The Problem With American Health Care Is Price Gouging
If you want to really fix America’s health care spending problem the answer is not to move away from pay for service, “skin in the game,” or to shop around for insurance on exchanges. The root of the problem is price gouging. The government mostly refuses to stop it and even actively helps large sections of the health care industry engage in price gouging.
The New York Times has a very good look at this problem for joint replacement, but this is in no way a unique problem. This same basic problem exists through our health care system.
Generic or foreign-made joint implants have been kept out of the United States by trade policy, patents and an expensive Food and Drug Administration approval process that deters start-ups from entering the market. The “companies defend this turf ferociously,” said Dr. Peter M. Cram, a physician at the University of Iowa medical school who studies the costs of health care. […]
His joint implant and surgery in Belgium were priced according to a different logic. Like many other countries, Belgium oversees major medical purchases, approving dozens of different types of implants from a selection of manufacturers, and determining the allowed wholesale price for each of them, for example. That price, which is published, currently averages about $3,000, depending on the model, and can be marked up by about $180 per implant. (The Belgian hospital paid about $4,000 for Mr. Shopenn’s high-end Zimmer implant at a time when American hospitals were paying an average of over $8,000 for the same model.)
If you give a company exclusive rights to a life saving or dramatically life improving technology, the company is going to charge as much as possible. Since people don’t want to die they are going to pay whatever they can, even if it drives them into debt.
Just about every other first world country understands this insane and dangerous dynamic so they use something like single-payer or all-payer to regulate prices. In the United States, our well-lobbied Congress instead allows the industry to dramatically rip-off regular people and taxpayers.