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

[bannination]

http://www.washingtonpost.com/blogs/won ... in-france/

The result is that, unlike in other countries, sellers of health-care services in America have considerable power to set prices, and so they set them quite high. Two of the five most profitable industries in the United States — the pharmaceuticals industry and the medical device industry — sell health care. With margins of almost 20 percent, they beat out even the financial sector for sheer profitability.

Wait, what?

[k9nanny]

Sarah Kliff got further data showing an MRI can cost anywhere from $400 to $1,861 in Washington, DC alone.

My nephew in Raleigh wrote:

So it turns out that 2 MRI scans cost about $5,000. Wish someone would have told me that Blue Cross would only pay about $1,500. I guess I am a naive healthcare consumer.

[Wneglia]

Sarah Kliff got further data showing an MRI can cost anywhere from $400 to $1,861 in Washington, DC alone.

My nephew in Raleigh wrote:

So it turns out that 2 MRI scans cost about $5,000. Wish someone would have told me that Blue Cross would only pay about $1,500. I guess I am a naive healthcare consumer.

Charges for a procedure have no bearing on cost, or reimbursement. I had a cardiac ablation in October, in which I was in the cath lab for about 4 hours, and in the hospital overnight (not CCU). My bill was $110,000 and insurance paid $45,000. Our fees are set a little higher than commercial insurance, but nothing like that.

[Leo Lyons]

There just isn't any reason that charges should be what they are. I do realize that diagnostic/treatment equipment is expensive, as well as salaries for trained personnel, and other overheads; but they don't have to attempt to recoup their monies in one @#$%& treatment!

[rstrong]

There just isn't any reason that charges should be what they are. I do realize that diagnostic/treatment equipment is expensive, as well as salaries for trained personnel, and other overheads; but they don't have to attempt to recoup their monies in one @#$%& treatment!

There are a few reasons, actually.

First I'd like to clarify:

- When I refer to Canadian healthcare as "free", I mean free "the second time." Free by American standards. Americans pay more taxes per capita than Canadians (the "public" portion of this graph). The difference it that Canadians then GET that healthcare, where Americans must pay a second time.

- Unlike France, here in Canada we don't have socialized medicine. (Most doctors' practices, hospitals and walk-in clinics are privately owned.) What we have is partially socialized insurance. But the government does set many healthcare industry minimum standards.

- Emergencies are taken care of quickly and for free. Wneglia's cardiac ablation would not have cost him a dime in Canada. But the less of an emergency your problem is, the more likely you are to run into waiting lists and fees. The fees are mostly for dental and drugs.

- So we also have private insurance - insurance that costs far less than in America because of what the public system covers. Sleep Apnea, a non-emergency example, has a waiting list of many months in Manitoba just for the overnight respiration and blood oxygen test. In my case I instead went to a private clinic and had the test the following week. It cost $198, compared to $7000 in the US. My private insurance covered the $198, plus another $2000 for a CPAP machine.

Right then.

First, that $198 vs $7000 mentioned above isn't the whole story. The government had also pitched in what it would have cost them had I gone through the public system. And so I suspect that $280 in France may not be the whole cost either.

Second, while the system in each country is set up to take care of the customers, there's a big difference in who the customers are. In Canada and France, the patients are the customers. More importantly, with the government setting the standards, the customers are also voters. Elections get lost on issues like "hallway medicine."

In the US on the other hand, health care companies are investment companies. They need to give the best possible results for their customers - the investors. That's how the free market works. And there's a MUCH larger disconnect between the quality and cost of healthcare, and the voters.

Third, while healthcare isn't much of an issue in American elections (the recent farce - where the Republicans fought against 15 years of Republican healthcare policy - excepted), it IS an issue for healthcare firms. Lots of money goes into lobbying. And so the American healthcare industry enjoys a congressionally granted exemption from anti-trust laws that is the envy of every other industry.

Fourth, in most cases Canadian and French doctors and hospitals deal with ONE insurance bureaucracy. In America you're dealing with 100 parallel bureaucracies. Small wonder that private-insurance administrative costs in the U.S. are as high as 18 cents on the dollar, 5.8 cents for Medicare and Medicaid, and 4.2 cents for Canada. (citation)

That also means less costs for doctors themselves. An American journalist who deals with healthcare in both countries notes:

First, as noted, they don’t have to charge higher fees to cover the salary of a full-time staffer to deal with over a hundred different insurers, all of whom are bent on denying care whenever possible. In fact, most Canadian doctors get by quite nicely with just one assistant, who cheerfully handles the phones, mail, scheduling, patient reception, stocking, filing, and billing all by herself in the course of a standard workday.

Second, they don’t have to spend several hours every day on the phone cajoling insurance company bean counters into doing the right thing by their patients. My doctor in California worked a 70-hour week: 35 hours seeing patients, and another 35 hours on the phone arguing with insurance companies. My Canadian doctor, on the other hand, works a 35-hour week, period. She files her invoices online, and the vast majority are simply paid — quietly, quickly, and without hassle.

Fifth, the folks running the MRI in the US pay massive insurance fees in case they miss something. Such a mistake throw a middle-class family permanently into the ranks of the working poor, and render the victim uninsurable for life. Not so in Canada, where not only is the cost of fixing the mistake already covered, but no matter what happens the victim will remain insured for life. When lawsuits do occur, the awards don’t have to include coverage for future medical costs.

[Wneglia]

Also, we've created a system that has largely removed both competition and rational decision making from the equation. Not every podunk hospital needs an MRI, but too many have them and are not efficient with their use because reimbursement at any price is mostly guaranteed. We would get by just fine with fewer MRIs used nearly to their capacity and patient transport by EMS for the few emergent cases. That's exactly what we would have if either the rational market or an effective bureaucracy was calling the shots.

It looks like Pardee Hospital is the outlier in MRI costs in the Asheville metro area.

Hendersonville Imaging Center, run by private physicians, is the least expensive. This is true anywhere in the country. Private physicians can provide care in their offices much cheaper than in any hospital.