One of my money expert friends refuses to believe that we are being bilked by the health care industry. Sure we spend 18 percent of GDP and Singapore spends 4.5 percent and we spend more than twice as much per person in dollars as do the richer European countries. However, American pharma and healthcare are way better than in those other parts of the world where they spend less.
Life expectancy statistics suggest that American health care is not better, but we can argue about lifestyle, accidental death rates, etc.
How about a new measure: exports of our purportedly superior products and services.
There are plenty of upper-middle-class and richer people all around the world. We can assume that their desire to be healthy and alive is as strong as ours. If our pharma is so great and the new patented drugs so much more effective than older generics, are foreigners happy to import these new drugs and pay U.S.-style prices for them? If our hospitals and procedures are more advanced, do we see planeloads of upper-middle-class French and Germans, for example, coming to hospitals in the U.S. for treatment? There is no debate that we charge 5-10X more and that they’ve already paid for insurance over there, but if we really do a better job wouldn’t at least a sizable number be willing to invest $800 in a plane ticket and whatever we are charging for procedures? What’s more valuable to a wealthy French or German citizen than health?
What do readers think? Is this a good metric?
Related:
- my health care reform proposal from 2009 (pretty much the opposite of what was done with Obamacare! I advocated for universal coverage at a predictable and budgeted cost. Obamacare leaves out tens of millions of Americans and nobody can say what the cost will be.)
- Book review: Bad Pharma (do new drugs work better than old drugs?)
‘Richer European countries’ are fairly small countries and are not France or Germany. Anecdotally, I recall there were foreign patients in the hospital I briefly contracted for, at least management bragged about them. This resource claims that some Europeans do indeed seek medical treatment in the USA. http://www.patientsbeyondborders.com/united-states
“Each year, some 300,000 international patients visit the United States seeking excellence in specialty care—especially in complex or “high-acuity” cases. US facilities and physicians are rarely able to beat the price at a JCI-accredited hospital in India, Turkey or Thailand; however, American specialists often are called upon to treat cases considered difficult or untreatable elsewhere.”
“Similarly, healthcare clusters in South Florida tend to attract the Latin American and Caribbean patient, while Boston and the greater New York region bring in affluent patients from all over, including Africa, the Middle East, Western Europe and—increasingly—Russia and China.”
I would say so called non-profit hospitals overcharge for in-patient stay and routine medicine delivered in house but surgery and procedure rates are reasonable, as well as prices for one of its kind medical equipment that do not have iPad – like markets. Anecdotally, outcomes seem better in the USA than in another very smart and recently developed country for which I have had a chance to compare lifetimes of people related to people of approximately same age living in the USA.
You have to break out international comparisons by race/ethnicity. The question is how long do Northern Europeans in America and West Africans in America live.
bobbybobbob: Life expectancy for the white working class is actually getting worse, in contrast to most rich countries. Speculation is that morale is suffering because of declining life prospects and rising inequality.
Philip: I think some people just find it hard to believe that US health care isn’t working very well.
Using export value as a metric: if US pharma products are so good then why are they priced lower when they are exported to Canada? Shouldn’t Canada be willing to pay more, not less, to import them?
Conversely, there is a strange black market where Americans travel to Canada to buy American drugs at a discount. So at least American consumers seem to believe it is worth the extra effort to buy American pharma products.
billg # 4: Was it a rhetorical question? It is because Americans subsidize Canadians by financing drug development. You gave a good example of American pharma being superior to Canadian. Those medicines were not developed in price-controlled Canada.
Russil Wvong #3 : Not very familiar with Canadian health system but Canadian health care does not provide adequate emergency care in off hours, at least at many locales. That lowers participation in risky sports such downhill skiing and sky-diving and lowers Canadian GDP! Also I have met Canadians east of the border who came for some surgery procedure, they were furlongs in Canada for years. Frankly I prefer active lifestyle just do not want such healthcare.
Dean, the subsidized drug and medical tech song and dance is ridiculous. The drugs and tech are almost all scams that don’t actually work. This stuff is essentially a way to fleece dumb Americans.
bobbybobbob #6:
I disagree with your statement. Pharma companies are working to make (lots of) money, and officers and principal would choose fishing or tutoring their own children if that opportunity was close for them. And investors would take their money elsewhere. I have observed several individuals whose chronic and deadly conditions were treated wit dynamic cocktails of medicine that prolonged their active lives for decades. I have had several coworkers surviving and working why being treated for different forms of cancer. This situation would unthinkable in other countries I have had some familiarity with. Of course, there are stooges everywhere but overall medicine advantage in the USA is very real. Maybe not in comparison to Switzerland (not sure) but overall it is.
dean: “Pharma companies are working to make (lots of) money, and officers and principal would choose fishing or tutoring their own children if that opportunity was close for them. And investors would take their money elsewhere.”
This doesn’t actually contradict what bobbybobbob is saying. It’s possible to make tons of money from something that doesn’t work.
Charles Wright gives an example:
dean: I can’t comment on sky-diving, but we do have downhill ski resorts in Canada, and we do in fact have ERs that are open 24 hours.
I know first hand that some of our state of the art medicine is highly sought after by people all over the world. I know because I got cancer in 2000 and was cured via US medicine. I went for treatments for 8 weeks alongside many foreign people who had come to the same US clinic for treatments. We all read the same published medical studies presented by those doctors. We all wanted the best available medicine. Oh and the foreign universal coverage is to do nothing in many cases for this disease.
The real issue is that treatment plan is not universally used. It offers 90-95% cure rates with few side effects. But 5 other treatment approaches are still widely used at much higher cost. Those approaches offer 50-80% cure rates and more side effects. But those treatments are cheaper initially. But then the side effects make the total cost a lot more. Plus in some counties the “treatment is to do nothing” and let the cancer grow and cause side effects and a future death sentence because the patient is old. Go figure.
@dean, @Russil: US health care is a big system. Fantastic, innovative beneficial interventions AND expensive treatments which don’t do much or worse, produce side effects which beget more interventions. Some of that is just the art part of medicine, of course and some of that is profiteering within an out of control system. However, I’d bet (without knowing the actual numbers) that the U.S. system also fosters more risk taking and more innovation than other systems. There’s a cost associated with it of course, but I’m not sure we want to get rid of all of that cost in the name of cost effectiveness/efficiency.
@philg: This sounds like a doctoral thesis level question. I would worry there is too much real world friction (e.g. a French speaker might be reluctant to seek treatment from an English speaking physician) to make the comparison meaningful.
“Using export value as a metric: if US pharma products are so good then why are they priced lower when they are exported to Canada?”
Actual reason is NOT that US subsidizes our market, but that our system is allowed to negotiate the prices for large-scale purchase/placement in the formulary, as does your VA? I think.
Nobody puts a gun to the head of Big Pharma and forces it to sell products cheaper up here in Canada. They do it willingly, knowing that their congresscritters will protect their backs south of the Medicine Line, forcing US customers to pay silly prices or die.
I’ve never met anyone who has willingly gone south for treatment. I know it happens. I do know folks who winter in AZ and NM and head south of the border for dental work. That count?
I was signing up for (European) private health insurance a while ago, and found that problems while in the US were explicitly not covered. I assume this is because of the infinite money drain possible if something happens.
I also assume that those going to the US for treatment are rich people who want those superior treatments. But how is this managed in practice? Do they actually get a price for the procedure beforehand, for example?
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Actually, we see 40,000+ Canadians coming to hospitals in the U.S. for treatment.
https://www.usnews.com/news/best-countries/articles/2016-08-03/canadians-increasingly-come-to-us-for-health-care
Gordon Macdonald #12:
Canada uses same trick as I once did, paying < $100 for medical machine based treatment that costs over $1000 (to amortize the equipment). Since the equipment was already there it did not make for doctor to keep it idle and I negotiated the price. Not using it was real possibility for me. Most of medicine does not cost much to produce, but it costs a lot to develop. Canada would not be able to buy it cheap if it was not developed expensively. In few years after development price of medicine goes down dramatically due to generic drug makers piggybacking on drug inventors' often blind and expensive research and FDA certification. I do not see broken system per se in drug development. Thanks for emphasizing my point.
Hard to imagine someone commuting from AZ to Canada for dental work and not loosing money in the process. Unless they know and like specific dentist. With no insurance, complete dental procedures cost form low $$$ to low $$$$ and it seems that travel costs from AZ and price of accommodations + at least some dental fee in Canada would come close to costs of local dental procedure.
many people make the mistake of thinking single-payer leads to lower prices. this is 100% wrong. other countries have lower costs because the government imposes lower costs.
this makes sense. how can an american negotiate emergency rates if they’re unconscious? how can one negotiate if most providers won’t disclose prices until after they’ve treated you? all prices should be published like any other industry. wholesale drug/equipment prices should be the same nationally, and retailers with the same owner should sell for the same price in the same county/state.
with monopoly providers of water/electricity we set prices high enough to cover costs + “reasonable” profit, but low enough that ~100% of people don’t need a subsidy. that’s what we should do with emergency prices, and drug/equipment prices (or have mandatory licensing. something like patent holder gets 5% of gross sales of generic competitors)
dean: Gordon is talking about Canadian retirees getting dental care in Arizona while they’re wintering there, so he’s agreeing with you that this does happen.
Babe: see Phantoms in the Snow (2002) for a more detailed study of Canadians getting medical care in the US.
dsgntd_plyr: agree completely. The US government does set prices paid by Medicare and Medicaid, and they’re lower than the prices paid by private insurers. See Lesson 7 (“Prices are the fundamental challenge in American health care”) in this article.
Thanks Russil for noticing. Most times I am multitasking while reading/writing and hence typos and misreads, sorry. Do not see how financial engineering will increase availability of new treatments. Old drugs are not the problem – generics are very cheap, cheaper than food. But dsgntd_plyr suggestion would make them more expensive of course.
” I do know folks who winter in AZ and NM and head south of the border for dental work. That count?”
South of the Border relative to AZ and NM! Only a crazy person would voluntarily get dental work done in the US rather than in Canada unless it was an emergency.
They are heading to Mexico for the work and finding it satisfactory. (My cousin spends part of the winter south of Phoenix, and they save up their work until they can head south for a few days. Other members of their snowbird group do as well. Usually this is only for pricy stuff like implants and major reconstructive, that insurance does not fully cover.
I have personally >never< met anyone who has gone to the US for any kind of health care. I am sure there are people like that, but I imagine they are very rich and/or very impatient. Critical care here is free and fast. Not so much with knees and hips, the bane of our aging population. We have wait lists for MRI but not much with other diagnostics.
We have heard lots of horror stories (some true) about snowbirds having minor problems in the US while on vacation. Usually the insurance company bargains away the bill but not until everyone's life is made miserable by worry.
I have to admit that if I had a wonky knee I'd consider getting it fixed in the US for speed, but then I'd not have the physio and follow-up care covered, which can be significant. You could probably shop around, couldn't you? Is there a Walmart for orthopedic surgery?
>but then I’d not have the physio and follow-up care covered
Another significant friction point reducing the utility of medical tourism.
I have a friend in Scotland who fell down the stairs THREE years ago and is still getting his back fixed. He did not go to the emergency room to start so it is considered maintenance. Thus the doctors there have been giving him pain killers all this time. They told him to wait to see a back guy, wait for a MRI, wait for some more tests, wait for blood work, stop taking this med and see if blood changes and so forth. So now he is a drug addict and they have not done back surgery for three years even though every doctors says he needs it.
And many of the foreigners who get treatment at the cancer clinic in Georgia are UK and Canadian. The reason is the standard “cure” for prostate cancer there is “wait ans see”. So they do nothing. And in a big percentage of those cases the patients die from prostate BONE cancer with crazy pain all over. This is your great single payer system in Scotland and the UK.
I broke piece of cartilage off in my knee. As a Canadian living close to the US border this was an opportunity to compare the costs and timelines for arthroscopic surgery to remove the piece (no other work was to be conducted).
Canada – Free as part the universal health care scheme. Wait time between three and five weeks. Ultimately, an opening came up early, total wait two weeks. This is what I went with.
Canada – Private. Quote 3 to 4k Cad, wait time 3-10 days. Actually done by the same doctor, in the same hospital as the public system. Just a different waiting list. No uncertainty on costs; if an unexpected outcome occurs all follow up is covered under the public system.
USA – Private. Quote 5 to 6k USD. Wait 10 days to three weeks (I didn’t shop around, perhaps faster service was available). Extreme uncertainty on the cost of emergency follow up care if something unexpected occurred.
Based on the above, I did not pursue medical tourism in the USA and would suspect this to be similar for many other considerations.
The only scenarios where I think it might be worthwhile is if you are very wealthy and you home country can’t provide the service. Or if there is a ‘specialist’ only found in the US which is the best for your particular condition.
I work for a company that supplies laboratory testing products(instruments and reagents) to labs in India. We make a few products, but the bulk of our sales are imports from the US, Germany, Japan to name a few. My understanding is that the prices quoted to Indian companies are way lower when compared to other developed countries. I remember about 10 years ago, we were representing a Japanese company , we were asked to supply an instrument to a lab in Delhi that was part of an Australian Laboratory Chain. Typically, we were in charge of all sales and marketing activities in India. In this case however, the parent company was completely managing the deal via discussions with the Australian management team. We were paid our commission for managing the imports and installing the product etc. We learned later that the price that was finalized was almost 6 times what were were quoting to our local prospects- hence the Japanese company was worries that the Australians would realize that they were paying so much more for the same product. Needless to say that Lab in Delhi closed down within a year.
Vivek #23, good illustration that prices are set by relationship between supply and demand, even for medicine.