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[ruchir]

How does the currency rate make any difference? Purchasing power parity is not the same as the currency rate. In any case, even adjusted for PPP, Indian healthcare costs far lower than US healthcare.

Currency conversion was a thing I remembered, but that was not the whole point. What Beck was talking about was the amount of money it is required in US to get medical education and run a medical business and compared that to expenditure in India. Higher expense would mean higher charges.

And that is not a problem with the heathcare system? The US is in serious need of tort reforms. What happens now is sheer nonsense. A lot of doctors just do not take up very complicated cases or go beyond their very narrow areas of specialisation because he/she does not want to run the risk of being sued. I am not saying that the Indian system - where doctors generally cannot be bought to task - is better. But this is a joke.

You made Beck's point regarding TORT reforms. Beck was crying on his program and has been for a long time, that US doctors have to pay exorbitant amount of money in malpractice insurance premium, that results in them charging more from customers.

That is not true. The good hospitals in India (although they may not number as many as those in the US) send their doctors abroad for continuous education in medicine on a regular basis. If anything, the same purchasing power parity works against them here as they have to pay in foreign currency at foreign rates.

How many hospitals in India send their doctors, and those who do are really as cheap as that lady in video said? I don't think so.

The argument was about a common hospital in India charging X money and a common hospital in US charging Y money, and someone in US saying that US hospital should be charging a similar amount that the Indian hospital is charging. If that happened, US hospital would not survive.

This is partly true. But there are other things such as the malpractices insurance, the huge receivables days they run (as insurance cos do not pay up on time) and not as much use of generic drugs as can be safely done that contribute to the higher establishment cost.

True.

About generic drugs, US politicians receive large sum of money from pharma companies, so they try to protect their interests. Also, think about this. Many big companies making branded drugs are US companies. These companies invest billions in researching and developing new drugs. They need to recoup their investment. They are business too, not charities. So it is easier for other countries to sell generic drugs because their companies just make generic drugs, they don't spend money in inventing a new drug.

Having said that, there should be a way in US, by which generic drugs are available.

[keep-it-cool]

1. I agree it would make a difference to some (actually a reasonably high) extent. But it is still too vast to explain just on that basis.

2. If yes, he is right. Tort reforms are needed on an urgent basis. This, more than anything else, takes cost significantly higher. Doctors conduct every test possible, however expensive they may be, just so they can cover their asses. Naturally cost would be higher.

3. Not many. But even within those who do, the cost of treatment is far far cheaper to that in the US.

4. I completely agree on the need for patent protection. I have argued in favour out here. Having said that, the US needs a strong buyer who provides the balance on the other side. And if govt is spending such a lot on healthcare, I don't see why they don't negotiate better. Maybe a govt run insurance company is an option. Let me explain with an example - today, because insurance pays a large part of cost of medicine, everything sells. I don't remember the name of the drug now - but there is a cancer drug that extends life by 5-6 months. It is a heartless, but still relevant, question whether the 50k/dose for that drug would be better used in healthcare. Forget that, it is not necessary that just coz a drug is new, it is better than existing therapy. However, large pharma cos would naturally put more resources behind pushing these drugs as they are patented while existing therapy may be going off patent. With insurance paying for most of it, no one really bothers. Some subtle bargaining by the buyers would help rein in excesses. Anyway, that is a different debate altogether.

[ruchir]

1. I agree it would make a difference to some (actually a reasonably high) extent. But it is still too vast to explain just on that basis.

3. Not many. But even within those who do, the cost of treatment is far far cheaper to that in the US.

Okay, let us look at the salaries that a US hospital pays to it's, for example nursing staff and security staff. Typical salary of a nurse in a hospital is around $50K. Typical salary of a security guard in a hospital is around $45K-50K. Then you have other staff (excluding actual doctors). Salaries of all these people go into running a hospital.

Then, as an employer, hospital has to pay SSN tax, Medicare tax, Medicaid tax, FICA, Unemployment Fund tax, Payroll tax, 401K matching (if applicable).... all these are expenditures that a hospital has to incur in order to keep it's staff.

Convert the nurse salary to INR and decide whether an Indian nurse would be paid the same amount. Think if an Indian hospital would have to pay most of those taxes and charges for every employee.

All of the above inflates the operational / establishment cost of a US hospital way above and beyond the operational / establishment costs of an Indian hospital. Hence, healthcare becomes costly in US.

4. I completely agree on the need for patent protection. I have argued in favour out here. Having said that, the US needs a strong buyer who provides the balance on the other side. And if govt is spending such a lot on healthcare, I don't see why they don't negotiate better. Maybe a govt run insurance company is an option. Let me explain with an example - today, because insurance pays a large part of cost of medicine, everything sells. I don't remember the name of the drug now - but there is a cancer drug that extends life by 5-6 months. It is a heartless, but still relevant, question whether the 50k/dose for that drug would be better used in healthcare. Forget that, it is not necessary that just coz a drug is new, it is better than existing therapy. However, large pharma cos would naturally put more resources behind pushing these drugs as they are patented while existing therapy may be going off patent. With insurance paying for most of it, no one really bothers. Some subtle bargaining by the buyers would help rein in excesses. Anyway, that is a different debate altogether.

I would be very skeptical of a govt run insurance. See, govt provides Medicare insurance, and what does it do? It negotiates by limiting the reimbursements it gives to doctors and pharmacies. What is the result of that? Walgreens - the largest drugstore in US - is now slowly refusing to take medicare/medicaid prescriptions because it says it will incur losses on filling those prescriptions because govt reimbursements are extremely low. Similarly, a huge number of doctors in US are now refusing to take medicare patients for the very same reason - increasingly low reimbursements by govt. The point is that govt has only one way of negotiating -- decrease the reimbursements. When that happens, businesses stop accepting govt options. Ultimately, it is the users of govt options who end up becoming the losers in this entire process.

For your example, I agree, just because there is a new drug, it does not mean it is better than existing remedies. But whether to prescribe the new drug or not, in the first place, is a decision of the doctor or doctor/patient discussion. So, while insurance companies may push their new drugs, it is up to the consumer to buy it and doctor to honestly analyze and decide if it is worth prescribing. Also, if a patient can buy the 50k/dose drug then why shouldn't they?

[keep-it-cool]

Two points.

How can you just convert a nurse's salary in the US into rupees and compare that with an Indian nurse's salary? You need to adjust for purchasing power parity on the cost side as well..not just on what they charge for treatment. What I am saying is that adjusted for the dfferent standards of living in the US and India, the best Indian hospitals (which send doctors for extensive medical training overseas) are far cheaper than their US counterparts. Yes, the fact that US hospitals have to pay all these charges do not help but cannot explain the entire difference. Receivables from insurance, the fear of getting sued and going overboard in order to avoid that also has a big role to play.

Insurance companies dont push for new drugs. Why would they? It helps them if lower cost medication is used. The doctors prescribe them because drug cos make it worth their while and the patients dont care because insurance anyway pays for most of it.

This entire business of making losses on medicare prescriptions is nonsense ...it is just posturing. They know that enough prescriptions / patients will come their way from non govt insurance. If the push is strong enough (as in Germany recently, for instance), industry adjusts. The question is whether there is a will and ability to make that big push.

[ruchir]

KIC -

I am unable to wrap my head around the purchasing power parity bit. But I will try to understand. There is a huge difference in standard of living of an Indian nurse and a US nurse. Like, the cars they drive (if Indian nurse drives a car), the kind of house they live in (I don't think Indian nurse has A/C), the kind of other expenditures they have. I think life of a US nurse is kind of costlier than that of the Indian nurse. And the thing is that US lifestyle attracts every Indian. In the salary that a US nurse gets, she can afford a much better lifestyle (comparatively) than the Indian nurse.

Even if an Indian hospital sends it's doctors to US for training, it is not the same as a doctor doing a 6 year medical course in US. If I am not wrong, medical study in US costs something like $300K. Now, imagine there are 20-25 doctors in a US hospital with that kind of student loan. Hospital is going to spend a lot of money in their salaries. For a big Indian hospital, even if it sends some of it's doctors abroad for training, I'm not sure it is an extended stay training (like for 2-3 years). Also, how many doctors such a hospital would send? 2? 5? 7? So, they are spending money, but it is a one time expenditure. A US hospital has to pay high salaries every month!! So, IMO expenditure wise, it's not the same if an Indian hospital sends some of its staff abroad for training.

I'm not sure if I have done it sufficiently, but I am trying to say that because of the combination of lifestyle, salaries, taxes and lot of other expenses running a hospital in US becomes much costlier than in India... despite currency conversion and purchasing power.

---

About pharmas pushing drugs, I have read many articles and seen many programs where they explain how pharmas give monetary incentives to doctors for prescribing their drugs. Look at the amount of Ads you see on TV. That's huge expenditure in publicizing their drugs. I mean, the situation is such that an anti-psychotic / ADHD drug like Ritalin is now being prescribed to elementary school kids!!! Doctors and Psychiatrists get paid by pharmas for prescribing their drugs.

---

About medicare, why do you think it is nonsense? You think Walgreens is a charity that should be running in loss? There are only two ways to push pharmacies into filling medicare prescriptions (even if it is at loss):

1. Destroy private insurance companies so only govt option will remain. That way all pharmacies will have to accept the prescriptions and since reimbursements will be decided by govt, these pharmacies will go out of business very soon.
2. Open a govt pharmacy to provide medicine for medicare patients. This mean more govt bureaucracy. Medicare will cost about $600 billion in 2010. You add more funding now for providing subsidized medicines too. Does the govt have that kind of money?

[keep-it-cool]

Ruchir, I am not disagreeing with you. I agree on the salaries, taxes, standard of living part. All I am saying is that you cannot just convert a dollar salary to a rupee salary and show the difference. It costs more in the US to buy a coffee v/s in India. It costs more in the US to buy most things as compared to India. Hence, the only valid comparison is to adjust for this difference. I am not an economist and am unable to do the adjustment. But I have read enough and met with enough hospitals (not as a user) both in India and the US to figure that salary is not the factor that makes too much difference.

Let us take an example. Real estate in Mumbai is as expensive now as in New York and more than some other parts of the US. 50-60% of the cost of setting up a hospital is land and building. Another 30% is medical equipment - there are no Indian medical equipment companies - so most of this equipment is also imported from the same suppliers who supply to the US hospitals. So, effectively 80-85% of the set up cost is similar. Operating costs will vary, but hospitals are, by nature, high fixed cost businesses. So, just salaries cannot explain the steep difference in cost of treatment to a patient. Factors such as taxes,  insurance for doctors, proclivity to ask for every test under the sun etc add a lot more - and these are problems with the US healthcare system that need to be sorted out.

I am not saying that Walgreens is running a charity. I am saying that they will not make losses on medicare patients. Walgreens, Walmart, Duane Reade, Rite Aid - all of these source significantly from India these days ...from around 5 years back when they had hardly any sourcing from India, the cost of medicines for them has gone down by atleast 50%, if not more. Have cost of drugs come down by as much for the patient? I dont think so. They will make money on medicare patients as well ...of course they will make less money but they will still make money. It is their choice that they dont want to accept those prescriptions but they are just posturing by claiming that they will run to losses.

Of course doctors get swayed by Big Pharma to prescribe anything. They also do not want to be held to ransom by patients' families later on if someone dies 2 weeks earlier than he would have had he taken a more expensive drug. That is why you need the payors (govt insurance, pvt insurance, HMOs ...anybody) to get involved and say that ...sorry, we will not cover so and so drug because the cost benefit does not add up. If that patient wants to still go ahead and take the higher cost option, he pays out of his own pocket.

[vincent]

Ruchir,

I do understand your arguement why US doctors,hospitals and medecin are more expensive. That is precisely why there should be a decent coverage for everyone at a fair price which is a law in most West European countries. The question I have is why Glen Beck and others are fussing about when the US patients who are not fully covered go to India for treatment and then bash India being a country with no flushing toilets and with sick rivers? Some of the medical tourism packages that India offers include stay in a resort like hospital plus a hotel lodging (with toilets ) and tourist excursions for the spouse. Why should Glen Beck have any problem with a US elderly couple which does not have any means to afford the "wondeful US healthcare system" that Beck is raving about decides to go to India??

You may want to take a look at this video clip which is from CNN and not from the Indian promotional videos. I am sure now Gen Beck would say "take a look at those cycle rickshaws and bullock carts..."
But saving 100k$ is not a small change.


          <a href="http://www.youtube.com/v/goCko7zBLKQ&rel=0" target="_blank">http://www.youtube.com/v/goCko7zBLKQ&rel=0</a>

[Cover Point]

And that is not a problem with the heathcare system? The US is in serious need of tort reforms. What happens now is sheer nonsense. A lot of doctors just do not take up very complicated cases or go beyond their very narrow areas of specialisation because he/she does not want to run the risk of being sued. I am not saying that the Indian system - where doctors generally cannot be bought to task - is better. But this is a joke.

You made Beck's point regarding TORT reforms. Beck was crying on his program and has been for a long time, that US doctors have to pay exorbitant amount of money in malpractice insurance premium, that results in them charging more from customers.

I am all in favor of Tort reform. Infact that is the first thing they SHOULD have done. It does nothing other than hurt the patients and doctors. And the system is broken. BUT lets be real here. That is not the only issue with the system. Fixing that would not fix everything as the republicans seem to think. Infact there was a study done and they felt this would have less than 1% impact on the overall spend. Lets say it is more ... double or triple that .... still it is not the same.

Doctors in India too make a lot of money.  People from here go to INdia to get operated on in Apollo hospital where the conditions are BETTER (not same ... but better) than most hospitals in the US.

The big issue here is our insurance system and a lack of competition. Insurance companies form monopolies. Our costs are higher ... much higher than they should be despite us getting poorer care.

Insurance companies have no real reason to keep costs down. they take their profits and pass things along. A lot more costs can be squeezed out of the system but it does require govt to push.

Unfortunately there are too many fat cats (on both sides) who want to keep the status quo. A govt health plan would have fixed a lot of the ills ... provided real competition ... but I guess that was too much for the republicans who control the votes of the rich.

[pieterSAN]

Ruchir,

I do understand your arguement why US doctors,hospitals and medecin are more expensive. That is precisely why there should be a decent coverage for everyone at a fair price which is a law in most West European countries. The question I have is why Glen Beck and others are fussing about when the US patients who are not fully covered go to India for treatment and then bash India being a country with no flushing toilets and with sick rivers? Some of the medical tourism packages that India offers include stay in a resort like hospital plus a hotel lodging (with toilets ) and tourist excursions for the spouse. Why should Glen Beck have any problem with a US elderly couple which does not have any means to afford the "wondeful US healthcare system" that Beck is raving about decides to go to India??

You may want to take a look at this video clip which is from CNN and not from the Indian promotional videos. I am sure now Gen Beck would say "take a look at those cycle rickshaws and bullock carts..."
But saving 100k$ is not a small change.


          http://www.youtube.com/watch?v=goCko7zBLKQ

This is exactly the point. He is upset that the too many American people are not behaving as he would want them to - that his view of the world does not fit with reality.

In fact,  (stolen line) "Reality has a liberal bias" and people like Glenn Beck are upset about it.