There are plenty of reasons to brag about living in America, like the fact that we have the most innovative beers on the planet (sorry Germany). Or that our Hollywood blockbusters are second to none. However, the cost of healthcare in the good ‘ol US of A is not something to boast about, it is the most expensive place to get healthcare in the world.
There are 4 primary reasons for this: hospitalization, pharmaceuticals, physicians and administration.
Consider this: If you have an employee in need of an Appendectomy, to receive hospital care in the US it would cost $29,426. That SAME procedure in Europe costs in the neighborhood of $3,000-$4,000. You can literally send your employee on a 10 day trip to Europe to have the procedure done for less than it would cost you to have it done at home. Don’t believe it?
Here are the numbers:
Round trip ticket to Europe + rental car + 8 nights in a hotel = $2,113.52*
Sending your employee across the pond will save you $23,312.48.
Yeah, but the high cost must equate to better results right? Nope. Americans aren’t living any longer than the British or the French.
There are two widely unknown reasons the American hospital system is so inflated.
Charge masters are the internal lists of hospital service fees (think everything from delivering a baby to giving a patient an Aspirin). These charges are created by the hospital and are determined relative to a discounted percentage of that fee (so why not bloat the hell out of them?). Some patients have reported paying $5.00 for an Aspirin and upward of $1,000 for a toothbrush. Crazy right? Yeah, well good luck trying to avoid it. Unless you live in California, the price point of said tooth brush is a SECRET and will likely differ significantly from hospital to hospital. It is nearly impossible to price compare to find the best deals.
If you are an employer, you likely purchase hospital services through a preferred provider organization (well that sounds nice). While you think the PPO would negotiate down these charge master prices, think again. Your PPO doesn’t have any reason to negote a fair price. They get paid per employee per month and so their only incentive is the number of people they have suckered into thinking they provide real discounts rather than actually providing them. With a PPO you are still paying 200-450 percent of what Medicare pays.
I don’t know about you, but dropping my PPO and opting for a Reference Based Reimbursement is sounding pretty darn good right now. Either that, or dusting off the ‘ol passport.
While it is tempting to send an employee to Europe for an Appendectomy, it is equally as tempting to have that employee stay there for the savings on prescription drugs.
On top of the exorbitant hospital costs, America is also the most expensive country in the world to get prescription drugs. Here are some stats to put things in perspective:
• By 2020 it is estimated that Employers will spend 40% of their total health care budget on pharmaceutical benefits.
• Our drugs cost 43% more than our Canadian neighbors’.
• Drugs in the US are on average 40% more expensive than in Europe.
• We waste $290 billion because of medication non-adherence. Yep, we pay a lot for our medication and then we don’t bother to take it.
The arguments as to why pharmaceutical costs are so inflated are complex. There is no one reason we are paying the most in the world for our drugs. Here are just 5 reasons prescriptions are sucking us dry:
1. The US takes the brunt of the Research and Development costs
We are known for our innovation in America, and the drug business is no different. We also have access to the Lamborghini’s of diagnostic equipment and we aren’t afraid to take them for a ride. Expensive technology and research equal expensive products passed on to the consumer.
2. Legal fees
Along with R&D costs our legal expenses make our drugs 43% more expensive than our Canadian neighbors.
3. What do Americans love more than technology and lawyers? Marketing.
Each year big Pharma spends $31.7 billion on marketing to patients, doctors, hospitals and insurers. Those costs are without question passed on to the purchaser.
4. Our distribution system is inefficient
The United States uses an inefficient and costly drug distribution system, whereby prescriptions go through the hands of a pharmacy benefit manager (PBM) and a direct distributor like a pharmacy before getting into the hands of the consumer.
5.Consumers don’t care
As long as a drug is ‘covered by insurance’ most consumers don’t even think to ask questions. If we shopped for our prescriptions with as much fervor as we do for PlayStations on Black Friday, we may have a chance at getting a better deal.
Health care cost management is complex, but the AMPS team is advocating for the consumer every single day. Smart employers are finding that containing their medical care costs requires hiring expert advocates. AMPS will cut through the BS and simply save you money.
Hospital bills and prescription drugs account for most of our bloated healthcare costs in the US.
The other two players adding to the problem: physician reimbursements and administrator costs.
Doctor’s don’t have secret charge master lists like hospitals. Instead they are required to follow
pricing guidelines set by reasonable and customary (R&C) charts.
Finally, common sense!
Well, don’t get too excited.
Nothing says ‘Murica like a strong entrepreneurial spirit. Since doctors don’t set their own fees,
they found a loophole lucrative solution to increase payments.
If a doc wants $100.00 for a service and the payer will only repay $50.00 then guess what,
grandma is going in twice for her bunion exam.
Payment for their services is the least of our worries. Remember the #1 reason US medical costs
are out of control? Hospital billing trolls realize many (ok, most) administrators don’t analyze bills
for errors or overcharges. They benefit by submitting bills chock-full of duplicate charges, errors
and other “mistakes”.
On average AMPS finds 168K in overpayments per thousand employees each year because plan
administrators don’t find the errors and make adjustments.
That’s a problem.
US healthcare isn’t doomed, but it will not get any better if consumers don’t pay attention. If you
are too busy, let us know. Our claims auditing experts have reclaimed over 200 million dollars for
our clients. We’re ready when you are.