High Price for a New Hip — charges “because they can”

xray total hip

Elisabeth Rosenthal of the New York Times is the author of the lead story on 8/4/13 “For Medical Tourists, Simple Math” about the high cost of hip surgery in the US with an astounding comparison to the low cost in Belgium.  She quotes US orthopedic surgeon Rory Wright saying that joint makers keep prices high “because they can”, not because of research and development or liability costs.   Once again, the Times presents strong evidence of price gouging in the US health care system.

Below is the cost information presented in the article in US dollars in 2012 — the fees presented reflect the repudiated “chargemaster” fees for uninsured individuals   Belgium has national health insurance with some basis in reality for payments (and some national price and profit restrictions)

Hip Costs US Belgium 2

Below is a table from the Commonwealth Fund on fees paid to doctors by public payers (like Medicare) and private payers (like private insurance)

pc orth comparison

The US makers of knee and hip implants (Zimmer and OrthoWax) pay their CEO’s in excess of $8 million dollars per year each.  In 2007 device makers had to pay $311 million to settle a claim of kickbacks to surgeons.  Artificial hips cost about $350 each to manufacture  but hospitals and insurance companies usually pay between $4,500 and $7,500 each.

Conclusions:

  1. People in the US without insurance are at a tremendous disadvantage.
  2. Hip and knee implant manufacturers make huge profits in the US.   Other countries solve the problem with price controls and limits on profits placed on the very US companies that freely gouge US customers and damage the US economy.  Does congress care?
  3. If you live in the US, need surgery, don’t have insurance,  and do have enough money for an airplane ticket then:   go to another country for your surgery (Belgium has a lower infection rate than in the US as another advantage).
  4. Lack of insurance should be a vanishing problem in the US with ObamaCare but the high cost paid by insurance (ultimately paid by everybody) is far too high.
  5. The work of surgeons is undeniably valuable. Somehow many other products and services associated with surgery seem to get paid high fees for no reason.  An operating room is not  surgery, a metal implant is not  surgery, and a hospital room is not surgery.  Those associated services are hugely overpriced and need price controls and profit limitations.
  6. Surgeons get paid much more than primary care providers, which makes sense based on the years of training and experience.  If surgery is really needed  then health systems and patients gladly pay for the talent.

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