WaPo: Why an MRI costs $1,080 in America and $280 in France

[Generic Other]

There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher.

That may sound obvious. But it is, in fact, key to understanding one of the most pressing problems facing our economy. In 2009, Americans spent $7,960 per person on health care. Our neighbors in Canada spent $4,808. The Germans spent $4,218. The French, $3,978. If we had the per-person costs of any of those countries, America’s deficits would vanish. Workers would have much more money in their pockets. Our economy would grow more quickly, as our exports would be more competitive.

There are many possible explanations for why Americans pay so much more. It could be that we’re sicker. Or that we go to the doctor more frequently. But health researchers have largely discarded these theories. As Gerard Anderson, Uwe Reinhardt, Peter Hussey and Varduhi Petrosyan put it in the title of their influential 2003 study on international health-care costs, “it’s the prices, stupid.”

As it’s difficult to get good data on prices, that paper blamed prices largely by eliminating the other possible culprits. They authors considered, for instance, the idea that Americans were simply using more health-care services, but on close inspection, found that Americans don’t see the doctor more often or stay longer in the hospital than residents of other countries. Quite the opposite, actually. We spend less time in the hospital than Germans and see the doctor less often than the Canadians.

http://www.washingtonpost.com/blogs/ezra-klein/post/why-an-mri-costs-1080-in-america-and-280-in-france/2011/08/25/gIQAVHztoR_blog.html

[Turbineguy]

1. The cost may be high in the US

but at least you don't have to eat those rich sauces with it!

[Robb]

2. Or heaven forbid a white wine that doesn't taste like a block of wood.

I'm looking at YOU, California.

[Auggie]

7. The trend is towards much lighter use of oak in California

BTW, I've had Côte de Beaune just as oaky.

[mike_c]

11. not an oak fan, huh?

[joeglow3]

3. Exactly. We subsidize much of the rest of the world.

[rexcat]

5. I have heard this argument before...

please site the studies to back up your claim. How does the US subsidize MRIs in France and the rest of the world, or for that matter x-rays, hospital stays, etc.?

[Raine1967]

10. +1

I would like to know the answers you asked as well.

Excellent question.

[joeglow3]

17. Answered

It is really simply cost accounting.

[joeglow3]

16. Think R&D

The production of a drug, piece of equipment, etc has 2 cost components: variable and fixed. Most countries as able to negotiate lower prices due to their size (think Wal*Mart). We are screwed because we have a bunch of splintered insurance companies with little leverage. Now, we need single payer, so we can get better prices. However, we will not be subsidizing all the R&E costs, so other countries would most likely see their costs going up.

[procon]

12. We do???

Harrumpf... and all this time I thought healthcare costs in the US were higher because we have to put up with a crazy for-profit corporate system, unlike "much of the rest of the world" and their *shiver* scary-low-cost socialized medicine.

I appreciate the remarkable diversity of ideas on DU... most of the time.

[DesertRat]

14. No, we don't

That's a totally baseless comment.

[joeglow3]

15. Study cost accounting.

It is a simple concept. Canada has a huge block that has massive negotiating power (think things like drugs). They are essentially the Wal*Mart who can get the cheapest costs (in many cases, it only covers the variable costs and portion of the fixed costs).

Next, enter a shit ton of separate insurance companies. They don't have the negotiating power and are stuck paying the higher price. These dollars are used to cover the variable costs and will subsidize the fixed costs (think of things like R&E, failed drugs, etc.). The easy answer is to get single payer, so we have one "company" buying everything.

Now, this will clearly lower our costs. However, if we cut our payments to the same level as Canada, who will subsidize the fixed costs?

I also read somewhere that our largest 3 or 4 research hospitals crank out more innovations than most entire countries. Clearly, everyone benefits from this, at the expense of people who spent all the money on research.

[rexcat]

18. The cost of drugs in Canada, Austrailia, Britian, EU and Japan are not negotiated by the governments

the price of pharmaceuticals is set by the government. If the companies don't cooperate they cannot sell any drugs in that country. In this country the insurance companies set a limit on what they are going to pay for a prescription and anything over that will be paid for by the individual. There is a lot of innovation coming from foreign companies. They want US approval for their drugs but many drugs at this time have been approved elsewhere such as the EU and then they do several studies in the US to back up the data from the foreign studies and they get approval here. Since durg prices are not set in the US the companies in turn can charge whatever they feel the "market" will give them. I know this because I work in the Pharmaceutical industry on the R&D side.

One of many examples of this was the approval of oxaliplatin (a chemotherapy agent) made by Sanofi (now Sanofi Aventis). The drug had been approved in the EU for many years but it was not cost effective to do the clinical trials in the US. This drug is used for 1, 2 and 3 line treatment for colorectal cancer. When the company approached the FDA for approval a deal was made that they only needed one clinical trial in the US along with the EU data for the submission. We got oxaliplatin approved in less then 18 months as a third line agent. There were two additional trials started at the same time so they could get the drug approved 2nd and 1st line treatment of colorectal cancer. This was more for labeling since once the drug got approval as a 3rd line agent the drug could be used "off label" as a 2nd or 1st line treatment. It only took several more years to get the approval as a 2nd and 1st line agent. This has now become the standard rather than the exception.

You obviously don't know what you are talking about.

[KansDem]

4. Because we have the best health-care system in the world!

And if you believe that, I've got a palm tree in Wisconsin to sell you!

[onehandle]

6. And the French MRI comes with a nice glass of red Bordeaux.

We are totally being ripped off.

[Generic Other]

8. The prices should be similar

That is what we should be mad and screaming about.

[xchrom]

9. Du rec. Nt

[cojoel]

13. things went from bad to worse

when we started letting the pharma companies push their wares on TV commercials. They should advertise to physicians, period, and not with bribes and kick-backs.