THE GREAT AMERICAN RIP-OFF

America!  You are getting royally screwed on your healthcare costs!

My husband recently had radical open prostate surgery at one of the best teaching hospitals in Berlin.  We are insured under the public health insurance system.  Having never worked in Germany, we never paid into that system, and so our annual premiums are calculated on the basis of our “pension income,” i.e.  U.S. Social Security and IRA withdrawals.  Under that calculation, my husband’s health insurance premiums total about €2,200 per year.  Those premiums cover everything except prescription drugs, for which we pay between €5.00 and €10.00 per prescription, depending on the drug and the quantity, and in the event of a surgical intervention, €10.00 per day for inpatient hospital care.   

My husband was in the hospital for ten days in January, and the whole shebang—from pre-admission visits with the surgeon (the head of the Urology Department) and the anesthesiologist, the surgery itself, post-op medications (including  morphine and anti-coagulants), an ultrasound exam to confirm internal resections were intact, personal care items, and the room (shared with one other patient)—cost a whopping €100.00.  And the care was top-notch. 

I don’t know what the real cost of my husband’s surgery was, but I can tell you that a friend had the same surgery at a comparable hospital in 2010.  He was privately insured and so he was able to see the real cost of his procedure:  €36,000 (€46,000 today with inflation), or $49,000 at the current exchange rate. 

What is the real cost of a radical prostatectomy in the U.S.?  On average, about $58,000, but the costs vary widely.

According to Consumer Health Ratings:

A prostate cancer surgery study published in the medical journal Urology, found that facility costs averaged nearly $35,000 (+/- $20,000) for a radical prostatectomy (RP) procedure in the US. (In 2022 dollars, this would be nearly $47,000). Estimates were provided by 70 of 100 hospitals invited to submit prices for an uninsured 55 year old man. Facility fees ranged widely, from $10,000 to $135,000.  Academic medical center prices were statistically higher for the same theoretical patient. In addition, 10 hospitals provided numbers for surgeon and anesthesia fees, which averaged $8,280 (+/-$4282, ranging as high as $18,720).  Finally, about 1/3 of hospitals indicated they would discount the prices for prompt payment, an average of 34%. Research by Pate, Uhlman, et al, from the University of Iowa. Published March 2014.  Using a simple medical inflation factor, the combined cost of facility, anesthesia and surgeon fees would be about $58,000 in 2022 dollars.

To make a more apples-to-apples comparison, I would definitely add the $20,000 noted above in order to compare academic medical facilities in an urban area with a mid-range cost of living index. In fact, a radical prostatectomy at the Mayo Clinic costs a little more than the additional $20,000--almost $81,500.

So, $49,000 for a radical prostatectomy at Vivantes Klinikum im Friedrichshain (affiliated with Charite’, one of the best teaching hospitals in Germany), versus $81,500 at the Mayo Clinic (one of the best teaching hospitals in the U.S.).  

What accounts for this dramatic difference in cost?  Why do Americans pay so much more for health care than Germans do?  Without question, in most American urban areas, the care is superb, the equipment state-of-the-art, and the doctors extremely well-trained.  But that is true of large cities in Germany too.  Why does U.S. health care cost so much?

In a word, the answer seems to be GREED.  Below are some enlightening excerpts from an opinion piece in a Journal of American Medicine publication written by Donald Berwick, MD, MPP of Harvard.

On hospital pricing games for drugs:

Hospital prices for the top 37 infused cancer drugs averaged 86.2% higher per unit than in physician offices. A patient was billed $73,800 at the University of Chicago for 2 injections of Lupron depot, a treatment for prostate cancer, a drug available in the UK for $260 a dose.

On insurance company profiteering:

Originally intended to give Medicare beneficiaries the choice of access to well-managed care at lower cost, [the Medicare Advantage program] has mushroomed into a massive program, now about to cover more than 50% of all Medicare beneficiaries and costing far more per beneficiary than traditional Medicare ever has. By gaming Medicare risk codes and the ways in which comparative “benchmarks” are set for expected costs, MA plans have become by far the most profitable branches of large insurance companies. According to some health services research, MA will cost Medicare over $600 billion more in the next 8 years than would have been the case if the same enrollees had remained in traditional Medicare.

On inflated health care executive compensation:

Of the 10 highest paid among all corporate executives in the US in 2020, 3 were from Oak Street Health, and salary and benefits included, reportedly, $568 million for the chief executive officer (CEO). Executives in large hospital systems commonly have salaries and benefits of several million dollars a year. Some academic medical centers’ boards allow their CEO to serve for 6-figure stipends and multimillion-dollar stock options on outside company boards, including ones that supply products and services to the medical center.

On market concentration:

Mergers, acquisitions, and public offerings have been occurring throughout health care, often at valuations that defy logic. Oak Street Health, an innovative primary care company that employs physicians and plays heavily in [Massachusetts], had a $15 billion initial public offering in 2022, equivalent to $196,000 per patient in their panel.

 

On the cost of the costs for ordinary Americans:

A total of 41% of US adults, 100 million people, bear medical debts. One of every 8 individuals owes more than $10,000. In Massachusetts, 46% of adults say they skip needed care because of costs. As of 2021, 58% of all debt collections in the US are for medical bills. Health insurance premiums in Massachusetts have gone up more than 200% in 2 decades and now cost more annually per family than a car. People of lower income must choose high-deductible plans; they cannot afford more complete coverage. In no other developed nation on earth is deep medical debt as present a threat as in the US.

On greed:

US health care costs nearly twice as much as care in any other developed nation, whereas US health status, equity, and longevity lag far behind. Unchecked greed is not the only driver of that failure, but it is a major one. Few, if any, other developed nations tolerate the levels of avarice, manipulation, and profiteering in health care that the US does.

What to do about greed? No answer is easy, not least because of the political lobbying might of individuals and organizations that are thriving under the current laxity. The cycle is vicious: unchecked greed concentrates wealth, wealth concentrates political power, and political power blocks constraints on greed.

This health care services loop has become just one of unfortunately many all-too-familiar rip-offs of Americans through the synergistic efforts of corporations and politicians working in tandem. Berwick’s summary bears repeating:

The cycle is vicious: unchecked greed concentrates wealth, wealth concentrates political power, and political power blocks constraints on greed.

Keep it real!

Marilyn