How Much Does Health Care Cost?
A lot more than it does in other countries, especially if you are buying--as most of us do--a la carte.
Ezra Klein has some eye-opening charts, showing average prices in different countries, which come to him via Kaiser Permanante CEO George Halvorson:
The Other Klein writes:
There is a simple explanation for why American health care costs so much more than health care in any other country: because we pay so much more for each unit of care. As Halvorson explained, and academics and consultancies have repeatedly confirmed, if you leave everything else the same -- the volume of procedures, the days we spend in the hospital, the number of surgeries we need -- but plug in the prices Canadians pay, our health-care spending falls by about 50 percent.
In other countries, governments set the rates that will be paid for different treatments and drugs, even when private insurers are doing the actual purchasing. In our country, the government doesn't set those rates for private insurers, which is why the prices paid by Medicare, as you'll see on some of these graphs, are much lower than those paid by private insurers. You'll also notice that the bit showing American prices is separated into blue and yellow: That shows the spread between the average price (the top of the blue) and the 90th percentile (the top of the yellow). Other countries don't have nearly that much variation, again because their pricing is standard.
The health-care reform debate has done a good job avoiding the subject of prices. The argument over the Medicare-attached public plan was, in a way that most people didn't understand, an argument about prices, but it quickly became an argument about a public option without a pricing dimension, and never really looked back. The administration has been very interested in the finding that some states are better at providing cost-effective care than other states, but not in the finding that some countries are better at purchasing care than other countries. "A health-care debate in this country that isn't aware of the price differential is not an informed debate," says Halvorson. By that measure, we have not had a very informed debate. But download this pack of charts (pdf), and you'll be a bit more informed.
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1
God bless you, Karen Tumulty.
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God bless you...-
1.1
I seem to recall a Swampland commenter posting the $7400 U.S. average per-person health care cost over, and over, and over again....
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Do you remember who that was, Stuart Zechman? -
1.2
I can't believe that Ezra was allowed to write
In other countries, governments set the rates that will be paid for different treatments and drugs, even when private insurers are doing the actual purchasing.
And I can't believe that Karen has the balls to link to that and quote it outright.
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This is the third rail of establishment media coverage. To not say that "USA! USA!" is the best at everything is "objectively anti-American", just like opposition to the invasion of Iraq was "objectively Pro-Saddam", as Joe Lieberman put it. If Time or the Washingon Post were somehow to face a competitor who was more "American" than they, whose branding identity was "news, analysis and commentary for Americans like you", and whose claim to being the flag-waving channel was more believable, then where could Time and WaPo's editors expect chunks of their audiences to end up when we start the next war?
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I'm shocked that they can do this without fear of intense "You're anti-American communists!" criticism, even at this point, when it's academic.
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2
What SZ said. Incredible how these facts have taken almost a year to surface.
But they also point out why health care reform is so hard. Let's point out all the middle class jobs that have been eliminated in the last 30 years, and note that *each* category is in the millions of workers:
Steelworker
autoworker
Railway employee
Airline employee
meatpacking employee
Bank employee
retail store owner (due to Wal-mart)
residential construction worker
software testers and support techniciansNow we see that if we are to have health care reform, we now have to put wage pressure and profit pressure on Doctors, nurses, X-ray technicians, hospitals, etc. etc.
We have to do this, or health care costs will make all of us unemployable. But in doing that, we are attacking the livelihood of the last group of employees that were not subject to true market pressures. The fight will be brutal.
And we should not do winner take all. But if we don't start to realize that Medicare rates should be at the higher end of the pay scale, rather than the lower, and that the most wealthy specialists should make $250k/year rather than $700k, we will continue to pay twice as much as everyone else in the developed world for the same thing they get, at the same quality. And we can't afford that anymore.
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2.1
But in doing that, we are attacking the livelihood of the last group of employees that were not subject to true market pressures.
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You don't think market pressures affect, say, an RN that works in an OR? Hospital staff experience stagnant wages, chronic understaffing, layoffs and hiring freezes, et cetera just like other industries. Doctors have to work with a slightly different set of market pressures...
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3
Thanks, KT. You rock.
…and yet, sorry to spoil the party, but why (the higher costs per unit)? Beyond simple fixed prices, why doesn't our vaunted supply / demand thingy lower costs? I'll presume if many articles existed breaking down why costs are higher, stuart would quote them (or I'd easily find them). The famous NYorker article about McAllen, TX. points out too many procedures. I'm guessing another factor is not-so-open HC pricing / lack of transparent market pressure. This 2006 piece and its prequel pondered this. Yes, it's from a biz site / financial advisor writer so it's pro-capitalist, but it may help. http://www.marketwatch.com/story/health-care-pricing-initiatives-help-consumers-shop-wisely
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…speaking of parties, KT, did you dress as Octomom for treat night / parties? Or Kate Gosselin (the wig was popular)? Or Emma Peel? -
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Well, yeah! That would be Exhibit A in why thinking people are so pi$$ed about the non-debate we're having in the U.S.
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"The health-care reform debate has done a good job avoiding the subject of prices.''
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Really, the debate avoided the subject that we pay more for health care all on its own? If only some one had looked into this and asked the right questions during the debate things would be a little different now. You would have thought that this kind of information would have been discussed at the begining of the debate. Its not like everyone in the world had to wait for a Kaiser chart. As it is its probably too late. -
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Hmm. Would have been nice if Time asked this question back when Baucus was having single-payer advocates arrested for trying to save us some money.
Better late than never, I suppose.
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7
Few days I got a bill for the health insurance premium from my wife's employer. Since my wife is on extended maternity, We have to pay the health insurance premium in full to keep us covered. The premium amounted to $650 for a family of four, including an infant.
At first I thought... that's not too bad, considering I will have to pay more than twice, if I have to get insurance on my own. I would certainly have to pay significantly more if the insurance is thru my employer and is definitely not as generous as my wife's employer.
Then I did a quick math, My wife's employer hires more than 120,000 employees in US alone, and If I assume the average premiums for each employee is around $300 per month, The yearly premiums paid by the employer to the insurance company is more than half billon dollars.
What's so wrong here, is that smaller employers like mine (100+ employees) will never be able to offer insurance like my wife's much bigger employer, because that have no leverage with the insurance company and have to take what they can get. Where as my wife's employer with half a billion in premiums can make insurance companies bid for their business.
The other aspect is the insane profits the insurance company has pocketed after pocketing half a billion dollars in premiums. I am pretty sure the insurance company has not spend anywhere close to 500 million for claims incurred by families of my wife's employer.
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8
KT:
In other countries, governments set the rates that will be paid for different treatments and drugs, even when private insurers are doing the actual purchasing. In our country, the government doesn't set those rates for private insurers, which is why the prices paid by Medicare, as you'll see on some of these graphs, are much lower than those paid by private insurers.
A) Aren't the rates paid by Medicare (especially to hospitals) also higher than in other rich countries, just less than what private providers in the US pay?
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B) Aren't many categories of private prices basically set by Medicare, as Medicare establishes a floor? If so, how and how often does Medicare negotiate the prices it pays ?
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C) Aren't many other categories of private prices (especially prescription drugs and hospitalization) basically set by Medicaid, because Medicaid pays the high retail price asked by drug companies and hospitals, and then "lowers" the cost through a rebate program in which the drug companies and hospitals then pay Medicaid back a separately negotiated part of the retail price?
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D) Are there any other mechanisms of which you are aware that might set and keep US health care prices artificially high?-
8.1
By D) "other mechanisms" you mean collusion/rampant bribery, right? Um, I mean the practice of democracy by good corporate "citizens"
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8.2
Or, it could mean that the reimbursement of HC through Medicare and Medicaid is so low that the only way hospitals and doctors can afford to stay in business is to over-charge those with insurance.
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I think over the weekend I saw some "expert" make the claim that Hospitals charge non-medicare insured folks nearly 137% for the same treatments or bed charges as they do a Medicare patient.
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The charts makes sense if that is the case. Perhaps the only thing that needs reformed are regulations on hospital charges overall, not just for medicare.
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So really we are subsidizing all of the Government health care programs with private health care insurance. It is really that simple.
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Now, passing regulations on price controls is more important than ever it seems. -
8.3
Or, imagine this. Put people in charge of their own health care. Let them pay a large chunk of the bill. Then perhaps they will look at their doctor or hospital and say, "I'm not paying that much for that".
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Simply allow the market to dictate the costs. Allow us to negotiate our health care costs just like we negotiate any prices or we will not buy it from supplier X.
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Perhaps even taking a trip t India for our health care needs, to show those in the US that are price gouging that we will not pay their exhorbitant prices.
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Put health care insurance back to where it once was. Pay out of pocket for the routine everyday charges, and put together castastrophic insurance for those times when our health care becomes a great burden. Back to the days we had "major medical" insurance. -
8.4
"So really we are subsidizing all of the Government health care programs with private health care insurance. It is really that simple."
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No Rusty, it is not that simple. Provider charges are not the same as provider costs and we are all -- insured or uninsured -- subsidizing wasteful provider strategies. When a hospital decides to compete with others in the area by building a VIP wing, the debt for that construction is not paid for by the VIP patients; it becomes part of the hospital's general overhead and everyone pays. The same applies for the bonuses paid to attract specialists to a specific hospital -- they don't raise just the bills for cardiac patients.
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If Medicare covers a lesser percentage of the waste, it doesn't necessarily follow that other insurance companies are somehow obligated to pick up the difference. The idea that insurance companies should "reimburse" providers for all of there expenses is simply misguided. -
8.5
Actuallyr, Rusty, that chart shows you are dead wrong. In those other countries, private providers deliver care for much less than our Medicare reimbursement rates. And stay in business, and don't charge others more.
Doctors who tell you they "can't stay in business" at Medicare reimbursement rates are really telling you "I can't organize my clinic however inefficiently I want, and pay myself $200k/year on top of that" at Medicare reimbursement rates.
Boo hoo. Ask those same doctors if they have any sympathy for the 20 million Americans who have lost good union jobs over the last 30 years.
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I wonder if the wingnuts will finally understand how broken our insurance-industry-run healthcare system is now that they have pictures.
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9.1
The pictures are not drawn in Crayon, so probably not.
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KT thx a bunch. Quick Q. Does MedPac have any power to address these issues? What's the status on MedPac anyhow? All i've heard so far are the insurance reform that are more palatable/accessible to regular folks. Is a strong MedPac still part of the legislation?
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10.1
A stronger Medpac is in the bills, but I don't see that it does much here.
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11
On my computer screen the size of those 3 charts looks to be about the perfect fit for a ... Time cover!
Mind you, last year would have been better.
As always, from the outside looking in, America is nothing short of surreal.
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12
I think people should take a particularly close look at the fees for scans and imaging.
It has frequently been suggested, if not stated outright -- including by KT -- that Americans receive "too many" tests. By golly, Americans can't expect a $2000 CT scan every time they bang their head! The solution is obviously to perform fewer tests. Sure there might be a few more cases of undiagnosed traumatic brain injuries, but that is what tort reform is for.
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13
Karen,
It seems our politicians have been missing the whole point regarding health reform. Is the purpose to insure the uninsured or to lower costs. Or is it both?
Nothing in the current legislation really addresses costs. Until we tackle the issue of medical costs, this legislation is not going to improve things.
There are several models where the costs are much lower than the national average. These need to be implimented.
We have too many McAllen, Texas and until these are eliminated, health care reform will fail.
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13.1
insurance reform isn't all that's included in the bills. There are pilot programs that are designed to experiement with different delivery systems in the bill as well. And a commission of experts would submit to congress a series of potential changes that would address quality, affordability questions outside of the politics of congress to vote either for or against (which makes them more likely to pass). It's supposed to be a Federal Reserve-like committe but for healthcare instead.
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In order to get regular folks to be more engaged in the process, the white house and its allies decided to put the PR focus on the insurance reform but in the process, no one really know if any change has been made to the design of MedPac, or if it even still exist in the legislation at this point because virtually no journalist knows enough about delivery systems enough to dig into the legislation. hence my earlier question to KT.
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In case my sarcasm wasn't clear, the point was that we shouldn't accept as gospel that a CT or MRI scan has to cost $1k-2k. We should be working to push down prices so that scans and other tests that are medically indicated will be performed based on medical need not cost.
My back-of-the-envelope calculation would be that the U.S. could DOUBLE the number of CT and MRI machines in the U.S. for $2-10 Billion. Total. If the Federal Government simply bought the machines outright, in bulk, and did not charge for their use. The cost of a scan would drop overnight to probably a couple hundred dollars: the cost of a technician + physician's interpretation.
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15
The crazies are quiet this thread. Facts are like kryptonite to them.
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The counterargument I hear being made is that the companies sell to say Canada at just above breaking even, They are allowed to do so by gouging us. If we stopped let them gouging us, I wonder if there would be upwards price pressure elsewhere.-
15.1
I know, just one little tid-bit from stuart. That's all.
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But, I think we can all be in agreement that health care costs, not insurance is the real problem and the expense that must be addressed.
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No matter what kind of insurance reform is put into place, if costs are not addressed in any bill, which Nancy and company completely left out of their terrible bill, then the problems keep on mounting.
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Nothing is solved, and everything is risked for the sake of a political "win" for the Democrats.
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Why do Democrats hate the regular folks out in America?
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16
Another very hidden cost in health care is that if you get a prescription filled in a large chain pharmacy, the expiration date is always a year from the date you got it filled. This is very likely not the real date after which it should not be used.
For example, I just got a refill of an ointment I use for a rash that appears every now and then. The expiration date on the label is 10/19/2010. The date on the crimp end of the tube is 01/2011.
Because of my hip operation, I just got an antibiotic that I have to take before going to the dentist. The expiration date is a year from today and the three refills the surgeon indicated must also be used within a year from today. I have no way of knowing the real expiration date of the pills. I likely won't even use the first amount in the year.
This is no doubt more convenient for the pharmacies, but leaches a lot of money out of consumers in the aggregate. I understand this doesn't apply to all drugs and most are used within the time, but saving bits of money wherever possible would help.
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It would be interesting to see similar graphs covering the area of defence procurement.
But of course, Republicans see no problem in their tax dollars being gouged by the defence contractors.
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KT: This is what American Exceptionalism is all about. We pay for things medical our European and Northern allies get for a fraction of the cost. We don't see any high indignation when we read about defense cost overruns and the deliberatly over inflated charges imposed by suppliers to DOD. We don't ask the CBO to cost our adventures in Iraq and Afghanistan. We never question DOD expenditures because its all about National Security, not our Congress critters taking home pork on the DOD's tab. Both Republicans and Democrats shamelessly push programs at DOD which cost us tons of money.
A $698billion defense budget went through Congress like a dose of salts. But when it comes to health care we revert to form: carping all the way through the exercise.
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18.1
The US has spent almost a trillion dollars fighting Islamic terrorists in Afghanistan and Iraq since 2001, and yet still people are being blown up by Islamic terrorists across the planet. This money appears to have been wasted.
But where is the Republican outrage at this waste of taxpayers money?
Meanwhile more Americans die each month because good healthcare is unavailable to them than died on 9/11.
But where is the Democrat ourage at this waste of human life?
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So this is why single payer and (robust) public option were off the table -- because either of these approaches might actually address the problem.
Or, we could mandate that everyone purchase the same crappy insurance they can't afford today, and then give them some inadequate subsidies to pay for some of it.
Thanks, Dems!
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19.1
Thanks centrist Dems!
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20
This whole debate on health care, expecially by our lame congressmen, women and senators leave out is TORT REFORM. We need to get the lawyers out of health care and install the California type system with a $250,000 max claim for malpractice. Maybe doctors would not be doing all kinds of tests to proctect themselves and to keep patients from running to a lawyer, when they had a doctor problem.
Why no, TORT REFORM? Because most of our Washington lawmakers are, guess what, lawyers.
If this Health Care Overhaul passes it going to cost 2-3 trillion, not the 900 billion put out by congress. My guess is that if the public option passes everyone will be on it in 5-7 years.
I don't want Canadian or English type health care. I'm sure most people, in this country don't either, if they really understood it!!!-
20.1
Let's say for the sake of argument that you get national tort reform next year, and so that issue is over.
I don't want Canadian or English
Would you take Japanese?
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French?
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German?
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Any of the other rich countries' systems that are half as expensive as ours, and produce better health outcomes for their citizens?
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Don't you want to be like them, where simply being Japanese or German really means something to their fellow countrymen-and-women? Don't you want Americans to have the kind of value for their health care dollars that these other people in the world get?
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Don't you care that you're getting ripped off, not just by lawyers, nor by doctors who are afraid of lawyers, but by the people who have managed to set the prices for the drug Lipitor at $48 for German people --and $200 for Americans?
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Don't you think that Americans deserve a better deal than we're getting?
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Don't you believe that we should get back to trying to be the best in the world again?
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21
I don't want Canadian or English type health care. I'm sure most people, in this country don't either, if they really understood it!!
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I'm sure most people in this country would want an all-payer system like France or Germany health care ...if they really understood it. And I bet the minority who wouldn't like all-payer probably go for individual-payer Switzerland or the Netherlands...if they really understood it.
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What all those systems have in common is that they are universal. Everyone in those countries has the same basic coverage; delivered through private providers. The German system is in fact more privatized than the US -- and covers everyone while consuming about half as much of the national resources. In other countries, for-profit insurance takes a back seat to maintaining a sustainable national health policy that guarantees access to all citizens.-
21.1
...What all those systems have in common is that they are universal AND COST THEIR CITIZENS HALF AS MUCH AS OURS.
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- ktumulty freshman senators are on the senate floor trying to put more "reform" in the health bill. will they get 60 votes? #hcr http://bit.ly/8HTPuq - 14 hours ago
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