The article completely ignores structural problems that lead to high prices. Since the US health care market effectively has government price controls (due to Medicare, which is a huge percentage of revenue for most facilities), this causes some perturbations in the market.
Pretend you're an optometrist. Historically you got paid well for your time, so you organized your business around seeing as many patients as possible and referring out things like labwork, glasses-making, etc, since you couldn't compete on price with shops that kept their capital equipment busy nearly 24/7. Life is good; you get paid well for your time and your customers get reasonable prices on things like labwork, glasses, etc.
Over time, your medicare rates keep dropping. Eventually you actually start losing money when you see medicare patients. You then realize that the labwork/glasses part of the business is pretty high margin, and even if you buy a machine and keep it barely busy, you can still eek out some profit from keeping that work in-house. So you buy some equipment, and instead of referring out labwork and glasses, you start doing it in-house. Again you can finally make money on medicare patients.
The medical device companies LOVE this. What better way to expand your market than "invest" (ahem lobby) so that your customers can make money with machines that are only busy 30-50% of the time. That's 2-3x as many devices as if they had 95% utilization, WIN! The doctors won't complain, b/c the system is so messed up that they know it's the only way for them to actually make money. And the insurers can't really do much about it b/c they can't force their patients to go to a different facility as that's too intrusive.
So it's kind of a combination of market failure, lobbying, and price-fixing that causes procedures to be way too expensive in the US since the normal market mechanisms that cause prices to approach a small margin over the cost at high capital utilizations to fail.
There's a lot more to it than that, but whenever I talk to my many relatives in the medical industry, this is always happening, and it's a major factor in prices. MRI machines aren't cheap (think $1M).
Pretend you're an optometrist. Historically you got paid well for your time, so you organized your business around seeing as many patients as possible and referring out things like labwork, glasses-making, etc, since you couldn't compete on price with shops that kept their capital equipment busy nearly 24/7. Life is good; you get paid well for your time and your customers get reasonable prices on things like labwork, glasses, etc.
Over time, your medicare rates keep dropping. Eventually you actually start losing money when you see medicare patients. You then realize that the labwork/glasses part of the business is pretty high margin, and even if you buy a machine and keep it barely busy, you can still eek out some profit from keeping that work in-house. So you buy some equipment, and instead of referring out labwork and glasses, you start doing it in-house. Again you can finally make money on medicare patients.
The medical device companies LOVE this. What better way to expand your market than "invest" (ahem lobby) so that your customers can make money with machines that are only busy 30-50% of the time. That's 2-3x as many devices as if they had 95% utilization, WIN! The doctors won't complain, b/c the system is so messed up that they know it's the only way for them to actually make money. And the insurers can't really do much about it b/c they can't force their patients to go to a different facility as that's too intrusive.
So it's kind of a combination of market failure, lobbying, and price-fixing that causes procedures to be way too expensive in the US since the normal market mechanisms that cause prices to approach a small margin over the cost at high capital utilizations to fail.
There's a lot more to it than that, but whenever I talk to my many relatives in the medical industry, this is always happening, and it's a major factor in prices. MRI machines aren't cheap (think $1M).