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Why Is U.S. Care Costlier? Prices Are Higher

March 5, 2012
Written by: , Filed in: Diagnostic Imaging, Practice Management
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“Why an MRI costs $1,080 in America and $280 in France.” That’s the provocative headline on an analysis by Washington Post columnist Ezra Klein.

The newspaper originally posted the article on Friday under the more pedestrian title “High health-care costs: It’s all in the pricing.” I prefer the Saturday “Why an MRI costs …” repost because the entire article is on one page; I don’t have to keep clicking “Next Page” and waiting for the page to reload in order to read the whole thing.

Anyway, Klein refers to a report released Friday by the International Federation of Health Plans (IFHP), an international health-insurance trade group. The report, in the form of 32 PowerPoint slides, says the average cost of an MRI is $1,080 in the United States but $281 (not $280) in France.

The report puts the average cost at $116 in Argentina, $138 in India, $245 in Spain, $478 in Chile, $599 in Germany, and $903 in Switzerland. It also looks at four other imaging procedures, all of which are described as more expensive in the United States (usually significantly so) than in the other countries listed.

Why the disparity? Klein says Americans aren’t sicker and don’t go to the doctor more often and don’t get more health-care services than people in other developed countries. Instead, he says, our prices for health-care goods and services are simply higher than those in other countries.

And why is that? Several reasons, Klein says. Among them:

  • “Other countries negotiate very aggressively with the providers and set rates that are much lower than we do,” says health-care researcher Gerard Anderson. The government either sets prices directly or puts pressure on providers to keep prices low.
  • In the United States, health care is “very much something people make money out of,” says Tom Sackville, CEO of the IFHP. “There isn’t too much embarrassment about that compared to Europe and elsewhere.” Klein points out that:

Two of the five most profitable industries in the United States—the pharmaceuticals industry and the medical device industry—sell health care. With margins of almost 20 percent, they beat out even the financial sector for sheer profitability.

  • The United States spends more—a lot more—on researching and developing medical innovations than other countries. “We end up with the benefits of your investment,” says the London-based Sackville. “You’re subsidizing the rest of the world by doing the front-end research.”

The article is an interesting read, especially because it mentions the cost of research, which often gets overlooked. And, despite the headline, at least it doesn’t directly blame radiologists for anything.

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The European market for women’s imaging takes a hit from the Continent’s economic crisis, says a research company. For more about why breast imaging is bucking that trend, see our Facebook page.

Related seminar: The Business of Radiology

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One Response to “Why Is U.S. Care Costlier? Prices Are Higher”

  1. Radiology Daily»AlertArchive » Should We Blame Health Care For U.S. Deficits? on April 9th, 2012 at 10:06 am

    […] as we’ve mentioned and others have pointed out, the robust U.S. profits made by medical-device and pharmaceutical […]