Why an MRI costs $1,080 in America and $280 in France • Hacker News Board

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

#151

Post by jshen » Sun, Mar 04, 2012, 3:47 PM UTC

phren0logy wrote: post #146

yequalsx wrote: post #132

Earlier quoted context omitted.

As I understand it now, doctors have largely invested in testing companies. When they (not all doctors obviously) - I probably thinking primary doctors - order tests the test is a money maker for the doctor. Wouldn't a calculation of the effect of litigation include the scenario you mentioned? Otherwise it would seem to be a bad calculation. Do you have any studies that show how often a test is ordered simply to avoi…

Even if many testing companies are owned by doctors, the overwhelming majority have no stake in one. Citations re: excess testing: http://www.ncbi.nlm.nih.gov/pubmed/15928282 http://www.ncbi.nlm.nih.gov/pubmed/10136689

I only read the abstracts, so correct me if I'm wrong, but both of those links fail to compare the US with other countries. I.e they don't show that costs in America are higher than other countries due to defensive medicine. It could be that all countries have higher costs due to defensive medicine, we wouldn't know from these studies.

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

#152

Post by yequalsx » Sun, Mar 04, 2012, 3:48 PM UTC

phren0logy wrote: post #146

yequalsx wrote: post #132

Earlier quoted context omitted.

As I understand it now, doctors have largely invested in testing companies. When they (not all doctors obviously) - I probably thinking primary doctors - order tests the test is a money maker for the doctor. Wouldn't a calculation of the effect of litigation include the scenario you mentioned? Otherwise it would seem to be a bad calculation. Do you have any studies that show how often a test is ordered simply to avoi…

Even if many testing companies are owned by doctors, the overwhelming majority have no stake in one. Citations re: excess testing: http://www.ncbi.nlm.nih.gov/pubmed/15928282 http://www.ncbi.nlm.nih.gov/pubmed/10136689

The second link hardly endorses your view. It says

Although our estimates delineate a wide range of potential savings, systemwide savings from aggressive malpractice reform could approach $41 billion over five years.

According to one source [1] the U.S. spent $2.6 trillion in health care in 2010. An $8 - $9 billion dollar savings per year from eliminating defensive medicine hardly adds up to "a lot more than 2%".

[1] http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/...

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

#153

Post by ktizo » Sun, Mar 04, 2012, 3:54 PM UTC

Cadsby wrote: post #149

yummyfajitas wrote: post #138

Earlier quoted context omitted.

I don't live in the US, but India does have a health care system fairly similar to the US. The biggest difference is it has less red tape than the US, and insurance companies play a minor role. Most people pay out of pocket and comparison shop. Costs here did vary significantly for the surgery - the dirty hospital was 0.9-1.5lac (depending on general ward vs private room, etc), the place where I had it done was about…

> The biggest difference is it has less red tape than the US, and insurance companies play a minor role. If true, you are glossing over a pretty substantial difference between the two systems.

And then ignoring most of the others, like the truly colossal difference in money spent per capita and the fact that the public health system, while so chronically underfunded that it is unable to do it's job, is at least nominally charged with trying to provide a free universal service paid for by taxation.

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

#154

Post by DanBC » Sun, Mar 04, 2012, 3:59 PM UTC

With an increasing elderly population there's a need for a lot more care, especially for people with dementias.

Here's one fascinating article about US prisons which face a serious problem. (Caution: contains descriptions of violent crimes.)

(http://www.nytimes.com/2012/02/26/health/dealing-with-dement...)

This shows that big improvements in quality of life can be achieved with small changes. Give health care assistants better training about dementia and give them more time to talk to patients. This small cheap change has several benefits: nurses can do more nursing; meals get eaten; falls are reduced; people feel like they're getting better care; etc.

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

#155

Post by apinstein » Sun, Mar 04, 2012, 4:03 PM UTC

The article completely ignores structural problems that lead to high prices. Since the US health care market effectively has government price controls (due to Medicare, which is a huge percentage of revenue for most facilities), this causes some perturbations in the market.

Pretend you're an optometrist. Historically you got paid well for your time, so you organized your business around seeing as many patients as possible and referring out things like labwork, glasses-making, etc, since you couldn't compete on price with shops that kept their capital equipment busy nearly 24/7. Life is good; you get paid well for your time and your customers get reasonable prices on things like labwork, glasses, etc.

Over time, your medicare rates keep dropping. Eventually you actually start losing money when you see medicare patients. You then realize that the labwork/glasses part of the business is pretty high margin, and even if you buy a machine and keep it barely busy, you can still eek out some profit from keeping that work in-house. So you buy some equipment, and instead of referring out labwork and glasses, you start doing it in-house. Again you can finally make money on medicare patients.

The medical device companies LOVE this. What better way to expand your market than "invest" (ahem lobby) so that your customers can make money with machines that are only busy 30-50% of the time. That's 2-3x as many devices as if they had 95% utilization, WIN! The doctors won't complain, b/c the system is so messed up that they know it's the only way for them to actually make money. And the insurers can't really do much about it b/c they can't force their patients to go to a different facility as that's too intrusive.

So it's kind of a combination of market failure, lobbying, and price-fixing that causes procedures to be way too expensive in the US since the normal market mechanisms that cause prices to approach a small margin over the cost at high capital utilizations to fail.

There's a lot more to it than that, but whenever I talk to my many relatives in the medical industry, this is always happening, and it's a major factor in prices. MRI machines aren't cheap (think $1M).

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

#156

Post by ktizo » Sun, Mar 04, 2012, 4:08 PM UTC

malay wrote: post #144

ktizo wrote: post #137

Earlier quoted context omitted.

So if they have been lowering prices for 30 years, why do the prices keep going up? I know there are increased costs due to medical advances, but this only accounts for half the increase in costs according to studies, so the rise from 5% of GDP in the 60's to 16% of GDP today, especially seeing the massive increase in GDP during that period, does not chime at all with the idea that the insurance industry is lowering…

My comment should have said that absent insurers over that time period, prices would be higher than they are currently. The effect they have is on controlling the level of price increases, not on lowering price absolutely (which I doubt is possible if people wish to keep extending their lives). I am not saying that insurers are the most effective option or advocating for them; I am only saying that without them, pric…

We have had such comparisons for MRIs posted on this thread already, given as examples of prices being much less at facilities that do not deal with insurers at all.

While I would agree that having buying power should bring down prices, this can be completely outweighed by the middleman trying to maximise profits. If prices are kept high, for instance, then you can make more money per person, so therefore having less administrative overhead per dollar made and so more profit margin.

For a non-medical example of this, just have a look at Apple, who make tons more money than their competitors, despite shifting less product, by simply ignoring the bottom end of the market.

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

#157

Post by khuey » Sun, Mar 04, 2012, 4:09 PM UTC

rospaya wrote: post #145

matwood wrote: post #133

Earlier quoted context omitted.

I never found a single place where I could post-pay with cash - they were all too afraid of drive-offs. Many municipalities in the US have made post-pay illegal, so even if gas stations wanted to offer it they couldn't.

Excuse my ignorance, but what does "post-pay" mean?

Paying for the gasoline after you put it in the vehicle. At most gas stations in the US, if you want to pay with cash, you park your vehicle at a pump, go inside and prepay a certain amount, fill up your vehicle, and then go back inside to collect any money you didn't spend.

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

#158

Post by yaix » Sun, Mar 04, 2012, 4:14 PM UTC

shingen wrote: post #96

yaix wrote: post #80

Earlier quoted context omitted.

> High health care spending is yet another way the US subsidizes other countries. Look at the US's trade deficit and dollar devaluations of the past 50 years to see who is subsidizing who. But that's beside the point. Look at it less nationalistic and rather as corporations vs. consumers. American consumers are "subsidizing" large corporations in an oligopolic market.

Your 50 years is a radical exaggeration. America had a budget surplus and stable dollar 12 / 13 years ago. Which is why gold was $270x / ounce, and oil was $12 to $20 and gasoline was still $1. Trade deficits are mostly irrelevant so long as you aren't accumulating debt, and your domestic economy is highly productive. I run a huge trade deficit with Amazon.com for example, as do all of their customers. That's ok beca…

Gov't budget and import/export of currency has nothing to do with each other.

Current account deficit is what I wanted to type, not only trade. It works like this since Bretton Woods (okay, 40 years ago): US has current account deficit, that means that US dolars (or bonds in USD) are collected by other countries, and the US receives physical values (traded goods, raw materials, etc.) in return. When the USD loses value vs other currencies, the other countries posess now less value, because the USD they own is worth less physical stuff/other currencies.

The US is trying hard to do the same thing with China currently, since China has bunkered some 3 trillion USD. Devalue the USD a few percent vs the Renminbi and the US has saved a lot of value it would otherwise have to "pay back" to China some day.

Its a good thing to run the leading international currency (ie the USD) because of the implicit value transfer to your own country.

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

#159

Post by dhughes » Sun, Mar 04, 2012, 4:19 PM UTC

Cass wrote: post #69

dhughes wrote: post #3

If there was medical procedure that would cost a lot in a hospital an MRI would not surprise me, it such a large powerful, power hungry, complex device I can't see how it couldn't. I wish each person could get access to an MRI each year it would be nice to track your health visually.

MRIs aren't much use for screening. They can't be used to diagnose many diseases at all, and for many others, their sensitivity and specificity are quite low. In addition, they produce a large number of huge, highly complex images that have to be reviewed by a human being, and it's incredibly easy to overlook something if you don't know what to look for. If I had a coffee for every time our radiology specialist has s…

My reasoning was compared to a CAT scan it seems safer.

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

#160

Post by pash » Sun, Mar 04, 2012, 4:28 PM UTC

mikeash wrote: post #122

asmithmd1 wrote: post #39

High health care spending is yet another way the US subsidizes other countries. From the article: "This is a good deal for residents of other countries, as our high spending makes medical innovations more profitable. “We end up with the benefits of your investment,” Sackville says. “You’re subsidizing the rest of the world by doing the front-end research.” In the past 30 years have you heard of any medical innovation…

Medical research spending in the US is approximately $500/person/year. The medical cost gap between the US and other countries is approximately $3,500/person/year. R&D spending simply does not account for for anything close to the huge discrepancy in costs.

You're missing the point. High prices for drugs, procedures, and medical devices in the United States are what makes their development financially feasible. Without the American market, the expected payoff to new medical technologies would be much lower, so it's reasonable to believe that fewer would be commercialized.

Americans bear the bulk of these costs, which are passed along in the price of their treatments, because much of the rest of the world has instituted price caps that are too low to cover the full cost of R&D, from basic science to a product approved for sale. (These treatments are nevertheless available in other countries because the marginal cost of synthesizing a pill or building a device that's already been developed is low.) It's a classic free-rider problem.