Why an MRI costs $1,080 in America and $280 in France - Ezra Klein

[Bill USA]

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/15/why-an-mri-costs-1080-in-america-and-280-in-france/
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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.

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[cbrer]

1. Executive bonuses...

Shareholder profits, Political payoffs.

Making Grandpa's cancer a business opportunity is just stupid, selfish, greed. Pure and simple.

[LiberalElite]

2. Of course we see doctors less often -

we CAN"T AFFORD THEM!!!!!!!!!!!!
I have insurance through my employer and the copay really adds up!

[goldent]

3. I had an MRI and a couple CT scans over the last several years

and my experience is that the machines were not heavily utilized and there are a lot of people staffing the centers. In one case, a CT scan was ordered, and I was sent over the "imaging" building. It was well staffed but few if any patients, and I just walked in and got my scan immediately.

[jeffrey_pdx]

4. Don't know if this is true....

I read or heard somewhere that part of the problem is competition. Let's say you live in a medium small town with 2 competing places (whether they're clinics or hospitals) to get healthcare. Since they are competing against each other for business, they both have to buy an MRI machine or they will lose that business to the other. Even though there are only enough people in the area to necessitate 1 machine. This leads both of them to up the price you pay to cover the cost they paid for the machine. Probably a little simplistic, but seems to make sense to me.

[daybranch]

5. simplistic maybe but worth discussing

Why are Doctors even allowed to own such facilities? This is a vertical monopoly assuring the doctor will oder unnecessary MRIs . There are much better ways.

[JayhawkSD]

6. You're on the right track

Except that it's the opposite of competition.

Initially hospital A had a CT machine and B had an MRI machine. A sent its MRI patients to B and B sent its CT patients to A. All of the patients were taken care of, the machines were utilized 90% of the time, and everyone made a profit.

Then A decided that they were losing profit to B when they sent patients over for MRI's, so they bought their own MRI machine. This allowed them to do their own MRI's and make additional profit. A retaliated by getting their own CT scanner. So now the machines are utilized only 45% of the time and everyone is making less profit, so they raise the prices to compensate. They also, of course, order more MRI's and CT scans to increase the utilization.

True competition drives prices down. This is an example of greed, and it happens all the time.

goldent goes in and sees the MRI and CT machines busy because there are too many of them for the existing patient load. The reason for that is that there is no competition. The law allows the provider to provide a service, a necessary service, often an emergency service, without telling the buyer in advance what it will cost.