The Price of Medical Services

Is the conversation finally starting?

By now, most of the health care cognoscenti realize that we have not had a robust discussion of medical costs. You could say that the public has been misled by the pols and the advocacy groups, which have been preaching that affordable quality health care will magically appear at the stroke of the president’s pen. For months, Campaign Desk has been urging the press to look closely at the hypocrisies inherent in the rhetoric about affordable health care and the reality posed by the lack of serious cost containment proposals on the legislative table. You can’t have one without the other.

So we were pleasantly surprised to see Washington Post blogger Ezra Klein explain yesterday how profit-hungry doctors, hospitals, and drug companies are responsible for boosting the price of health care in America. In its intense focus on insurance companies, the press has let those most responsible for rising costs off the hook. It’s easier to beat up on insurers than family doctors or the heart surgeon who saved grandma’s life.

Klein had a long chat with George Halvorson, the CEO of managed-care organization Kaiser Permanente. Halvorson may well have called on Klein as part of the insurers’ grasstops strategy, which sends the industry’s crème de la crème out to visit politicians and the press in order to promote their talking points. If that’s the case, it doesn’t really matter, because Halvorson had something to say about an aspect of health reform that has been sorely undercovered.

He presented Klein with a packet of charts produced by an outfit called the International Federation of Health Plans, an association of insurers around the world. Those charts show that America is off the charts, so to speak, when it comes to spending on medical services. Take, for example, physician fees for a routine office visit. The group found that American prices range from $59 at the low end to $151 at the high end. But in Germany the average cost for a routine vist is only $22; in Canada $30; and Spain $15. Now look at CT scans for the head. The group said the average price in the U.S. is $950—far higher than the German average of $319, the French average of $212, and the Spanish average of $161.

Clearly, U.S. docs get paid a lot more for their services than their foreign counterparts do. And yet the House reform package calls for eliminating the scheduled 21 percent pay cut for doctors next year and all the cuts scheduled after that. The Senate Finance bill eliminates the cut for next year, but goes along with a 25 percent cut in 2011. What gives here? How does this produce affordable health care? It doesn’t, and reality is beginning to sink in.

A Washington Post news story reinforced the message of Klein’s blog post, quoting Halvorson as saying the bills “are directionally correct, but they’re not going far enough.” Others made the same points. Said the Post:

As the debate reaches a critical juncture, many are worried that the president’s ambitious hopes to constrain costs could result in tepid half-measures on Capitol Hill.

Could it be that Americans are being sold a pig in a poke?

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman.