Another Great Swindle: Doctors, Hospitals, Pharma as Much to Blame as Insurers

Big Pharma CongressSix months ago, in a long-forgotten article, I quoted a Cleveland physician complaining that health care reform will cut his income so sharply he will be forced to curb his lush standard of living.

… a physician acquaintance in Ohio who is a highly regarded specialist with a seven figure income … complains to me that any of the current health reform proposals will cut his income in half, at least, as if his life would disintegrate if he had to live on only five or six hundred thousand dollars a year. Better 47-million people not have access to his training, skills and expertise than he drops one of his two country club memberships because of personal financial hardship.

While the health insurance industry’s immoral, amoral and, sometimes, illegal treatment of policyholders is an appropriate prime culprit and target in the current push for reform, the fact is that physicians, hospitals and drug companies are getting an undeserved pass by much of the media. They are as much to blame for health care problems and out-of-control costs as Aetna, the Blues, Wellpoint and other insurance companies.

Trouble is, not only is the media letting them off the hook, so is Congress.

One of the original key goals of health care reform was to lower the obscene cost of getting sick and recovering in America, whose citizens pay far more for everything from a simple visit to the doctor to complicated tests to prescription drugs than anyone else in the civilized world. Yet neither the likely House version nor the current Senate version of reform give cost cutting more than a flicker of attention.

So Kaiser Permanente chief executive George Halvorson showed Ezra Klein of the Washington Post a series of revealing and extremely disturbing charts, comparing the cost of similar medical services in the US and five other Western countries plus US Medicare.

Kaiser is the largest managed care organization in the US, founded in 1945 by industrialist Henry Kaiser, and consists of the Kaiser Foundation Health Plan, Kaiser Foundation Hospitals and regional Permanente Medical Groups.

Since it insures some nine million people as well as operating not-for-profit hospitals and clinics, Halvorson has horses running in the race – but on both ends of the betting line. So while he is in a unique position to see the issue two ways.

Physician-Fee-ChartOffice Visits
According to Halvorson’s charts, it costs the typical patient in the US anywhere from $59 to $151 to see a doctor. In countries with a national health plan, the price is a fraction of what it is here. In Spain, the cost to see a doctor is $15; Germany $22; France $31; the Netherlands $32; and Canada $30. Under Medicare, it is $72. In Canada, for example, the fee for a doctor’s visit is negotiated between the government and the College of Physicians and Surgeons in each province; in the US rates are whatever the doctor can get away with charging, except when treating Medicare and Medicaid paitents.

Yet Congress is backing off trying to control even a portion of the cost of an office visit by refusing to roll back scheduled increases in what Medicare pays physicians to see each patient. No wonder the AMA gave its full-throated endorsement of the House bill – and reform generally – yesterday: Its member’s income won’t be affected one bit so my physician friend in Ohio will be able to keep both of his country club memberships.

Scans-And-Imaging-ChartComplex Exams
Nothing in the human body is more complex than the brain yet there are enormous spreads in the cost of a CT head scan between the US and other countries. In America, with “the greatest health care system in the world,” a CT head scan cost ranges from $950 to $1,800. In Canada, where I’ve had such a scan, the cost to the system ranges between $41 – really! – and $530. Germany is the most expensive of the six countries compared yet its cost per scan is one-third of the low end of the US range.

Prescription Meds
It’s just as bad in the US after the tests are done and a patient walks from the doctor’s office to a pharmacy across the street to fill a prescription.

Lipitor is a widely-advertised and often-prescribed medication for lowering cholesterol. In America, the pharmacist will collect anywhere from $125 to $334 before handing over the prescription bottle because drug prices are not regulated.

In one of Congresses most disgraceful sell-outs, in 2005 it prohibited Medicare from negotiating with Pfizer for what will be charged patients for the drug. Yet in each of the five other nations surveyed – where government negotiates the price of all prescription medications – patients pay a tiny fraction of what Americans must shell out.

What happens when the price of Lipitor is negotiated? It plunges. I mean plunges: In each of the other five countries, the cost per prescription is anywhere from one-quarter to one-half of what Americans shell out for the exact same medicine treating the identical ailment.

Big Pharma CongressYet Big Pharma got Congress and the Obama administration to agree to not set up a system to negotiate drug prices. So, every time any American needs to have a prescription filled, the pharmaceutical industry and member of Congress will make them wish they lived somewhere else. No wonder so many people in the US buy medicine in Canada.

As WaPo‘s Klein notes, “There is a thudding consistency to the (charts): A series of crude bars, with the block representing the prices paid by American health-insurance plans looming over the others like a New York skyscraper that got lost in downtown Des Moines.”

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There is a reason why American health care costs so much more than in any other country: We pay so much more for each unit of care. As Halvorson explained to Klein, and both university studies and consulting companies confirm repeatedly, if you leave everything the same – number of procedures, days spent in hospital, number of operations done – but plug in prices Canadians pay, America’s health care spending falls by 50%.

This is more than enough to cover every uninsured person in the US.

Charley James
The Progressive Curmudgeon

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Comments

  1. Adam Eran says

    One omission: The AMA has conspired to restrict the supply of physicians, working to limit the number of accredited medical schools, therefore artificially inflating compensation.

    And have you ever asked yourself why doctors-in-training have to work sleep deprived? Is that really going to improve the quality of care?

  2. says

    JCS …

    Thanks for reading the article and taking time to comment. Let me address some of your points.

    Filling Out Forms: Among other sins, it is unconscionable that the insurance industry cannot come up with a standard claim form and physician’s report. There are standard diagnostic, exam and treatment codes; why not do the same for claim filing? This would cut costs tremendously for physicians.

    Student Loans: It strikes me as insane that someone who wants to be a physician must incur six-figure debt loads. It would make much more sense for the federal government to provide subsidies for med students in exchange for which they would agree to spend X-number of years working in, say, inner city clinics or rural communities or someplace where doctors are in short supply.

    Malpractice Insurance: As Pres. Obama has suggested, perhaps some sort of reasonable cap on awards for malpractice are in order – as long as patients whose life is ruined by careless physicians or hospitals still have adequate recourse. One reason malpractice premiums are lower in Canada than in the states is that civil tort cases are heard by a judge, not a jury, so awards are more in line with damages. In the US, this may be the most effective form of tort reform as long as cases are not heard by elected judges who might be swayed in their decisions by companies, medical associations or hospitals giving them campaign contributions. Perhaps a special section of the judiciary where judges are appointed to, say, five year terms by an impartial body.

    Again, thanks for taking time to comment on my article.

    Charley

  3. Lisa says

    As my husband’s VA primary doctor so aptly put it to us one day, “…if all medicine in the US was under a VA-type program, doctors would have to become doctors instaed of businesspeople.”

  4. JCS says

    Intersting… but, not entirely accurate piece.

    The costs of an average office visit are probably accurate. But, you fail to recognize:
    -the overhead associated with providing that care are substantially higher in the U.S.
    -the average U.S. citizen visits a physician 3.5x/year, Canadians 6.6x/year (they make it up in volume)
    -average cost to file an insurance claim $8-$18
    -$15,000/yr primary care malpractice insurance in the U.S., around $2,200/yr in Canada (tough stat to find)
    -$155,000 debt for a medical grad in the U.S., virtually free from debt in Canada

    As a primary care physician, working 65hours/week(that is until flu season hits), making 1/10th of your reference, I think you need to acquaint yourself with a different crowd. Perhaps you’ll have a better idea about who is really ‘to blame’. And before you start asking to cut the payments to physicians by comparing them across borders, you should have some idea about what really goes into the cost of providing that care.

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