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Why an MRI Costs $1,080 in America and $280 in France

Why an MRI Costs $1,080 in America and $280 in France

By Ezra Klein, The Washington Post

In 2009, Americans spent $7,960 per person on health care. Our neighbors in Canada spent $4,808. The Germans spent $4,218. The French, $3,978. If we had the per-person costs of any of those countries, America’s deficits would vanish. Workers would have much more money in their pockets. Our economy would grow more quickly, as our exports would be more competitive.

There are many possible explanations for why Americans pay so much more. It could be that we’re sicker. Or that we go to the doctor more frequently. But health researchers have largely discarded these theories. As Gerard Anderson, Uwe Reinhardt, Peter Hussey and Varduhi Petrosyan put it in the title of their influential 2003 study on international health-care costs, “it’s the prices, stupid.”

As it’s difficult to get good data on prices, that paper blamed prices largely by eliminating the other possible culprits. They authors considered, for instance, the idea that Americans were simply using more health-care services, but on close inspection, found that Americans don’t see the doctor more often or stay longer in the hospital than residents of other countries. Quite the opposite, actually. We spend less time in the hospital than Germans and see the doctor less often than the Canadians.

“The United States spends more on health care than any of the other OECD countries spend, without providing more services than the other countries do,” they concluded. “This suggests that the difference in spending is mostly attributable to higher prices of goods and services.”

On Friday, the International Federation of Health Plans – a global insurance trade association that includes more than 100 insurers in 25 countries – released more direct evidence. According to Insurance Revenue, it surveyed its members on the prices paid for 23 medical services and products in different countries, asking after everything from a routine doctor’s visit to a dose of Lipitor to coronary bypass surgery. And in 22 of 23 cases, Americans are paying higher prices than residents of other developed countries. Usually, we’re paying quite a bit more. The exception is cataract surgery, which appears to be costlier in Switzerland, though cheaper everywhere else.

Prices don’t explain all of the difference between America and other countries. But they do explain a big chunk of it. The question, of course, is why Americans pay such high prices – and why we haven’t done anything about it.

“Other countries negotiate very aggressively with the providers and set rates that are much lower than we do,” Anderson says. They do this in one of two ways. In countries such as Canada and Britain, prices are set by the government. In others, such as Germany and Japan, they’re set by providers and insurers sitting in a room and coming to an agreement, with the government stepping in to set prices if they fail.

In America, Medicare and Medicaid negotiate prices on behalf of their tens of millions of members and, not coincidentally, purchase care at a substantial markdown from the commercial average. But outside that, it’s a free-for-all. Providers largely charge what they can get away with, often offering different prices to different insurers, and an even higher price to the uninsured.

Health care is an unusual product in that it is difficult, and sometimes impossible, for the customer to say “no.” In certain cases, the customer is passed out, or otherwise incapable of making decisions about her care, and the decisions are made by providers whose mandate is, correctly, to save lives rather than money.

In other cases, there is more time for loved ones to consider costs, but little emotional space to do so – no one wants to think there was something more they could have done to save their parent or child. It is not like buying a television, where you can easily comparison shop and walk out of the store, and even forgo the purchase if it’s too expensive. And imagine what you would pay for a television if the salesmen at Best Buy knew that you couldn’t leave without making a purchase.

“In my view, health is a business in the United States in quite a different way than it is elsewhere,” says Tom Sackville, who served in Margaret Thatcher’s government and now directs the IFHP. “It’s very much something people make money out of. There isn’t too much embarrassment about that compared to Europe and elsewhere.”

The result is that, unlike in other countries, sellers of health-care services in America have considerable power to set prices, and so they set them quite high. 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 players sitting across the table from them – the health insurers – are not so profitable. In 2009, their profit margins were a mere 2.2 percent. That’s a signal that the sellers have the upper hand over the buyers.

This is a good deal for residents of other countries, as our high spending makes medical innovations more profitable. “We end up with the benefits of your investment,” Sackville says. “You’re subsidizing the rest of the world by doing the front-end research.”

But many researchers are skeptical that this is an effective way to fund medical innovation. “We pay twice as much for brand-name drugs as most other industrialized countries,” Anderson says. “But the drug companies spend only 12 percent of their revenues on innovation. So yes, some of that money goes to innovation, but only 12 percent of it.”

And others point out that you also need to account for the innovations and investments that our spending on health care is squeezing out. “There are opportunity costs,” says Reinhardt, an economist at Princeton. “The money we spend on health care is money we don’t spend educating our children, or investing in infrastructure, scientific research and defense spending. So if what this means is we ultimately have overmedicalized, poorly educated Americans competing with China, that’s not a very good investment.”

But as simple an explanation as “the prices are higher” is, it is a devilishly difficult problem to fix. Those prices, for one thing, mean profits for a large number of powerful – and popular – industries. For another, centralized bargaining cuts across the grain of America’s skepticism of government solutions. In the Medicare Prescription Drug Benefit, for instance, Congress expressly barred Medicare from negotiating the prices of drugs that it was paying for.

The 2010 health-reform law does little to directly address prices. It includes provisions forcing hospitals to publish their prices, which would bring more transparency to this issue, and it gives lawmakers more tools and more information they could use to address prices at some future date. The hope is that by gathering more data to find out which treatments truly work, the federal government will eventually be able to set prices based on the value of treatments, which would be easier than simply setting lower prices across-the-board. But this is, for the most part, a fight the bill ducked, which is part of the reason that even its most committed defenders don’t think we’ll be paying anything like what they’re paying in other countries anytime soon.

“There is so much inefficiency in our system, that there’s a lot of low-hanging fruit we can deal with before we get into regulating people’s prices.” says Len Nichols, director of the Center for Health Policy Research and Ethics at George Mason University. “Maybe, after we’ve cut waste for 10 years, we’ll be ready to have a discussion over prices.”

And some economists warn that though high prices help explain why America spends so much more on health care than other countries, cutting prices is no cure-all if it doesn’t also cut the rate of growth. After all, if you drop prices by 20 percent, but health-care spending still grows by seven percent a year, you’ve wiped out the savings in three years.

Even so, Anderson says, “if I could change one thing in the United States to bring down total health expenditures, it would definitely be the prices.”

SOURCE

Obama Plans to Dramatically Cut Healthcare Benefits for Troops!

Trashing Tricare

BY: Bill Gertz –

The Obama administration’s proposed defense budget calls for military families and retirees to pay sharply more for their healthcare, while leaving unionized civilian defense workers’ benefits untouched. The proposal is causing a major rift within the Pentagon, according to U.S. officials. Several congressional aides suggested the move is designed to increase the enrollment in Obamacare’s state-run insurance exchanges.

The disparity in treatment between civilian and uniformed personnel is causing a backlash within the military that could undermine recruitment and retention.

The proposed increases in health care payments by service members, which must be approved by Congress, are part of the Pentagon’s $487 billion cut in spending. It seeks to save $1.8 billion from the Tricare medical system in the fiscal 2013 budget, and $12.9 billion by 2017.

One of the changes that people have not been opposed to is a new pain management solution that will be implemented. It is called cbd oil. It is safer and more effective than what they are using now, and it should help many disabled veterans to improve their quality of life. To those not familiarized with this medication you can look at this article at ANIPOTS that covers the basics quite well.

Many in Congress are opposing the proposed changes, which would require the passage of new legislation before being put in place.

“We shouldn’t ask our military to pay our bills when we aren’t willing to impose a similar hardship on the rest of the population,” Rep. Howard “Buck” McKeon, chairman of the House Armed Services Committee and a Republican from California, said in a statement to the Washington Free Beacon. “We can’t keep asking those who have given so much to give that much more.”

Administration officials told Congress that one goal of the increased fees is to force military retirees to reduce their involvement in Tricare and eventually opt out of the program in favor of alternatives established by the 2010 Patient Protection and Affordable Care Act, aka Obamacare.

“When they talked to us, they did mention the option of healthcare exchanges under Obamacare. So it’s in their mind,” said a congressional aide involved in the issue.

Military personnel from several of the armed services voiced their opposition to a means-tested tier system for Tricare, prompting Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey to issue a statement Feb. 21.

Dempsey said the military is making tough choices in cutting defense spending. In addition to the $487 billion over 10 years, the Pentagon is facing automatic cuts that could push the total reductions to $1 trillion.

“I want those of you who serve and who have served to know that we’ve heard your concerns, in particular your concern about the tiered enrollment fee structure for Tricare in retirement,” Dempsey said. “You have our commitment that we will continue to review our health care system to make it as responsive, as affordable, and as equitable as possible.”

Under the new plan, the Pentagon would get the bulk of its savings by targeting under-65 and Medicare-eligible military retirees through a tiered increase in annual Tricare premiums that will be based on yearly retirement pay.

Significantly, the plan calls for increases between 30 percent to 78 percent in Tricare annual premiums for the first year. After that, the plan will impose five-year increases ranging from 94 percent to 345 percent—more than 3 times current levels.

According to congressional assessments, a retired Army colonel with a family currently paying $460 a year for health care will pay $2,048.

The new plan hits active duty personnel by increasing co-payments for pharmaceuticals and eliminating incentives for using generic drugs.

The changes are worrying some in the Pentagon who fear it will severely impact efforts to recruit and maintain a high-quality all-volunteer military force. Such benefits have been a key tool for recruiting qualified people and keeping them in uniform.

“Would you stay with a car insurance company that raised your premiums by 345 percent in five years? Probably not,” said the congressional aide. “Would anybody accept their taxes being raised 345 percent in five years? Probably not.”

A second congressional aide said the administration’s approach to the cuts shows a double standard that hurts the military.

“We all recognize that we are in a time of austerity,” this aide said. “But defense has made up to this point 50 percent of deficit reduction cuts that we agreed to, but is only 20 percent of the budget.”

The administration is asking troops to get by without the equipment and force levels needed for global missions. “And now they are going to them again and asking them to pay more for their health care when you’ve held the civilian workforce at DoD and across the federal government virtually harmless in all of these cuts. And it just doesn’t seem fair,” the second aide said.

Spokesmen for the Defense Department and the Joint Chiefs of Staff did not respond to requests for comment on the Tricare increases.

The massive increases beginning next year appear timed to avoid upsetting military voters in a presidential election year, critics of the plan say.

Additionally, the critics said leaving civilian workers’ benefits unchanged while hitting the military reflect the administration’s effort to court labor unions, as government unions are the only segment of organized labor that has increased in recent years.

As part of the increased healthcare costs, the Pentagon also will impose an annual fee for a program called Tricare for Life, a new program that all military retirees automatically must join at age 65. Currently, to enroll in Tricare for Life, retirees pay the equivalent of a monthly Medicare premium.

Under the proposed Pentagon plan, retirees will be hit with an additional annual enrollment fee on top of the monthly premium.

Congressional aides said that despite unanimous support among the military chiefs for the current healthcare changes, some senior officials in the Pentagon are opposing the reforms, in particular the tiered system of healthcare.

“It doesn’t matter what the benefit is, whether it’s commissary, PX, or healthcare, or whatever … under the rationale that if you raise your hand and sign up to serve, you earn a base set of benefits, and it should have nothing to do with your rank when you served, and how much you’re making when you retire,” the first aide said.

Military service organizations are opposing the healthcare changes and say the Pentagon is “means-testing” benefits for service personnel as if they were a social program, and not something earned with 20 or more years of military service.

Retired Navy Capt. Kathryn M. Beasley, of the Military Officers Association of America, said the Military Coalition, 32 military service and veterans groups with an estimated 5 million members, is fighting the proposed healthcare increases, specifically the use of mean-testing for cost increases.

“We think it’s absolutely wrong,” Beasley told the Free Beacon. “This is a breach of faith” for both the active duty and retiree communities.

Congressional hearings are set for next month.

The Veterans of Foreign Wars on Feb. 23 called on all military personnel and the veterans’ community to block the healthcare increases.

“There is no military personnel issue more sacrosanct than pay and benefits,” said Richard L. DeNoyer, head of the 2 million-member VFW. “Any proposal that negatively impacts any quality of life program must be defeated, and that’s why the VFW is asking everyone to join the fight and send a united voice to Congress.”

Senior Air Force leaders are expected to be asked about the health care cost increases during a House Armed Services Committee hearing scheduled for Tuesday.

Congress must pass all the proposed changes into law, as last year’s defense authorization bill preemptively limited how much the Pentagon could increase some Tricare fees, while other fees already were limited in law.

Tricare for Life, Tricare Prime, and Tricare Standard increases must be approved, as well as some of the pharmacy fee increases, congressional aides said.

Current law limits Tricare fee increases to cost of living increases in retirement pay.

SOURCE

Who Is Left To Bribe?

Obama Taps Taxpayers For Student Stimulus

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By Chris Stirewalt

Obama Looks to Wring Stimulus From Saturated Student Loan Market

“$1 Trillion”

Estimated amount of student loan debt owed by Americans.

In keeping with his new campaign theme of “we can’t wait,” President Obama today will roll out a plan to put more money in the pockets of some of the nation’s 36 million student loan recipients.

Obama has broad latitude in this area – certainly broader than the first two parts of his western campaign trip, underwater mortgages and subsidies for hiring veterans – because one of his early legislative initiatives was to have the federal government take over the student lending business in America.

Obama argued for the measure in 2009 as a cost-savings initiative, saying that the old system of privately issued, government secured loans reduced the amount of available money for needy students and also prevented the feds from making the system more efficient.

But Obama is now seeking to use that new power to obtain a taxpayer-financed stimulus that Congress won’t approve. The idea is to cap student loan repayment rates at 10 percent of a debtor’s income that goes above the poverty line, and then limiting the life of a loan to 20 years.

Take this example: If Suzy Creamcheese gets into George Washington University and borrows from the government the requisite $212,000 to obtain an undergraduate degree, her repayment schedule will be based on what she earns. If Suzy opts to heed the president’s call for public service, and takes a job as a city social worker earning $25,000, her payments would be limited to $1,411 a year after the $10,890 of poverty-level income is subtracted from her total exposure.

Twenty years at that rate would have taxpayers recoup only $28,220 of their $212,000 loan to Suzy.

The president will also allow student debtors to refinance and consolidate loans on more favorable terms, further decreasing the payoff for taxpayers.

Obama’s move comes at a moment when many economists are warning of a college debt bubble that is distorting college tuition rates and threatening to further damage credit markets. The president’s move is intended to make college more affordable for more people, which will, in turn allow universities to jack up their rates.

As in the housing bubble, cheap credit on easy terms increases the amount of money chasing the product (in this case a diploma) allowing schools to increase prices. This inflation makes it harder for middle-class families to afford paying their own tuitions, driving them into the government financing program, which, you guessed it, drives up costs further still.

Obama’s goals, aside from continuing to encourage young people to spurn the private sector in favor of service jobs, is to try to juice the economy. Those who participate in the program could see their monthly incomes rise by hundreds of dollars, thereby increasing the money they have to buy stuff and try to juice the economy.

A more modest program already in place has been a bit of a bust with only 1.25 percent of debtors signing up, likely because of the unpleasant notion of additional paperwork and government reporting hassles. But by sweetening the deal and putting a big PR push behind it, Obama is betting that he can get people spending in time to help shore up his re-election chances.

The best part for Obama is that he can obligate the Treasury without Congressional approval thanks to the passage of what he described as a cost-saving measure in 2009.

Risk-Averse Romney Frustrates Hill GOPers

“I am not speaking about the particular ballot issues. Those are up to the people of Ohio. But I certainly support the efforts of the governor to reign in the scale of government. I am not terribly familiar with the two ballot initiatives. But I am certainly supportive of the Republican Party’s efforts here.”

— Former Massachusetts Gov. Mitt Romney walking back his prior support of a new Ohio law that restricts the collective bargaining power of state worker unions.

While former Massachusetts Gov. Mitt Romney has done a better job of wooing Capitol Hill Republicans than his fellow GOP 2012 contenders, there’s still a resistance to the man who has been the party’s frontrunner for most of the past three years.

Romney heads to the Hill today to try to corral supporters from two groups – more moderate members who are natural fits for Romney and a few conservatives to vouch for a nominee they can accept as the inevitable choice.

It’s been a hard sell.

“If he’s inevitable, I don’t know why he needs my help,” one swing-state Republican House member told Power Play. “I’ll endorse the nominee, whoever that is.”

Members and staffers agree that while Romney looks increasingly unbeatable since the party’s conservative base remains divided, there’s little to be gained from jumping on board early.

“If you endorse [Romney], you upset the base at home and don’t really get anything in return,” a former senior Senate staffer who now works as a GOP campaign consultant told Power Play. “This is not one where you want to be seen as ahead of the curve.”

A closet Romney backer in Congress who said she is soon to announce her support publicly told Power Play that the frontrunner would continue to roll out a series of high-profile endorsements in the days and weeks to come.

“We respect results and we respect experience,” he said. “We also know that it will take practical solutions to do the job.”

Romney made his task more complicated on Tuesday when he flinched when questioned about a pair of state ballot initiatives while visiting a Republican campaign office where they were working hard to pull out wins on the referenda.

Romney issued a statement this summer in support of the law pushed by Gov. John Kasich to roll back the collective bargaining powers of state worker unions, but when asked in person about the union-led effort to repeal the law through a plebiscite, Romney was agnostic on the subject deferring to the will of the voters.

Many have attributed this to Romney’s unwillingness to be attached to the losing side of the issue since polls show lopsided support for the union-backed repeal measure. Others have speculated that Romney was looking to avoid connection to the anti-government union movement inside the GOP, an association that could be damaging to a candidate whom Democrats are already painting as a plutocrat uninterested in the plight of blue-collar workers.

More likely, though, it was the other issue on the ballot: A constitutional amendment that would shield Ohioans from the key provision of President Obama’s health law that requires all Americans to either purchase private insurance or be enrolled in a government program.

Romney, who pioneered the concept of mandatory insurance in Massachusetts, can hardly speak in favor of the Ohio amendment, which looks likely to pass. He has held that states should be allowed to compel citizens to buy insurance, but not the federal government and that each state should do as it wishes on the subject.

If Romney expressed an opinion on the union rule, he would be hard pressed to then express agnosticism on the mandatory insurance provision. By ducking the question, Romney protected himself from having to talk about his health law and, perhaps, avoided an even bigger embarrassment than what followed.

Romney’s answer was therefore technically the politically correct one since it traded a small embarrassment for a larger gaffe, but it is exactly that kind of calculation that continues to leave GOP activists cold. Romney avoids the gaffes that have plagued Herman Cain, Rick Perry and even occasionally Newt Gingrich.

By giving such careful answers, Romney has been able to maintain his quarter of the GOP electorate, but hasn’t been able to rebut the central critique of his candidacy: ideological inconstancy.

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