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"Health care costs more here because, well, doctors charge more."  It seems that much of the blame for soaring health care costs has been aimed at the insurance companies, during this long four year debate regarding health care reform.  Some people have decided that insurance companies make up premiums to gouge the consumer.  While I think that we can all agree that health care costs are out of control, the following article points fingers at the health care providers.  In all fairness however, the article does not mention one of the factors for higher fees is malpractice insurance protection, because people have gone lawsuit crazy.  A solution for this would be torte reform, which doesn't get much attention with the current administration.  Another part of medical provider costs is for research and development, which is why we have the best medical care in the world.  This segment is severely lacking in European health care systems, as there is no extra funding for this important piece.  However, it is interesting to see the drastic difference in pricing, and just reinforces the need to tackle another part of the equation that has grown out of control...

Article by: EDITORIAL , St. Louis Post-Dispatch Star Tribune Opinion Exchange September 20, 2011

“If you get your hip replaced in the United States, the orthopedic surgeon who performs the procedure will earn, on average, about $4,000 from your private insurance company, assuming you have one. A comparably educated and trained surgeon doing the same operation on a privately insured patient will get about $2,200 in England, $2,000 in Australia and $1,340 in France, according to a new study published this month in the journal Health Affairs. If you're covered by Medicare or Medicaid in this country, the difference in price is considerably less, suggesting that government programs are better price bargainers than private insurance companies.  But your orthopedic surgeon still will get more from Medicare for a first-time, uncomplicated hip replacement -- about $1,600 -- than surgeons typically earn through publicly financed health programs in the United Kingdom ($1,200), Australia ($1,000) or France ($700), the study found. The research, conducted by two professors of public health at Columbia University, clearly illustrates what should be obvious about the disproportionately large percentage of the U.S. economy -- 16 percent -- that goes to health care: We spend more in the United States for doctors' services because U.S. doctors charge higher prices than do doctors in other countries.

The new study also looked at prices primary care physicians charge for office visits and found a similar pattern, but with narrower differences. Under private insurance, U.S. doctors charge an average of $133 for an office visit, vs. $129 in England, $45 in Australia and $34 in France. Under public health systems, physicians in England actually get more than their U.S. counterparts on average -- $66 as opposed to $60 -- while Australian doctors earn $34 and French physicians $32.

The researchers found no evidence to support other explanations for higher prices in this country. "Higher physician fees -- rather than the higher costs of practicing, the volume of services provided, or medical school tuition expenses -- are the main drivers of higher spending for physician services in the United States," concluded the Commonwealth Fund, which helped pay for the study.

There are other factors worth considering, though. A reasonable case can be made that primary care doctors ought to be paid more, not less, for example, to help make the specialty more attractive to young physicians.

In any case, physicians' services hardly are the only area in which U.S. prices are out of whack. A 2008 report for the McKinsey Global Institute, the economic research arm of the McKinsey & Co. consulting firm, identified many aspects of health care in which U.S. prices are higher than they are in other countries.

One of them is outpatient services, which U.S. hospitals now regard as centers for generating profits (or "excess of revenue over expenses," as the not-for-profit institutions call it). "The highly profitable nature of outpatient care," the report said, "prompts growing investment in the resources needed to support outpatient care, fueling additional use and spending. In fact, U.S. hospitals earn a significant percentage of their profits from elective same-day care." Of the $850 billion spent on U.S. inpatient services in 2006, the report calculated that $436 billion was excessive compared with what was spent in other industrialized nations.

In the area of pharmaceuticals, the McKinsey report pointed out that drug costs in the United States are higher not because Americans take more prescription drugs (they don't), “but because drug prices are 50 percent higher in the U.S. for equivalent products.” The American health care system is a sprawling behemoth with an almost infinite number of moving parts. Controlling its costs is the key to the future of the American economy. Among the many provisions of the Patient Protection and Affordable Care Act of 2009, for example, are financial incentives for health care facilities that reduce expensive preventable errors and financial penalties for those that do not.

But other proposals to cut costs by denying or further restricting access to people who need it and already have trouble getting care are unlikely to save significant amounts of money and are profoundly unfair. An article published in 2003 in Health Affairs still rings true. The title: ‘It's the Prices, Stupid: Why the United States is So Different From Other Countries.”

Karim Sadjadpour is an associate at the Carnegie Endowment for International Peace.  He wrote this article for the Washington Post.

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