Tuesday, August 6, 2013
Orthopedic Surgery is Cheaper in Belgium, a country with “Socialized Medicine” than the USA
Kudos to the Seattle Times for outing the medical device supply mafia in their August 5th story on a patient who was able to save money for his hip replacement by going to a European country with a national health care system. And low and behold, this story was front page news for today’s New York Times. Here are the facts, the federal government, through the CMS or Centers for Medicare and Medicaid pay for most of the hip replacements in the United States. This is a multi-billion dollar industry which generates huge profits for a few companies in Indiana. How can a device that costs $350 to produce be sold for $3,000 to $4,000 in the U.S. market? The answer is, because we allow it. Medical device manufacturers, including cardiac devices and others are all guilty of price gouging in this country, because as a people we have not demanded that our government funded health care plans pay a reasonable cost (say cost plus a percentage) for products and services purchased for enrollees.
Price Gouging Medicare
Americans should be outraged that someone can go to Belgium, pick up some luxurious chocolate (sorry Hershey’s no comparison), spend more than a week in an inpatient facility and spend only $16,000 versus $60,000 or 63% less than the same procedure and the same hip device would have cost in the United States. Of course in the states this total bill also includes layers of mark-ups and marketing, including hospitals, and clinicians, but in this case, the surgeons are the least guilty. There is a wide variation in the hospital charges for a hip transplant across the United States. Why do we allow this gouging of our federal coffers? The answer is simple, political lobbyists who spend all day every day greasing the skids in the beltway. And this matter was made even worse with the “super pacs” which allow the ubber rich to contribute unlimited amounts to political campaigns. And who might some of these super rich people be, well, as it turns out, all three executives of the artificial hip makers each earn eight million dollars a year. They are paid this handsomely to make money for their shareholders, not to deliver the most affordable health care for device users. Top executives of these for-profit companies are paid based on short term shareholder returns and they have little incentive to lower the price of their devices. In Europe, executives do not receive these ultra compensation packages and thus do not have perverse anti-consumer incentives to over charge their countrymen for products.
Pack Your Bags
In my previous experience researching ways to reduce the cost of cardiac devices I discovered those suppliers have a black box, crash tested cartel around their pricing of devices as well. All of this is geared to keep competitors of lower-priced devices out of the picture and profits high for the few. None of this means you are getting better health care, just more expensive health care, as the entrepreneurial health care purchaser, formerly from Washington State figured out. If the government is unwilling to use its bully pulpit to negotiate with medical device suppliers for lower prices for Medicare and Medicaid, then at least have CMS approve the reimbursement of procedures performed at International Joint Commission approved facilities off shore. Clearly, if it is less expensive for our citizens to go outside the country for health care, Medicare and Congress need to address this inequity.
Health Care Reforms Attempting to Address the Concern
There is a faint glimmer of hope in this tunnel, with the launch of PCORI, or Patient Centered Outcomes Research Institute, under the health care reforms in 2010. PCORI is a federal agency that was created to look at system-wide health care inputs and data to figure out how to cut costs and improve patient outcomes for the country, namely Medicare and other federally funded programs. The Patient Protection and Affordable Care Act initiated a sixty-day payment delay for medical device suppliers, so that Medicare can analyze abusive practices, which is needed. Additionally, the reform mandates added a 2.3% tax on medical devices to fund some of the PPACA mandates, like health care subsidies to buy insurance. Of course the medical device industry is trying to get that repealed.
The current free-for-all cartel environment of charging as much as you can to the U.S. health care system and only offering discounts to foreign governments who use the same devices has to stop. Since I see no effort on the part of the free market in this country to lower prices for medical devices or more effectively negotiating device payments by CMS (your government and the largest health care purchaser in the nation), I say it’s time to pack your bags.
For Americans who want to learn more about accessing health care abroad, go to Chapter 10 of Unraveling U.S. Health Care and learn how to find a safe facility for your surgery abroad, whether it is in Europe, Latin America, or Asia.
And this is the health policy maven signing off.
This article was written by Roberta E. Winter, an independent health care consultant and journalist and author of a guidebook on the U.S. health care system. Feel free to share this article virally.