The lobbyists have mounted up
The New York Times featured a fascinating article today on the benefits of medical tourism for joint replacement surgery. It follows a man who had his hip replaced in Belgium at a fraction of the cost he would have had to pay in the US. (In this case, he would have had to pay out of pocket because his osteoarthritis was considered a pre-existing condition. Under Obamacare, his insurance would have to pay, although the inflated prices would be little different.)
It's a very interesting piece worth reading all the way through, but I thought this really crystallized our problem --- a problem which is not going to be eliminated through the implementation of Obamacare:
The pricing system in Belgium does not encourage amenities, though the country has among the lowest surgical infection rates in the world — lower than in the United States — and is known for good doctors. While most Belgian physicians and hospitals are in business for themselves, the government sets pricing and limits profits. Hospitals get a fixed daily rate and surgeons receive a fee for each surgery, which are negotiated each year between national medical groups and the state.
Why is the US so expensive? Well, while many parts of the medical industry along with the government are trying to reduce costs it always seems to come down to this:
While doctors may charge more than the rate, few do so because most patients would refuse to pay it, said Mr. Boussauw, the hospital administrator. Doctors and hospitals must provide estimates. European orthopedists tend to make about half the income of their American counterparts, whose annual income averaged $442,450 in 2011, according to a survey by the Commonwealth Fund, a foundation that studies health policy.[This means they are forced to get by on a mere 220k a year...]
Belgium pays for health care through a mandatory national insurance plan, which requires contributions from employers and workers and pays for 80 percent of each treatment. Except for the poor, patients are generally responsible for the remaining 20 percent of charges, and many get private insurance to cover that portion.
Mr. Shopenn’s surgery, which was uneventful, took place on a Tuesday. On Friday he was transferred for a week to the hospital’s rehabilitation unit, where he was taught exercises to perform once he got home.
Twelve days after his arrival, he paid the hospital’s standard price for hip replacements for foreign patients. Six weeks later he saw an orthopedist in Seattle, where he was living at the time, to remove stitches and take a postoperative X-ray. “He said there was no need for further visits, that the hip looked great, to go out and enjoy myself,” Mr. Shopenn said.
The Affordable Care Act tries to recoup some of the medical device manufacturers’ profits by imposing a 2.3 percent tax on their revenues, effective this year. But Brad Bishop, the executive director of OrthoWorx and a former Zimmer executive, said that the approach would harm an innovative American industry, and that the cost would ultimately be borne by joint replacement patients “whose average age is 67.” He argued that the best way to reduce the cost of joint replacement surgery was to rescind the tax and decrease government interference.
Read this to see just what a boondoggle the medical device system in America really is. They have a powerful, wealthy lobby and they will not give up even one cent of their profits without a fight.
The medical device industry spent nearly $30 million last year on lobbying, according to the Center for Responsive Politics. The Senate moved to repeal the tax, and the House is expected to take it up this fall. The bill’s supporters included both senators from Indiana.
[T]he implementation period brings a dangerous asymmetry: The public quiets down, as people think action has been taken, but the lobbyists mount up. --- Ezra Klein