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Why is US heathcare so expensive - lack of competition, price fixing?

finebead

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Good article:

August 3, 2013

WARSAW, Ind. — Michael Shopenn’s artificial hip was made by a company based in this remote town, a global center of joint manufacturing. But he had to fly to Europe to have it installed.

Mr. Shopenn, 67, an architectural photographer and avid snowboarder, had been in such pain from arthritis that he could not stand long enough to make coffee, let alone work. He had health insurance, but it would not cover a joint replacement because his degenerative disease was related to an old sports injury, thus considered a pre-existing condition.

Desperate to find an affordable solution, he reached out to a sailing buddy with friends at a medical device manufacturer, which arranged to provide his local hospital with an implant at what was described as the “list price” of $13,000, with no markup. But when the hospital’s finance office estimated that the hospital charges would run another $65,000, not including the surgeon’s fee, he knew he had to think outside the box, and outside the country.

“That was a third of my savings at the time,” Mr. Shopenn said recently from the living room of his condo in Boulder, Colo. “It wasn’t happening.”

“Very leery” of going to a developing country like India or Thailand, which both draw so-called medical tourists, he ultimately chose to have his hip replaced in 2007 at a private hospital outside Brussels for $13,660. That price included not only a hip joint, made by Warsaw-based Zimmer Holdings, but also all doctors’ fees, operating room charges, crutches, medicine, a hospital room for five days, a week in rehab and a round-trip ticket from America.

“We have the most expensive health care in the world, but it doesn’t necessarily mean it’s the best,” Mr. Shopenn said. “I’m kind of the poster child for that.”
http://www.nytimes.com/2013/08/04/h...-simple-math.html?ref=elisabethrosenthal&_r=0
 

lizzie

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It seems odd to me that he isn't on Medicare, and Medicare would have covered it.

THat being said, one of the reasons our health care is so expensive is because health care workers typically make a living wage. Another reason is that people have lost touch with having to spend much out of pocket for medical costs, so they tend to over-utilize, which drives costs up. And last, but not least, is government mandates in the insurance industry, which require coverage for essentially all costs, dr visits, drugs, regardless of the type of insurance people actually want or need.
 

joG

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The price differences are quite astounding. But it is very difficult to judge why exactly the US prices are higher, because we are talking totally different systems. A friend of mine runs a very large university hospital here and employed a doctor in charge of 5 doctors at the price I was paying my assistant in London. He tells me he cannot get very good quality people, because at the prices here the good ones leave. He has not got the funds to prevent MRSA and finds himself with an average number of mutilation and death form this. In Germany we have ca 600.000 infections and somewhere around 25.000 to 30.000 deaths.

So what is expensive?
 

Paschendale

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It's so expensive because it's marked up to provide insane profits. Profits for the companies that buy up patents on new technology. Profits for the drug companies. Profits for the insurance companies. All of that with your health and your very survival held hostage.
 

Penderyn

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The mugs have been so heavily brainwashed into capitalism that they can't tell their arse from their elbow, and fall for any old self-interested drivel thieves spout, so that they pay twice as much as we do for the NHS and get something hugely inferior.
 

Wraith8

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The mugs have been so heavily brainwashed into capitalism that they can't tell their arse from their elbow.
That's true, it's not like the US controls almost a quarter of the world economy and that my home state of Illinois (by itself) has a higher GDP than most of the individual nations in Europe.
 

Penderyn

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That's true, it's not like the US controls almost a quarter of the world economy and that my home state of Illinois (by itself) has a higher GDP than most of the individual nations in Europe.
and what proportion of it do the mugs get?
 

Aunt Spiker

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Well - things use to be: you sought out healthcare, and you paid. . . therefor - if they wanted compensation, they made it affordable and worked with you.
Then - along came widespread use of health insurance.
Then: it didn't matter, if your insurance didn't cover it, you would. Cost mattered less, because, one way or another, they would get what they charged. Everything became a profit-margin and actual care was bumped to a lesser concern.
 

Wraith8

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and what proportion of it do the mugs get?
Well the US GDP per capita is far higher than the UK's. Any other questions or will you now launch into a new tirade against the US in order to try to define us solely by our faults?
 

Penderyn

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Well the US GDP per capita is far higher than the UK's. Any other questions or will you now launch into a new tirade against the US in order to try to define us solely by our faults?
Well, I think that, even with your puppet government here making war on us, you have far more poor people over there in proportion. If you have a hundred people, one with a million million dollars and the rest with nothing the average income is very healthy - except in reality, of course.
 

finebead

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Multiple reasons for the high price of the implants from the same article cited in the original post of the thread:

So why are implant list prices so high, and rising by more than 5 percent a year? In the United States, nearly all hip and knee implants — sterilized pieces of tooled metal, plastic or ceramics — are made by five companies, which some economists describe as a cartel. Manufacturers tweak old models and patent the changes as new products, with ever-bigger price tags.

Generic or foreign-made joint implants have been kept out of the United States by trade policy, patents and an expensive Food and Drug Administration approval process that deters start-ups from entering the market. The “companies defend this turf ferociously,” said Dr. Peter M. Cram, a physician at the University of Iowa medical school who studies the costs of health care.

Though the five companies make similar models, each cultivates intense brand loyalty through financial ties to surgeons and the use of a different tool kit and operating system for the installation of its products; orthopedists typically stay with the system they learned on. The thousands of hospitals and clinics that purchase implants try to bargain for deep discounts from manufacturers, but they have limited leverage since each buys a relatively small quantity from any one company.

In addition, device makers typically require doctors’ groups and hospitals to sign nondisclosure agreements about prices, which means institutions do not know what their competitors are paying. This secrecy erodes bargaining power and has allowed a small industry of profit-taking middlemen to flourish: joint implant purchasing consultants, implant billing companies, joint brokers. There are as many as 13 layers of vendors between the physician and the patient for a hip replacement, according to Kate Willhite, a former executive director of the Manitowoc Surgery Center in Wisconsin.

Hospitals and orthopedic clinics typically pay $4,500 to $7,500 for an artificial hip, according to MD Buyline and Orthopedic Network News, which track device pricing. But those numbers balloon with the cost of installation equipment and all the intermediaries’ fees, including an often hefty hospital markup.

That is why the hip implant for Joe Catugno, a patient at the Hospital for Joint Diseases in New York, accounted for nearly $37,000 of his approximately $100,000 hospital bill; Cigna, his insurer, paid close to $70,000 of the charges. At Mills-Peninsula Health Services in San Mateo, Calif., Susan Foley’s artificial knee, which costs about the same as a hip joint, was billed at $26,000 in a total hospital tally of $112,317. The components of Sonja Nelson’s hip at Sacred Heart Hospital in Pensacola, Fla., accounted for $30,581 of her $50,935 hospital bill. Insurers negotiate discounts on those charges, and patients have limited responsibility for the differences.

The basic design of artificial joints has not changed for decades. But increased volume — about one million knee and hip replacements are performed in the United States annually — and competition have not lowered prices, as would typically happen with products like clothes or cars. “There are a bunch of implants that are reasonably similar,” said James C. Robinson, a health economist at the University of California, Berkeley. “That should be great for the consumer, but it isn’t.”
They imply the device makers lobby on trade policy to keep out competition, they like patent protection although they only make minor modifications (a manipulation of the patent process) and they like the expensive FDA medical trail process as it protects the incumbents by presenting a barrier to entry of the market. Seems like we need some common sense regulations to un-protect the incumbents and better serve the public interest.

And Mr. Catugno paid $37,000 for a hip joint that cost $350 to manufacture, whose patent protection should have expired over a decade ago....
 

Tigger

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Part of it is upcharge to cover the worthless sacks of **** that Ronnie Ray-Gun says these hospitals have to treat and release without compensation.
 

MaggieD

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imagep

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It's simple really.

Healthcare is so expensive because the consumer doesn't pay for it. I can assure you that if consumers were paying for doctor visits, they wouldn't cost $130 a pop.
MaggieD, I just wish that more people listened to you. You are exactly correct, yet there will be another hundred posts on this thread discussing all sorts of nonsense, and never even acknowledging that what you just pointed out is 99.999% of the issue.
 

Deuce

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It's simple really.

Healthcare is so expensive because the consumer doesn't pay for it. I can assure you that if consumers were paying for doctor visits, they wouldn't cost $130 a pop.
Meanwhile, in socialist Belgium where the consumer doesn't pay for it, prices are drastically lower.

I think it's because health care never has been, and never will be a free market, but America is desperately clinging to the idea that the free market can deliver it effectively. A pillar of an effective free market is a reasonably-informed choice made by the consumer. If Sony makes a crappy, overpriced television I can buy a Phillips. Or I can buy a different entertainment device entirely, like a laptop or a tennis racket. Or I can buy nothing at all. In health care, you don't have that choice. The guy in the OP can't get a appendectomy instead of a joint replacement, and choosing to do nothing isn't really a choice either. He'd be living in pain forever and probably lose the ability to walk. That's not a choice. Hell, sometimes it's literally "get this procedure or die."
 
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