NYT Pay Till It Hurts Case Write up

Article Title: “The Odd Math of Medical Tests: One Scan, Two Prices, Both High”

In the 2014 article “The Odd Math of Medical Tests: One Scan, Two Prices, Both High”, the article starts off by talking about Len Charlap, a retired math professor, who has had two outpatient echocardiograms in the past three years that scanned the valves of his heart. The first, performed by a technician at a community hospital that lasted less than 30 minutes. The next, was at a premier academic medical center in Boston, that took three times as long and involved a cardiologist. However, the charges seems to be backwards. The community hospital had charged about $5,500, while the Harvard teaching hospital had billed $1,400 for the much more elaborate test. The drastic price difference confused poor Mr. Charlap.

The article further analyzes the Medicare payments between the teaching hospitals in Boston and other hospitals within cities like Philadelphia. It is just as Dr. Naoki Ikegami, a health systems expert at Keio University School of Medicine in Tokyo, and affiliated with the University of Pennsylvania's business school said, "One of the things about U.S. health care system is that it defies the laws of economics, and of gravity. Once the price is high, it just stays there.”

Using Mr. Charlap’s case as an example, two major takeaways from the article are: 

1. The more machines, the higher the bills.

Testing has become "what liquor is to the hospitality industry: a profit center with large and often arbitrary markups" in the United States' medical system. Like the recent Iphone 8 and Iphone X phenomenon, where the systems are similar, the phone with newer bells and whistles is the one that’s being charged at a higher price. “Someone might feel, ‘I bought the expensive new machine and this patient is insured, so I might as well use it,’ ” said Dr. Barry S. Lindenberg, a cardiologist in Schenectady, N.Y. “We have to be honest, there are abuses.”

2. Stubborn model of payment.

The article also mentioned that despite Japan’s fondness for testing, its health spending is about $4,000 a year a person, or 9.6 percent of gross domestic product. By contrast, the United States spends more than $9,000 per person annually, more than 17 percent of G.D.P., although some studies indicate that health care spending is leveling off. The difference is in part because Japan decides the value of each test and medicine, sets a price and then demands that it decrease over time. However in United States, it’s a totally different case. New Jersey had the second-highest charges for echocardiograms in the nation in 2012, 8.4 times Medicare’s approved rate. Despite having machines that are newer, more cost-efficient, and provide clear snapshots of the heart, it is not used as often in the United States as in other countries. For example, the newest miniature echocardiogram machines can fit into a doctor’s white-coat pocket and, placed on the chest during an office exam, provides a snapshot of the heart. Even primary care doctors in training can use the devices, which sell for well under $10,000, to detect basic heart problems with a few hours of instruction, according to studies. Because there's no profit involved, the doctors in the United States do not use it as it does not fit the United States' model of payment. It is still an ongoing issue that needs to be changed.