In The Blogs

The Cost of Technology Revisited

| Mon Nov. 2, 2009 10:03 AM PST

A few days ago Ezra Klein quoted the CEO of Kaiser Permanente, George Halvorson, telling us that CT scans cost "a few hundred dollars in Europe and over $15,000 here." This didn't seem quite right to me, and today Ezra gets the goods straight from Halvorson in lovely chart form. Turns out the "few hundred dollars in Europe" part is right, but there was some kind of mistake about the U.S. pricing.¹ As you can see from the chart, a head CT scan costs about $950 in the U.S. vs. an average of $276 in six other countries. That's a difference of about 3.5x.

Which is still a very big difference. As I've mentioned before, here in the U.S. we pay higher fees to our doctors, we pay higher prices for drugs, we pay higher prices for diagnostic tests, and we pay higher administrative costs to our insurance companies. If we want to reduce healthcare costs, we have to do something about all that, but both Obama and the Democratic leadership in Congress have (quite accurately) decided that doing so right now would earn the undying wrath of doctors, Big Pharma, insurance companies, hospitals, and device manufacturers, and together they could easily kill any chance of passing healthcare reform at all. So instead we'll pass reform now without addressing prices and then hope that maybe we can do something about it later.

And maybe we can. But don't bet on it: interest groups fight like crazed weasels to keep what they have, and they usually win. We might be able to freeze cost increases a bit if we put some serious muscle into it, but that's probably about all we can reasonably hope for. Or maybe technology will save us. You never know.

More charts here. I'm sure everyone will have their own favorite.

¹Apparently it was a mistranscription. Halvorson actually said $1,500, not $15,000. Ezra has since corrected the original post.

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Kevin Drum is a political blogger for Mother Jones. For more of his stories, click here.

Comments

You've got to be kidding

Submitted by Dan R. (not verified) on Mon Nov. 2, 2009 10:43 AM PST.

Heck, we couldn't even get Congress to negotiate Medicare drug prices with the pharma companies! How are we going to get them to cut doctors' fees in half?

Collusionary Racketeering

Submitted by Anonymous (not verified) on Mon Nov. 2, 2009 11:09 AM PST.

The elites will do everything to keep their supply limited and pricey or pricey and limited. Their self importance justifies their mutual support racket and supporting racket in D.C. whose members strive for status among the self important.

The bloat

Submitted by RZ (not verified) on Mon Nov. 2, 2009 11:27 AM PST.

US health care is a bloated system and has been for decades. I use the word 'bloated' very carefully. It means the system is fat everywhere - the insurers are bloated, the doctors are bloated, the payment systems are bloated, the HR departments are bloated.
It does not mean that any of those people are lazy. A bloated person can exert a great deal of energy simply moving around, and a bloated system generates a tremendous amount of work.
The solution is to squeeze the expectations of inflation out of the system, and the way to do that is through the insurer. Hence the hopes for the public option. I'm not sure it will work as effectively as its proponents say (not enough market share), but I sure hope it's a start.

The $15,000 was a careless

Submitted by Anonymous (not verified) on Mon Nov. 2, 2009 11:29 AM PST.

The $15,000 was a careless error which Klein corrected. And if you'd been at the event, you'd know Halvorson went from talking about $1500 CT scans to $15k bypass operations--which is also in this chartpack (slide 19).

It was actually a little confusing if you weren't listening extremely closely. And frankly, it's not like this should have set off alarm bells. It's not insane to think that healthcare costs could be so greatly different.

For instance, look at slide 19. A bypass costs from $40,000 to $100,000 MORE in the US than it does abroad. In the context of such outrageous numbers, it's not insane to think that we'd overpay for CT scans by $10,000.

This isn't "the cost of

Submitted by Anonymous (not verified) on Mon Nov. 2, 2009 11:44 AM PST.

This isn't "the cost of technology." Other countries have these exact same technologies. They use them just as much. Many use them even MORE than we do.

This is "the cost of higher prices."

Or, as Uwe Reinhardt put it back in 2003: "It's the Prices, Stupid: Why The United States Is So Different From Other Countries" http://content.healthaffairs.org/cgi/content/full/22/3/89

graphs or graft

Submitted by john sheman (not verified) on Mon Nov. 2, 2009 11:47 AM PST.

Another great source of graphs is the Frontline show reported by T.R. Reid, but the champ is a document produced by the Congressional Research Service in 2007 comparing the U.S. with the rest of the OECD on just about everything medical.

Any comparison of MRI's etc. really needs to include Japan where that stuff is really cheap.

So, how is this going to work?

Submitted by rhinoman (not verified) on Mon Nov. 2, 2009 12:57 PM PST.

Kevin,
So what do we do when all those wonderful "automatic future spending cuts" in the current health care bill are undone before they actually happen? Because, as you often point out, they will be, the special interests you often refer to will insist on it. Then health care won't become so deficit neutral anymore, it'll blow a hole in the budget you can sail the Titanic through.
What then?

devil's advocate

Submitted by joshjosh on Mon Nov. 2, 2009 1:28 PM PST.

What do we do about doctors' student loan obligations? that's usually the first thing i hear when the notion of reducing doctor pay gets mentioned. as a lawyer w way too much student debt, it's certainly something that needs discussing ...

It's not just the cost--CT scans are problematic

Submitted by Dennis Doubleday (not verified) on Mon Nov. 2, 2009 3:06 PM PST.

I also worry that the profit motive can turn investment in CT scanners into demand for questionable scan orders.

After I had two CT abdominal scans in one month, I was appalled to learn that each one likely gave me a radiation dose of 400 times that of a conventional chest x-ray (possibly much more), according to the FDA, at http://www.fda.gov/Radiation-EmittingProducts/RadiationEmittingProductsa...

CAT scan radiation dose

Submitted by rhinoman (not verified) on Mon Nov. 2, 2009 5:26 PM PST.

I was prepared to dismiss your concern; being a former radiation worker I'm far too accustomed to people overreacting to small amount of radiation exposure.
But I looked on the FDA page, and it says that the average exposure for a chest CAT scan is 1 to 10 mSv (milliSieverts). Which is 100 to 1000 mR (milliREM). Which is an awful lot of radiation for a single procedure.
I need to check this out to see if it's really true. But it would support my previous experience with the medical profession, that they are much more casual with radiation that we could ever be.

I don't see what libs see in

Submitted by Anonymous (not verified) on Mon Nov. 2, 2009 4:00 PM PST.

I don't see what libs see in Ezra Klein. I kept seeing references to his wisdom, then I finally caught him on TV. Looks like a soft little Jewish sissy who never got closer to real life than putting his nose in a book.

That's the list price for a

Submitted by Anonymous (not verified) on Mon Nov. 2, 2009 5:24 PM PST.

That's the list price for a CT exam. I know that we pay less than the average European price for our HMO patients or around $150 per scan. The problem is the multiplicity of insurance plans results in a completely screwed up pricing structure. Combine that and the use of expensive specialist care in place of cheaper primary care and it's not surprising that we pay a lot more.

Single payer is the answer. That and more primary care docs and fewer specialists.

Still, A&F as in other

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