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Traveling Abroad for Medical Care – Why?

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That new hip? The one that’s going to cost you between $50,000 and $100,000.  Making a hip costs about $350 in the US. The hospital or orthopedic clinic will pay from $3500 to $7500 and will bill you anywhere from  $30,000 to $37,000 for that $350 piece of metal and plastic. Yet, as a recent New York Times story revealed, you could go to Belgium for a hip replacement and pay a total of roughly

$14,000.  That’s what one man did. He lives in Warsaw, Indiana, home of the three biggest manufacturers of hip replacement joints. He got a new hip, made in his own hometown. But he had to go to Brussels in order to afford it. He paid $13,660, a price that included his new hip joint, all doctors’ fees, operating room charges, crutches, medicine, a hospital room for five days, a week in rehab and a round-trip ticket.

America has the highest healthcare costs in the world. Several years ago the big buzz was Medical Tourism, as people began to realize that medical treatment in foreign countries was safe and much less expensive. Businesses sprang up to help Americans plan medical procedures in foreign countries.

Yet now, as we grapple with the details of the Patient Protection and Affordable Care Act, known “affectionately” as Obamacare, many of our elected officials are working hard to ensure our complicated, expensive system stays intact. It is ludicrous to think that a piece of equipment which costs about $350 to manufacture could cost the consumer $35,000 alone—before surgery costs. Who’s to blame? Who gets rich in this scenario?

Your tire goes flat; you go to the tire place and get an estimate. They tell you exactly what the tire costs and the cost for putting it on your car. They tell you the costs for rotation, alignment, and tire disposal. Have you ever asked your doctor the cost of his services, or a particular shot or series of tests? He won’t know. He isn’t in charge of setting fees and has no control over how costs are calculated. And he or she may not even care.

Back to Belgium. “The country has among the lowest surgical infection rates in the world — lower than in the United States — and is known for good doctors. While most Belgian physicians and hospitals are in business for themselves, the government sets pricing and limits profits. Hospitals get a fixed daily rate and surgeons receive a fee for each surgery, which are negotiated each year between national medical groups and the state.”  Do we want that much state involvement?  Probably not, because we generally believe in free enterprise.

Then consider this: There are five manufacturers of hip joint implants in the United States. In 2007 these manufacturers paid $311 million to settle lawsuits related to the practice of paying (off?) surgeons to use their brand of hip joint replacements. In 2007 nearly 1,000 orthopedists in the United States received a total of about $200 million in payments from joint manufacturers for consulting, royalties and other activities, according to data released as part of the settlement.  (NYT)

Device manufacturers in some areas actually go into operating rooms with doctors and instruct them on using their devices. Cost as it relates to efficiency doesn’t enter into this equation. There’s not enough market competition or enough regulation. And as I reported in an earlier article  , DuPuy, one of the biggest manufacturers, is facing over 10,000 lawsuits for manufacturing faulty hip joint replacements. 

These medical equipment corporations pay doctors handsomely as “consultants” and they pay off politicians. Last year they spent an estimated $30 million dollars lobbying Congress to repeal the The Affordable Care Act, which carries a provision to impose a 2.3 percent tax on the medical device manufacturers’ profits, effective this year. So far the Senate has voted to repeal the tax and the House is expected to do so as well. Major supporters? The two Senators from Indiana.

A nice chart from the New York Times gives the reader a quick summary of 2012 survey data collected annually by the International Federation of Health Plans, a global insurance trade association. You can see that Americans pay significantly higher costs than citizens of any other country.  If you want a little more detail, try this Washington Post analysis  of costs for bypass surgery, knee replacement and other medical procedures.

Note that the United States is the only country where costs are not set.  Again, we value capitalism and free enterprise, which are good ideals and goals.  We experience a range of costs because, in part, each insurer is negotiating independently. If you have ever had to deal with a billing question, get a pre-estimate or deal with allowable charges, you understand how convoluted our system can be. Will Obamacare help?  We will have to wait and see.  Hopefully, in the coming years, Americans will not have to leave our shores to get good, affordable health care.  And, and at the same time, there will remain financial incentives for smart, qualified people to go into the health care field.