premiums were taxed? For perspective, note that premiums have skyrocketed in the last 10 years, yet employers that offered group health insurance tend to still offer it.
> I guess I'm not seeing where the government enters the picture here.
Government half-assed it. How? By providing neither complete liberalization and deregulation (a libertarian dream I hear often -- why can't my health insurance be like my car insurance...etc..etc), nor fixing prices (a la Japan) or providing free a healthcare alternative.
It is the worse of both worlds it seems. All of the recent health care reforms are pretty much bullshit from what I can see if they dropped the single payer option. Without controlling the costs. Yeah I can insure my 26 year old children but my premiums have gone up 30%+ in last 2 years. It is like they are trying to plug holes in a hunk of Swiss cheese. "But we'll mandate them to give free preventive care checkups, we got them now! Everyone cheers. HMOs turns around, laugh and raise premiums by 30%.
I live in New Zealand, and the system is neither completely liberalized, or deregulated, and works fine.
There is a public healthcare system that is paid for by taxes. The quality is really good generally, though rationalisation does happen with time, so we have quite big waiting lists.
However, there is also a private medical system that you're free to use. The largest one is actually a non-for-profit insurance society, and they run a chain of hospitals as well. If the public system is overloaded, sometimes Health Boards (government) will pay private hospitals to do operations.
Either way, medical insurance is really cheap, optional, and healthcare is seen as a right between the government and the citizen, not some weird relationship with an employer.
> There is a public healthcare system that is paid for by taxes.
I wouldn't call that "liberal" and "deregulated". At least no according to US political-speak. Providing a free alternative and thus competing with the health insurance companies is a pretty obvious involvement in the health care by the government.
That is a sane option and I like it. We have enough regulation and involvement but it just stops short of actually offering a viable free alternative. So the government sticks its fingers in the pie and makes a mess then the health insurance companies do the same and in the end the citizens get screwed.
Southern Cross health care - not for profit, but I wonder what it's executives earn? It isn't a feel good organisation at any stretch, and the beady eye of the government has reached out in the past due to some unethical practices they have. Preferred providers etc - keeping the money within its hospitals more like it. I might be cynical, but I've observed them working within the private healthcare sector and it isn't pretty.
Directors were paid $48,000 and the chairman $80,000.
The CE and senior executives earned a total if $2.7m between them all.
All FY 2012. And all very reasonable
Good link. The flip side of that is that each director got about national average wage (how many hours did they work?) and the executive wages are high. Membership is falling and they are making money (unexpectedly more than predicted, so this is accidental). This isn't a company out to help New Zealanders, it's out to feed its hospitals a steady flow of high paying patients.
Keeping money within its own hospitals sounds more or less what you'd expect, surely? That's the whole point of having their own hospitals?
And I expect the executives are paid quite a bit. I'm sure they're not a bunch of angels, but nobody says you have to use them. FWIW, I've used them once in the past, and observed my father doing the same, and we've had no complaints. The premiums seemed reasonable, as well; far from the horror stories one hears from the States.
It feels like, at least until guaranteed issue kicks in, the government has no-assed this problem, except for Medicare, which is by many accounts tremendously efficient and effective.
I fail to see how Medicare can be considered effective and efficient when it costs about as much per capita as what other countries pay to cover everyone, it covers less than 1/6 of the population, and only covers about half the total health care costs of the covered population.
It may be better than the private US healthcare system, but that's not saying much.
Medicare has to do business with US providers, so of course it's still going to be more expensive than in a civilized country. According to your numbers, the tax burden relative to the level of service is at most about 12 times worse than other countries, though the fact that Medicare covers the people who most need expensive care means it's actually much closer to international costs. It's certainly effective in that it does provide a lot of care for a lot of people, and it's about as efficient as it can be without completely revamping the supply chain it depends on.
There is a healthcare system in the United States that does far better -- the Veterns Administration. So clearly it is not impossible.
Even leaving aside government provisioned care, there are several simple ways Medicare could use its massive purchasing power to control costs. Part A could take into account alternate available treatments and their effectiveness-adjusted-cost when determining what procedures to cover. Part B could coordinate care through a single gatekeeper physician. Part C could be eliminated, as it was a cost saving experiment that failed. Finally, Part D could negotiate with drug providers on behalf of the entire pool instead of delegating negotiation to dozens of insurance companies, each with smaller pools.
The VA does a better job because they actually run their own hospitals and clinics. That makes a huge difference - they can directly control many of the costs, and can wield their negotiating power far more effectively than Medicare is currently allowed to.
I sympathise completely with your overall point, but it's worth pointing out that the per-capita comparison isn't completely fair - Medicare covers the elderly, a group that have tremendously high per-capita costs relative to most of the rest of the population.
This isn't to say that the system isn't massively inefficient, just that it's maybe not quite as bad as that stat suggests :-)
When he says "per capita" he's talking about the total population of the country.
That is, lots of European countries cover their entire populations with a budget of around $2000 per citizen per year. Medicare/Medicaid have a budget over $2000 for every citizen per year -- 300 million people * $2000 = $600 Billion.
(In 2010, Medicare had a budget of $453 Billion, and Medicaid has $290 Billion.)
When people call Medicare efficient, it may mean "they spend little money on overhead," but that's very different than spending it well.
Yeah, I realise that - perhaps my response was unclear.
What I mean is, when people say "Medicare costs the US more per member of the population (covered or not) than the UK, even though it only covers 1/6th of the population" the stat is unfairly biased - because the segment of the population that medicare covers is the segment that requires by far the most healthcare.
The stat would be dramatically improved if we accounted not by percentage of the population covered, but instead by percentage of healthcare resources used.
The efficiency of Medicare is often overstated. Medicare spends a lot per patient, which makes administrative costs a smaller percentage of total spending. And some administrative tasks are handled by other government agencies, but many calculations of Medicare efficiency don't include those.
Additionally, there's a not insubstantial chunk of Medicare spending that's essentially fraudulent, and that no "real" insurance company would pay, but Medicare lacks the "overhead" to do much about all but the most egregious cases.
Why else did you think there were so many daytime TV ads for "free" scooters before Medicare cracked down? And that's just one example.
If you ask some people they would say "everything is screwed up because govt is regulating it" others say "everything is screwed up because they are not involved enough with it". I lean towards the latter, but I can buy the argument from the other side as well perhaps.
When there's a battle of opinions between "they're regulating too much" and "they're regulating to little", my presumption is the actual answer is "they're regulating it in the wrong way".
You didn't really answer his question. What exactly is the government doing?
I haven't really studied the issue deeply myself, but the usual complaint I hear is about things like selling insurance across state lines. But I'm not clear on how 15 or 25 or 40 (IL, TX, CA, respectively) isn't a big enough population to capture most of the efficiencies of scale that are there to be captured.
One of the arguments for shopping across state lines is changing the risk profile. There are certain conditions that are more prevalent in certain states or regions (e.g. obesity in the "deep south").
Another argument is that states individually mandate what should be covered under insurance. If you can buy from another state, then you can get (cheaper?) insurance such that you're not paying for things that aren't relevant to you.
And the more regulated providers will have no way to sell their added oversight as a benefit worth paying for? That doesn't seem plausible: Certainly PPO's were able to sell "see a specialist without a referral" to many group plan customers.
When the government offered tax benefits for corporate plans, it shifted the dynamics from individual plans to said corporate plans. When employers started offering plans, it shifted the way people think about health insurance. The way it existed, pre-tax-benefits, was much more like life insurance: you paid your way for daily expenses but had catastrophic coverage. After the tax benefits, people began treating it more like "nearly free healthcare". Due to the change of insurance type, instead of knowing how much a doctor's visit costs, the insurance "takes care of it".
Finally, by having the company hide 60-80% of the cost of the premiums and averaging the costs out across the entire company, people don't know how much things are really changing on a year-to-year basis, even though they are, in all actuality, paying the entire cost of the premium through lower salaries.
The average doctor in the US spends 50% of his time on bill collection issues of one type or another and a significant percentage of his income on malpractice insurance. Assuming 6 patents an hour * 10$ a patent * 40 hour weeks * 48 weeks a year = 192,000$. Say 50% overhead and that's 96k / year in Argentina. Drop that to 3 patents an hour and add in ~4x cost of living, rent's cheap cars are less so, and your around 200k / year which is close to the US equivelent.
Now, let's swap that around in the US and say 40$ or ~30$ in Canada a visit should be about right for 10-25 minutes with a doctor assuming a decent heath care system. Except most offices have more people doing medical billing than doctors and doctors still spend a lot of time on insurance related tasks and your quickly into 100+$ a visit.
Another way to look at this is that the US is subsidizing the world's healthcare. Take the example of drugs in the linked article [1]. Given their pricing power in the environment, the article asserts that we pay 2x what other countries do for identical drugs, for no other reason than we aren't negotiating as a large group. As an anecdotal example, when visiting Beijing, I had some trouble breathing, so I went to a pharmacy to buy an inhaler. I didn't have insurance that worked in China, so I had to pay out of pocket. Not only did I not need a prescription, but I also only paid $4 for the inhaler, complete with medicine. The same inhaler + medicine costs $10 with insurance in the US (god knows how much without it).
Tom Sackville, a UK politician quoted in [1] summed it up nicely: "We end up with the benefits of your investment. You’re subsidizing the rest of the world by doing the front-end research."
Most of the excess expenditure in the US is not going to pharma and other device companies for research; it is instead being divided up by billing companies working for hospitals, doctors and other businesses in the supply chain.
This should be obvious to anyone who looks at the charts and sees the mean cost vs the high and low end: companies are charging what they can when they can to the end user because there is no good advocate for the end user and they are up against a wall.
I also expand on who does in effect pay for medics research and the answer is not the American consumer but mostly the taxpayers (and philanthropists to university endowments etc) of the world given that most of the research that advances medical knowledge, that is innovative rather than iterative research, is performed in universities.
I was interning in California (I'm a Canadian citizen) when I felt compelled to go see a doctor because I spent about a week coughing up various different colours of phlegm (was awoken pretty much nightly with really bad hacking cough). I visited the walk-in clinic at Palo Alto Medical Foundation (in Palo Alto). I had travel insurance offered through my (Canadian) university supplement insurance plan (which for some reason wasn't in their system), so I was asked (albeit very politely) whether I'd like to pay for the visit in cash or credit card ($300 up front).
The doctor listened to me cough and did a swab for a staph infection before diagnosing me with the common flu and advising me to come back if it didn't subside within another week.
I guess in hindsight the visit cost much more than average (since $176 apparently is the 95th percentile cost for a routine doctor's visit), but it just seemed strange that seeing a doctor (not even emergency room) cost roughly half as much as an iPad.
I was an international student. Had a terrible strep throat. Lived off campus. Called university, asked if going to a nearby emergency clinic would be covered. They said "yes". Did so. Got there, waited 1+ hours in the lobby. Then a young intern saw me for 5 minutes. Prescribed a codeine pill and sent me home.
It turns out outside of campus clinic visit was not covered. I did not record the phone conversation. Got a $400 bill (in 1999 money!).
Fuck you American medical system. Should have given them the wrong name or something. It seems they are out to rob people I wouldn't even feel back screwing them over. Charging a student who lives on rammen noodles $400 in 1999 could mean not being able to pay for housing or not being able to avoid food or books.
Now I just avoid doctors as much as possible. It is irrational but I just feel like both insurance and doctors are out to screw me and take all my money. Sad thing is, my rational part of the brain understand that the next time I will see doctors might be in the emergency being unconscious or really sick (maybe I should carry a wallet with a fake name with me ;-)
As an expat, absolutely nothing. It drops off the credit report after 7 years.
Now before everyone gets indignant. I was a Verizon customer and had taken a job abroad. 18 months into my 2-year contract I called to say I'm leaving next month and want to cancel. The fuckers wanted to put me on a 2-month pause, stop the line for 2 months add 2 more months on the contract. I told them this was a permanent move and I didn't want to bother, just shut it down. Then they wanted to hit me with a $250 cancellation fee, not prorated. I referenced the part of the contract about coverage but the rep wasn't hearing it. While at the airport I called them and paid my final bill (they charged me to pay by credit card over the phone, too). Told them to cancel the line and goodbye.
I got a few very large bills in the mail after that, a few creditors calling my Google voice line, and then silence. It's been that way for 6 years.
A few years ago, when I moved overseas, T-Mobile had no trouble waiving the termination fees (for both my line and my wife's) once I'd shown them proof of the move. And they'd already unlocked our phones for a previous international trip, which was handy because we could easily go prepaid until we picked a carrier post-move.
I've always thought the US healthcare system was bad but I never realised how expensive it really was. I pay nothing towards healthcare, I don't pay for prescriptions (those are free for everyone here), and although getting a doctor's appointment can take a week or so at times (unless it's an emergency) I get good service. And none of this is thanks to insurance, benefits provided by my employer or government - it's the same for everyone.
The US taxes the poor / middle class much lower than the rest of the OECD, but the rich more. So if you're poor / middle class, then your taxes are much much higher than if you were in the US.
It is common knowledge amongst all whom study comparative taxation that the US has the most progressive tax system in the OECD. One of the OECD researchers posted about this on reddit recently.
Intuitively, look at VATs, fuel taxes, other consumption taxes. These are regressive and low in the US. Income taxes in the US are steeply progressive - especially in relation to other OECD member nations.
Corporate taxes are incredibly high in the US, again relative to other OECD nations. And income taxes are now about as high (for the rich - ~50%+) in the US as the highest taxing OECD nations. Cap gains rate is about the same or higher in the US vs OECD (~32% in US). Estate taxes don't exist in most OECD nations as well.
Importantly, tax enforcement is incredibly strict in the US relative to typical OECD, again particularly for the rich.
There's a feeling in some parts of the left in the UK that low US fuel taxes are symptomatic of the libertarian anti-left strain of American politics.
I think this disconnect between perception and reality highlights the importance of stopping using identifiers such as "left" and "right" for complex issues.
The US governments will likely hit a wall soon - further tax increases on the rich will possibly yield little/no new revenues. Many suspect that a VAT and higher taxes on the poor/middle class - where 66% of the income is after all - is inevitable.
It's rather hard to run an aggressive modern welfare state by leaning heavily upon those whom earn 33% of the income!
>further tax increases on the rich will possibly yield little/no new revenues.
Possible, I suppose. I'd need to see evidence.
>Many suspect that a VAT and higher taxes on the poor/middle class - where 66% of the income is after all - is inevitable.
Who are the many who suspect this? And on that note - your "whom" should be "who". Apologies for the pedantry.
I'd really like to see some reputable articles to back up your assertions, purely because I've not heard anyone make them before. I don't mind if you don't provide them, of course, you don't owe me anything, I'd just appreciate it if you did.
>I'd really like to see some reputable articles to back up your assertions, purely because I've not heard anyone make them before. I don't mind if you don't provide them, of course, you don't owe me anything, I'd just appreciate it if you did.
Hey James,
Firstly there is the simple fact of arithmetic. 33% vs 66%. The 33% is already quite heavily taxes, the 66% much less so. Which bloc is able to fund a welfare state?
Tyler Cowen and The Money Illusion and to a lesser extend EconLib are my primary sources in these discussions (basically the GMU econ mafia plus a few outsiders). This is a very politically similar cadre for me to harvest my ideas from, but they pay quite a bit of attention to outside theories. Regardless, if you want 'articles' you'll find them there.
Another possibility is a one time wealth tax. This has some pull because it can easily target only the very rich, but also has some pretty big issues due to it's inherent "Banana Republic-ness." But it can happen.
The VAT just seems likely because almost every OECD country uses them, it's potentially politically feasible, and the amount of revenue it can raise is enormous. It also doesn't have the Banana Republic features of a wealth tax.
And I like my "whom"'s, grammatically correct or otherwise :)
For comparison: I'm from California, and was studying abroad in Holland. I had travel insurance, and went to the general doctor for a similar situation (lung infection).
How it's supposed to work is that I pay in full and get reimbursed from my travel insurance company. They had never done that before, so just waived the costs of the visit.
They wrote me a prescription for antibiotics and asked me to wait a few days before filling the prescription to see if it goes away on it's own. The pharmacist did bill me in full, but it was so cheap that I never even bothered to ask for reimbursement (€20).
Anyway, for many reasons (including health care) I permanently relocated to NL. :)
When I was diagnosed with a melanoma last year and had to go for my second operation someone proposed I went to this specialist.
For reasons that are still unclear to me my insurance didn't cover it and I was told that if I did it out of pocket I would have to pay 3000USD for an initial meeting.
I was also sent the price for my uncomplicated operation which was between 30.000USD and 150.000USD. This is for a stage 1 removal.
Stage 2. started at 250.000USD and ended at 450.000USD
Stage 3. and stage 4. well lets just say i stopped reading after stage 2.
Now I am well aware that no one ever pay the list price, but it is to me (I am originally from Denmark) completely absurd the way the healthcare system is constructed.
I also recognize that there are no easy solutions here. You can never spend enough money on healthcare.
But you can certainly construct it differently than we have here in the US.
My partner and I were Australians working for a couple of months in Scotland back in 2003. My now wife had had a melanoma removed while in Australia and we visited a doctor in the UK to have one of the follow-up checks.
There was no cost.
I believe there was compulsory insurance coming out of our UK earnings (NIS or whatever it's called) but the entire process was so easy it was suspicious. Can't even remember paperwork. Needed a check-up, got referred to the specialist and they just ran through it and off we went.
The processes here in Australia are pretty simple too.
At no point should people be fearful of checks/tests or treatment for their personal health because of cost.
The only time I can remember any paperwork with the NHS is when my wife had a climbing accident in Glencoe and was taken by RAF helicopter to the hospital in Fort William - after a few days she was feeling OK so she wanted to sign herself out over the protests of the medical staff - so they had her sign something to prove that she was leaving, not them asking her to go (they really wanted her to stay for a few more days).
The charming nurse's parting words were "Come back to Fort William, but don't come back here" :-)
NYU Sloan covered it, and 2nd time it was removed. I have more than a thousand moles so will have to get checked for the rest of my life every second month or until they find a cure.
Obviously hoping for the latter and are trying to research the state of treatment just in case it happens again.
Health insurance premiums in America are about to jump even higher because of two key points in Obamacare.
1: By 2014 it will be illegal for an insurance company to deny coverage to a customer with pre-existing conditions. This is great news for people with pre-existing conditions, but bad news for everyone else, who will have to cover the cost through increased premiums.
2: Obamacare carries a clause in which consumers may opt out of government-approved healthcare and pay a tax penalty instead. The CBO estimates that in 2016 the average penalty will be $1200 per year.
In combination these two factors will create massive upward pressure on health insurance premiums.
Healthy consumers who carry mainly catastrophic insurance will choose to drop their coverage en masse in favor of paying the penalty.
After all, if they ever get really sick, they can always sign up for insurance because it's now illegal to deny coverage to someone with pre-existing conditions!
This will drive insurance prices higher, as there will be an ever-shrinking pool of consumers paying premiums.
I believe the long term goal is the deregulation of the health insurance market. Currently most states just have just 2-3 providers. The current providers are driving prices up because they have a, temporarily, captive market. Once more providers enter the market (because who wants to leave all that money on the table) the market should be self correcting.
The comments about the use of percentiles biasing the data are very true, in particular because there are effectively 3 pools of patients in the US: private/employer insured, Medicare/Medicaid and uninsured.
Medicare and Medicaid pay far less than private (employer) insurance (and the uninsured frequently do not pay at all). As a result, many hospitals and outpatient physicians charge private insurance disproportionately more than what the services actually cost in order to cover the operational losses from medicare/medicaid and uninsured patients. It's astounding how many articles that discuss the "ludicrous" prices of health-care in the US fail to mention that the prices for goods and services billed to uninsured patients are designed to offset the losses from other patients. That $80 aspirin is $0.01 for the aspirin and $79.99 for the cost of the nurse to bring it to you and a variable $ amount that helps offset losses.
The only fair analysis is to compare averages to averages, which in the US should include both charges to medicare/medicaid and private insurance.
I'm not arguing that health care costs in the US are lower or even the same as in other countries, by the way. I'm merely trying to point out that the differences are not what they seem at first glance.
More importantly: a brief look at the IFHP website and the report itself (http://www.ifhp.com/news153.html) leads me to question whether medicare was even included in this dataset. The relevant lines from the report are "The International Federation of Health Plans was founded in 1968 by a small group of health plan industry leaders. It is now the leading global network in the industry, with more than one hundred member companies from twenty-five countries" and "Prices for the United States are calculated from a database with over 100 million paid claims that reflect prices negotiated between thousands of providers and almost a hundred health plans." Draw your own conclusions (or perhaps someone should contact them).
Edit: I've emailed them to try and find out. I'll post back here what I find.
Edit 2: Another document put together by IFHP in 2009 (http://tinyurl.com/bn9qtvm
warning: PDF) compares other countries to US private insurance and medicare separately. Medicare prices are far more in line with other countries than the averaged data would suggest.
Infant mortality is. And the mother's life certainly is too.
But in general you do seem to be right. However this could be due to quality of life being hard to measure, because quality of life is related to healthcare, but damned if I can prove that.
Infant mortality is calculated differently by different countries. What counts as infant mortality in the US often counts as a still birth etc in other countries.
Those graphs are terrible. Why bother comparing the USA's 95th-percentile prices to the average price of other countries? And why refuse to show any countries that are more expensive than the USA in any category? Very ham-fisted.
Because there simply isn't that much variation in prices elsewhere. In fact, in many countries there will be exactly one price for any given treatment.
For example, in Switzerland, each treatment etc. is assigned a specific number of fee points (Taxpunkte). This is multiplied by a conversion factor to arrive at the cost of the treatment that a doctor can bill your insurance. And that's that. Unless the treatment allows for variations, it will always cost the same.
This should not really be surprising: There is no reason for a single payer system (or a system that's equivalent to single payer) to have multiple prices for one and the same thing. The whole point of single payer systems is that the single payer has the bargaining power to negotiate the most efficient price up front. Paying more than that without need would be a waste of money.
Provided that your insurance is LAMal. I have Uniqa and private hospitals can charge me whatever they feel like. Uniqa has agreements with some private hospitals, so in the end it's not that bad.
Did you read the caption? The claim is that in other countries the variance is extremely small. You could dispute that claim, perhaps, but that's not what you've done here.
(My objection to the graphs is that the bars are for 25-50-95th percentile, which is difficult to interpret. I'd rather they just gave a four-part 25-50-75-100, or at least a 25-50-75-95 if they can't reliably establish an upper bound, or maybe 5-50-95. Any of those would be easier to intuit.)
That's beside the point. The graphs are misleading. If the author simply let the data speak for itself, instead of biasing the visuals, it would be much more effective.
The medical system in China is severely underfunded while prices are fixed by the government that don't much these funding levels. Its kind of a mess.
For private healthcare without bribes in China, the prices are way more expensive than the states...but what choice do we have? At least I have insurance. Anyways, my experience is only in China.
I had the same feeling. A pretty typical case of data being carefully selected and presented to fit the argument, rather than presenting an objective view of things.
Well, hey, it's exactly what the title advertises: "21 graphs that show America’s health-care prices are ludicrous". Objective? Unbiased? No guarantees are made :)
What's funny about health care and to some extent education in the U.S is that the solution is NOT to spend more money. This is fundamentally at odds with the political ideology prevalent in this country which seems to think more money is the universally applicable and most effective solution to social problems.
I think it's spending more money on X, and less on Y. One of the huge savings available for single payer systems is you can use random audits vs debating every single bill. Cover everyone and suddenly you don't need to fill out reams of insurance forms every time you see a new doctor etc.
Just as one factor in healthcare costs in the US - I wonder if people talking about the expenses understand how much doctors and nurses make in most other countries compared to the US?
Slash the costs, and one of the prime cuts is going to be that doctors and nurses will make 1/3 as much instantly.
Nurses for example make 50% more in the US than in Germany, Norway, South Korea, France, and Canada to name a few.
I'd be interested to combine these charts with some other data that might be related, such as doctors' student loan and mortgage debt, per capita income, waiting times for various procedures, and maybe even a measure of how many citizens there are per doctor (as a way of determining relative barriers to entry for medical professionals). I don't really have a good sense about how all of those things stack up in other places, but I suspect the U.S. would be an outlier in some of those as well.
I believe you are making the assumption that doctors are pocketing this money (or at least much of it). I am not saying that you are wrong, but I am saying that you need to identify this as an assumption and re-examine it.
(As it turns out, you are wrong, but I don't have time to go into it right now :-P.)
Actually I'm not making any assumptions (hence the reason I would like to see the data stacked up together). I don't know what it would look like, but I enjoy exploring ideas like that. I actually do know, in at least two cases, that the doctors aren't pocketing the money (the doctor friends I know are going to be living paycheck to paycheck for several years as they deal with the huge debts they incurred in the process of becoming doctors). The question I'm most interested in exploring with the above data is this: what are the relative costs and barriers to entry for medical professionals in all of these countries? It's my impression (could be profoundly wrong for all I know) that they are exceptionally high in the U.S., and if that is the case, then it would be a contributing factor to the high costs.
There are obviously many other contributing factors, and I'm not proposing solutions here, just curiosity. I think you read more into my query that I meant to convey- I have nothing against doctors, or even against doctors making tons of money. I don't particularly like the disconnect between people and the prices of their medical care that happens as a result of our insurance model and I think that's also a major contributing factor to high prices. As you say, though, I don't really want to go into that here.
They key take away here is there is a HUGE opportunity for a medical tourism startup that helps people find quality healthcare overseas (from US perspective).
Umm is it just me or does it not look ludicrous but just higher if you compare the AVERAGES to the other countries' AVERGAGES, rathr than out 95th Percentile to other countries' AVERGAES?
I wonder how "not so well off" people pay for health care. What are the costs in government run hospitals?
(I am from Kashmir. Consultation with the best doctors does not cost more than 5 - 8 USD and in most cases this amount is for 10 - 15 days regardless of the number of visits. And if you go to government run hospitals you can get the best consultation for half a dollar. Only problem we have is that the health care infrastructure - private and government combined - is overloaded. Not enough hospitals, not enough doctors, not enough equipments. )
It depends on what income level you're talking about. Many low income people can't afford insurance and never receive healthcare until something catastrophic happens, and in that case they go to the emergency room. Hospitals are required to provide treatment (though there have been scandals surrounding this in the past), and so they will and then afterwards just bill the uninsured low income patient an insane amount. Debt collectors will then hound the individual or family for quite a while afterwards. Its a very efficient system. ;-)
Comparing USA Average (the middle number), the prices actually don't seem bad at all considering that the USA has by far the best medicine in the world and a host of reasons why it runs high (legal, cost of education, free markets, high rate of elective procedures, center of advancements, etc).
...the USA has by far the best medicine in the world...
Citation needed.
The statistics that I've seen usually place the USA near the bottom of the industrialized world on things like life expectancy, child mortality, survival rate after open heart surgery, etc.
Near the bottom of the industrialized world? That's a pretty fantastic claim for data that involves so much fraud.
For example, Japan's life expectancy is 83, right? Errr, nope not so much. You're no doubt aware of the vast fraud involved in Japanese welfare programs involving dead elderly.
The US is within a small margin of difference with many of the other major industrialized countries when you adjust for fake reporting. The US happens to have one of the best data accuracy rates when it comes to reporting death - or did you think Bosnia and Russia really have a 50% lower infant mortality rate than the US (the same Russia whose men live to 60)?
The US life expectancy is 78.5, that compares to 79.3 for South Korea, easily within a +/- margin of difference. The UK is 80, ditto Germany, again, it's trivially easy to skew these numbers artificially higher with fraud, but even in that case the difference isn't exactly dramatic. You're going to toast the US over a year variance on data that is not very accurate or proven? Yeah ok.
And if you really want to get into the data: the US is the best country on earth when it comes to the top 85%, because the real problem with the US is poverty and diet among the bottom 15%. THAT is our real problem. If you compare the top 85% in each country, the US comes out at the top. But you're not interested in that discussion I'm sure.
Either way, some/many of the things you cite have to do with access to care, diet, smoking (yes, more than europeans), etc, not quality. Things like heart surgery mortality rates are tough to compare since the USA is well-known for performing more procedurs at the end of life.
I find all these debates so difficult because it's so hard to interpret all the numbers. For instance, your article's numbers all seem to be based on outcomes for people who are seeing doctors. Maybe there's something about people who don't see doctors in the US which would cause the outcomes to be worse. Or maybe not. It's just impossible to trust anything, since everything can be interpreted in 10 different ways.
By what measure? Not outcomes. I suggest you check your sources as the US falls behind most of the developed world on outcomes - which really should be what you measure for healthcare stats.
I think that some of these comparisons may be a bit unfair. All of the dollar amounts are expressed in USD, but cost of living is different in different parts of the world. It would be like comparing housing prices in the Bay Area to housing prices in Argentina just on dollar amounts in USD, without taking other factors into account.
For instance, Argentina has $10 for an office visit. I'm not sure that a doctor would be able to make any kind of decent salary if they were only making $10/patient in the US. It would definitely incentivize the impersonal, "get done as fast as possible, don't spend a microsecond more," style of visit to the doctor.
The cost of living in France, the UK and Australia are comparable to the US. San Francisco and New York are very expensive to live in, but so are Sydney, Paris and London.
I'm not saying the numbers are reasonable. I guess I'm saying that the graphs would be more useful if they were somehow normalized for something like cost-of-living.
I think you're being fatalist by assuming it will. Having grown up in Europe and lived in several countries over there, I've generally found doctor's visits on that side of the pond no more rushed than over here, and indeed somewhat less stressful as there's less paperwork/financial overhead to deal with.
People who are skeptical of socialized medicine often paint a picture of it as a grim conveyor belt of impersonal if not callous treatment, exacerbated by the suggestion that waiting rooms are clogged with people who run to the doctor for treatment of the most minor symptoms. The reality is wholly different; while 'bedside manner' can vary, I've always found medical professionals at least as attentive as here. If anything there's slightly less emphasis on the division of labor than in the US, so you don't have that experience of being bounced around like a pinball between many different people and having to repeat yourself frequently.
Maybe you misunderstand. I'm not against socialized medicine (though that's just a blanket term, and the implementation can obviously be broken). My point was dropping the cost of a doctor's visit to something as low as $10, would probably be ridiculous in the US, because it would be difficult for a doctor to even make a living (let alone pay off med school loans). Note, that this is not a statement in support of the current costs.
There are a number of differences between the US and all the other countries which may explain the costs. For example - Malpractice insurance costs in the US are much higher, the salaries for doctors are higher, the cost of their education is higher, living expenses can be higher...
And because it is privatized - in the UK for example, the government can negotiate fees to bring down costs (for drugs, services etc). They can set prescribing guidelines so physicians don't just prescribe what they want and they can set treatment protocols and budgets so the physicians don't order unnecessary scans. All this brings down the overall costs.
Maybe I'm reading the graphs wrong, but they seem somewhat misleading to me: shouldn't the average (top of the blue bar, bottom of slightly greener blue bar) be what you're comparing to the others? The other columns are all strictly averages too, even though the prices are centrally set for many of the other countries.
The US does come out more expensive, but not as much as the graphs might lead you to believe. It's like saying: In Australia the average student scored 43 points on a standardized test, but in the US, students in the 95th percentile got 150 points! Yeah, not so convincing.
The charts show the average cost for each country, then for US it emphasizes the outrageous edge cases.
A more fair representation would show all 3 segments for all countries. With the data presented, if we look at just the average costs the change is still significant but not as dramatic and shocking.
Healthcare costs are a real issue and is totally jacked up in the US, but representations like this take away credibility from the argument they are trying to support.
Once again, pricing that ignores the real costs in other countries, what people really pay in the US, and most importantly, simply equate health care with a dollar amount. As someone who has lived in a two countries in those charts (one of those being the US), I can assure you those prices are not at all representative of reality. They also don't take into account quality of care, of which, I can again assure you, is vastly different.
I left Canada precisely because of the abusive medical establishment that essentially abused my children.
Is it possible to have dental care done as a tourist? I'd rather visit Russia for a few days and have my teeth worked on than pay $2500 to have some cavities filled here.
There are many things not factored into the graphs. Two that have been substantially quantified in healthcare economics literature:
- Average survival rates and outcomes for non-trivial procedures and illnesses are excellent in the US compared to the rest of the developed world. If I have cancer in the US, my average survival rate is 65-70%. In the UK NHS, to use that as an example, it is 45%. The better diagnostics, treatments, and options in the US are naturally going to cost more money and Americans have it to spend.
- The free-rider problem with pharmaceuticals. The vast majority of R&D cost is recovered in the US because it is one of the few markets in the developed world where drug companies can charge enough money to amortize their R&D costs. If Americans paid as much for drugs as the rest of the world, the pharmaceutical companies would go broke.
That said, there are an enormous number of aspects of healthcare in the US that are just grossly inefficient, wasteful, and expensive. Americans pay an inordinate amount of money for healthcare, and more than they need to, but they also receive some benefits in terms of medical outcomes as well.
Cancer survival rates are indeed quite good in the US compared to some other countries. However, that is not reflected in low cancer mortality rates.
Cancer survival rates generally measure how many people are alive five years after diagnosis; because in America, cancer diagnosis is performed early and often, cancer is often diagnosed early, and more patients will be alive five years after an early diagnosis than five years after a late diagnosis.
However, this does not necessarily lead to a measurably lower cancer mortality rate (the number of people who actually die from cancer) [1]. Furthermore, aggressive diagnostic procedures can also lead to false positives, unnecessary treatment, and overtreatment. Prostate cancer is a prominent example here: it is rarely fatal; it's a cancer that one generally dies with, not from. Conversely, surgery at the typical age where prostate cancer occurs carries significant risk and has, even when successful, negative effects on quality of life, such as incontinence and bowel problems.
The free rider problem with pharmaceuticals is largely a myth. Pharmaceutical companies typically invest only a relatively small percentage of their revenue (for Pfizer or Merck, about 15%, give or take) in R&D. I.e., out of every $10 that you spend on their prescription drugs, only $1.5 will go to research. Furthermore, most of the basic research (north of 80%) to discover new drugs and vaccines is actually funded by the NIH; Pfizer, Merck, etc. are more interested in variations of existing drugs than in innovating treatment [2].
People diagnosed with cancer are obviously more likely to die of cancer, since cancer is never cured, and everyone must die of something. What matters is how long they live with their cancer. That is why survival rates are a better measure of cancer treatment efficacy than mortality rates.
The problem with that is that cancer survival rates are measured from the time of diagnosis, not from the time the cancer presumably began (because that's often difficult to tell). And even with identical treatment efficacy, cancer that is diagnosed early will have a higher five-year survival rate than one that is diagnosed later.
In short, we're lacking good data at the national level to measure what you'd like to measure; and we do have studies (e.g., the one in the first link I gave you) that at the very least cast doubt on the belief that an aggressive cancer screening schedule reduces cancer-related or all-cause mortality. As Robin Hanson puts it: "While cancer screening does consistently lead to more cancer detection and more cancer treatment, it consistently doesn’t lead to lower mortality."
There won't be identical treatment efficacy, because cancer treatments work better the earlier they are started. Early diagnosis is not a data problem, it is an inherent part of why the U.S. gets good results fighting cancer.
Cancer is never cured? An early find of some cancers will have you living longer, due to increased awareness and vigilance. And why is survival a better measure than mortality? 2 sides of the same coin?
Do you have any publications or links to back up your cancer survival claim?
Thanks
edit:
Found this:
Global Cancer Statistics, 2002 DOI 10.3322/canjclin.55.2.74
That shows essentially the same survival between the US and western Europe. (Link to table http://i.imgur.com/UWPxDEx.png )
This claim on survival just does not stand up to what I have seen as someone involved in the medical field.
It's too much and it is my understanding that american health outcomes are definately no better and in many cases a lot worse (for example childhood mortality)
You're cherry picking here by focusing on the UK in your first example. There are plenty of nationalized healthcare nations that have 5 year survival rates that rival (and in some cases surpass) the United States.
As for the second point, I'm not ok with subsidizing the rest of the western world. Set reasonable limits here and let them pick up the slack.
If I have cancer in the US, my average survival rate is 65-70%. In the UK NHS, to use that as an example, it is 45%
Do you have any links to studies that show this? The 20% gap seems extreme.
better diagnostics, treatments, and options in the US
It's really hard for me to believe that the US has better treatments than other 1st world countries which would result in 20%-30% decrease in mortality across the board. Once again I'd like to see some evidence.
I could maybe understand if the US had much higher rates of testing which in turn resulted in higher rates of survivability.
Many of these claims seem grossly over inflated. I'd be interested to see where you got the figures from.
The statistics actually come from the esteemed British medical journal Lancet. Google it; the over-performance of the US across a broad swath of cancers in that study attracted a lot of attention.
As for why the US has better treatments, depending on how you measure it, 70-80% of all new biomedical R&D globally is done in the US. Consequently, if there is a new biomedical technology, it shows up in the US system first where they can capture the R&D investment. Most of the rest of the R&D is done in Asia.
You are correct about one thing: the US has extremely high levels of diagnostic testing compared to the rest of the developed world. It is both part of the cost and also why survival rates are higher for many diseases. The survival rates are not just better treatments, it is also earlier diagnosis by virtue of heavy use of (expensive) diagnostic tests.
"The U.S. health system is the most expensive in the world, but comparative analyses consistently show the United States underperforms relative to other countries on most dimensions of performance."
The US doesn't have a monopoly on medical innovation; Many of the big pharma companies are European:
Of the top 12 Pharma companies 6 are from the US, but fully 50% are from European countries
(http://en.wikipedia.org/wiki/List_of_pharmaceutical_companie...)
Many medical innovations have come from countries other than the US, and they continue to.
This would suggest that a significant percentage of the excess costs are going to medical innovation; instead at each step along the way (from hospital to insurer to reseller to medical device and pharmaceutical company) 15-30% is skimmed in admin and billing fees and other overhead.
It is a total myth that the US is either the sole innovator or the sole supplier of funding for medicine.
So who does fund significant medical research?
On the most part private institutions (think howard hughes medical institute) and universities and their endowments, and federal and state government grants.
There are significant research partnerships with pharmaceutical companies and they do spend huge numbers on R&D but significant quantities of this are iterative rather than truly innovative, which is work that is done more often by PhD's and postdocs as they have more to gain and less to loose by going out in a limb with their research.
And this research goes on in every country in the world.
The US may account for more than the rest of the world's aggregate defence spending but it is stretching it to suggest that the same is true for medical research.
Everything from basic cancer therapies to stem cells to the human genome were invented / discovered / cracked by US money. And it's a very, very long list that covers most types of advanced drugs and therapies in some form or another. Growing organs? Pioneered by US research. Robotic surgery? US money.
It is however true that a lot of US medical costs are tied up in labor, namely healthcare workers and administration. Nobody wants to talk about what happens when you cut costs there however (unemployment, lower wages, et al.).
The costs tell how capitalism ruined the capitalism and twisted it to work solely for the (already) capitalists who are/were on the upper deck of capitalist yacht.
It's not just insurance cost - it's the entire healthcare system it seems that is complicated and made not very easily accessible. There's an answer to a question on Quora, by a guy who stayed in USA.
Question is: What are some things that you can do in India but not in the US?
Answer says: I can go to a doctor with no insurance, no paperwork...[1]
I don't think it's very unsafe to assume that the healthcare is designed in a way to make it extremely costly and make it accessible only to the rich and paying(whatever the huge amount set) customers.
Is it so true that USA doesn't have an dependent clinic or practitioner medical care culture? As in an independent doctor setting up his/her clinic or hospital and not associated with some BIG hospital clinic chain or just one mammoth+costly hospital.
What about the state owned hospital or medical schools? Like those in state owned universities for example. How is the cost of treatment/check-up there?
disclaimer: In no way it's comparison of quality of healthcare in two countries, it just discusses the way it is accessible.
Smith "created capitalism"? Per Wikipedia (http://en.wikipedia.org/wiki/Capitalism): "The term capitalism, in its modern sense, comes from the writings of Karl Marx." You may want to read its section "Etymology and early usage" for more perspective. Then look up Adam Smith and "The Wealth of Nations".
One needn't coin the term to have created something.
Marx came after Smith - Marx's writings were in response to capitalism. Smith's writings were in response to mercantilism/cronyism/protectionism/imperialism.
My girlfriend and I are from Europe and we have been in the US for a year now while she finishes her university degree. Half a year ago she (we?) got pregnant, and we are paying more than triple the money for doctor visits than it would be back home. Not only that - but the money we're paying is just 20% of the "real" cost, the insurance she paid $7000 per year for is paying the rest. So we're paying $180 per visit and the "real" cost of each half an hour long doctor visit is about $900!
Now you might argue it's better service, but in my very subjective view, I highly doubt it and it doesn't feel like it at all. To add insult to injury: We got a 3D sonogram and the amount we paid (mind you, 20% of the "real" cost) was twice the amount our friends at home have paid for 3D sonogram taken by a private company (and the government is not paying a cent).
IMO, America is one fantastic country if you're rich - but it seems much much harder to live here than in Europe on meager salaries.