Editorial: Why does U.S. pay so much for basic medicine?

Published: Tuesday, Jun. 4, 2013 - 12:00 am | Page 10A

Trying to find out how much a hospital stay or any medical procedure costs requires "an advanced university degree in Dante's Circles of Hell," wrote Joe Livernois in an April 7 piece in The Bee's Forum section.

He was trying to compare the cost of his father's nine-day hospital stay in Mexico – including all the lab work, drugs, anesthesia and specialists – with an equivalent stay in California. In Mexico, the cost was $6,375. Here, the cost was nigh impossible to pin down, but after considerable tracking, Livernois estimated it would be about $125,000.

Now, the New York Times has embarked on a series, "Paying Till It Hurts." Launched Sunday, the first installment is a comprehensive 4,000-word piece looking at colonoscopies as a prime example of why U.S. health care costs are so much more than in other countries.

That routine cancer screening shows that the high cost of U.S. health care compared to other countries "may not be the use of extraordinary services, but the high price tag of ordinary ones."

If Obamacare, or any reform of the U.S. health care system, is to work, we have to figure out how to bend the cost curve downward. U.S. costs clearly are way out of line.

A fundamental problem is after-the-fact, opaque pricing. We can neither do comparative shopping nor raise hell about prices because we see costs too late, after a service is performed, or not at all.

As one doctor quoted in the story asked, "If you go to the supermarket and there are no prices, how can you make intelligent decisions?"

That is the first thing that has to change. We have to pin down and publish costs.

How far out of line are U.S. costs? The latest report from the International Federation of Health Plans has nice charts that should astonish Americans (see www.ifhp.com).

Consider Switzerland. That country has something like the U.S. Affordable Care Act – a mandate that all individuals carry health insurance, financial assistance for lower-income individuals, a regulated insurance market and competition among insurers.

A typical heart bypass costs $17,729 in Switzerland, $73,420 in the United States. An appendectomy costs $4,782 there, $13,851 here. Baby delivery costs $4,039 there, $9,775 here. The drug Nexium (for acid reflux) costs $71 there, $202 here. On and on. Americans should take a closer look at the Swiss system to see how they contain costs.

The New York Times also shows enormous variation in costs within the United States. For example, the typical colonoscopy in San Diego costs $2,041; in Los Angeles, $5,559.

Look closely at the colonoscopy case study, and you'll see that cost largely depends on where the procedure is done. If at the doctor's office, it is a lot cheaper than at a special "surgery center," where a hefty facility fee gets tacked on. Cost also depends on who administers the moderate sedation (such as a low dose of propofol). If by the doctor or nurse in the doctor's office, as is done in other countries, it is a lot cheaper than if done by an anesthesiologist or nurse anesthetist, as in the United States.

But it is hard to win changes. Aetna in 2007 tried to stop payments for anesthesiologists administering propofol during colon-oscopies; the providers squawked, so Aetna backed off.

In our system, pricing depends on the bargaining power of the insurers and providers – so prices vary wildly for patients seeking the same service with the same doctor. In other countries, as the New York Times points out, payment rates either are set as if health care were a public utility, or they are negotiated nationwide.

First things first, Americans have to be able to see posted prices for visits, procedures and drugs. Before we can reduce costs, we have to know what they are. Then we can all protest excessive costs and hold providers accountable.

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