One of the most daunting challenges facing Canadians distressed by unreasonably long waiting lists for medical care at home is the cost of seeking it abroad, without any help from the government health insurance they have been paying into their whole working lives.
True, in some cases provincial governments will pay for, or perhaps subsidize, pre-authorized medically necessary services in the United States that are not available at home in a “reasonable” time. But who can tell what is reasonable to someone struggling physically and emotionally with cancer or an unresolved cardiovascular or musculoskeletal condition?
As we have reported in previous articles, roughly 900,000 Canadians are waitlisted, with their average waiting time just to see a specialist at over 18 weeks. Most will simply have to endure, since going abroad for medical care is expensive. There is no way to sugar coat that fact.
But is it always an insurmountable fact? To determine that, one needs to take a good look at how hospitals and clinics in the U.S. price their services and how prospective customers (patients) can debunk some of the myths that hamper sound decisions.
For example, when you hear that the Swedish Medical Center in Seattle (a cross-border locale popular with B.C. residents), charges an average $109,829* for catheterization and placement of a drug-eluting stent in a blocked coronary artery, the waiting list becomes a little more tolerable. But when you strip away the mystique of American hospital billing and see that the average actually paid to the Swedish Medical Center for this procedure is $16,829, tolerability takes on a new meaning.
A freak? A one-off? Definitely not.
American hospitals (investor-owned or not-for-profit) have what are called “charge-masters,” huge volumes that factor in every item or service that can possibly be brought to bear in dealing with a given condition or cluster of related medical conditions. You can call it a wish list because nobody, except the most innocent ingénue, pays the full charge. A prominent U.S. economist has termed American hospital pricing as “chaos behind a veil of secrecy.”
Hospitals in the U.S. are businesses. As such, they are subject to the same stresses and market forces as other consumer-oriented organizations. They must have new, up-to-date, cutting edge product lines. They must be competitive. And they must be able to cut profitable deals with their wholesale clients (insurance companies). And, as a rule, their biggest client—the U.S. government Medicare program—dictates what rates it will pay for given services, and those rates in turn become the benchmark for what insurers will pay. That does not mean insurers will pay hospitals the rock-bottom Medicare rates (which are generally thought to cover only about 80 percent of the costs of covering Medicare patients). But they will pay a premium over Medicare rates, say 15, 20, 25 per cent or so; whatever they can negotiate with the hospitals to which they “steer” their members.
Furthermore, Medicare rates are themselves highly variable, dependent on local costs of living indices, local wage rates, the actual demographics the hospitals serve, whether they have teaching duties, and other such contingencies. Consequently, the Medicare rate for a given procedure (Diagnosis-related Group) can be two or three times higher for a hospital in Midtown Manhattan than for a 120-bed community hospital in rural Nebraska. In fact, the rate can even vary dramatically between similar institutions in the same town, just several blocks apart from each other.
So when Buffalo Hospital in Minneapolis charges $43,321 for a major joint replacement without complications (DRG 470), it actually is paid $12,524 on average from Medicare, and $17,365 from insurers. And at Erie County Medical Center, close to Buffalo, New York, the same procedure is paid at an average of $19,178 from insurers.
In Boston, the highly respected Brigham and Women’s hospital charges an average $110,267 for a major cardiovascular procedure without complications (DRG 238). It receives $29,512 average from Medicare, and $31,802 from private insurers. It’s up to self-pay patients to try to get the same rate insurers pay. And in several states, the law states they must.
Only a few blocks away in Boston, the equally prestigious Beth Israel Deaconess Hospital charges an average of $65,248 for the same cardiovascular procedure and is paid an average of $34,092 from insurers and private sources, while the Sanford Medical Center in Fargo, North Dakota, familiar to many Manitobans, is paid an average of $21,277 by insurers or patients.
If you are considering going abroad for medical care, do your homework. And before you wave off that bill for $156,467 from Yakima Regional hospital just south of B.C for DRG 460 (a spinal fusion), understand that the hospital is normally paid an average of $30,385 for the procedure, while at the world-renowned Cleveland Clinic in Ohio, the average payment for the spinal fusion without complications is $28,984.
These are still hefty sums. Top-tier health care is expensive wherever you go, and the service you can expect in most U.S. hospitals is of course top grade. But only you can decide what you’re prepared to tolerate on a wait list that doesn’t seem to end.
*All hospital cost data cited in this article is sourced from ongoing surveys by the U.S. Government’s Centers for Medicare and Medicaid Services.