It Costs $350 to Make an Artificial Hip. But It Will Cost You $30,000 to Get One.
For the last few months, Elisabeth Rosenthal of the New York Times has been working on a series of stories about the high price of healthcare in America. In July she wrote about the high cost of childbirth, and earlier this month she wrote about the truly insane cost of hip replacements in America. But Bob Somerby has noted something interesting: nobody else in the media seems to care:
These articles deal with a very important topic—the massive looting of U.S. consumers which characterizes American health care. This looting helps explain a welter of major social and political problems—our nation’s growing income inequality; our stagnant wages; the failure to provide full medical coverage; the nation’s problems with federal deficits and debt.
But so what? Despite their high profile and apparent salience, Rosenthal’s reports have met with universal silence, except for last week’s Fresh Air....It’s going to win the Pulitzer Prize—and it’s going to do so in silence!
Despite the high profile afforded this series, the silence has been general all over the press, which seems paralyzed, dead in life. At the end of this report, we’ll offer our own speculations about the resounding silence.
Is this really true? Rosenthal's piece implied that artificial hips cost about $350 to manufacture, but sell to hospitals for upwards of $5,000 or more—and are then marked up further by the hospital before they end up in an OR getting installed. It's not clear if $350 is just the manufacturing cost, or if that's the all-in burdened cost of producing a hip, but it almost doesn't matter. Even if it's the former, it means the full cost is unlikely to be more than $1,000 or so. Nonetheless, in the case of one particular implant, Rosenthal reports that U.S. hospitals pay an average of $8,000 and that even Belgian hospitals, which benefit from government-controlled pricing, pay $4,000. So everyone is paying a pretty hefty markup. Americans are just paying a super-hefty one, made worse by the fact that hospitals then add their own markup, bringing the price of the implant up to $30,000 or more.
So that's at least a 30x markup to the end user just for the cost of the part. And that's despite the fact that the technology is mature, volumes are high and increasing, and there are five companies "competing" for business. So what's going on?
Rosenthal has some ideas, but in the end it remains unclear. Where are insurance companies? Where's Medicare? Why isn't anyone outraged by this? Is it just fatigue at the never-ending tsunami of stories about the lunatic cost of all the various bits and pieces of American healthcare? Bob is right: it's a mystery.