Monday, August 12, 2019

When prices go up, eventually demand becomes elastic

Story of a women and her US surgeon who flew to Cancún to get and perform a knee replacement:
The hospital costs of the American medical system are so high that it made financial sense for both a highly trained orthopedist from Milwaukee and a patient from Mississippi to leave the country and meet at an upscale private Mexican hospital for the surgery.

When the price gets high enough, eventually, people find substitutes. 


Ms. Ferguson gets her health coverage through her husband’s employer, Ashley Furniture Industries. The cost to Ashley was less than half of what a knee replacement in the United States would have been. That’s why its employees and dependents who use this option have no out-of-pocket co-pays or deductibles for the procedure; in fact, they receive a $5,000 payment from the company, and all their travel costs are covered.

Dr. Parisi, who spent less than 24 hours in Cancún, was paid $2,700, or three times what he would have received from Medicare, the largest single payer of hospital costs in the United States. Private insurers often base their reimbursement rates on what Medicare pays.

1 comment:

  1. Luke - It appears the link is broken in the posting (or at least it was from my computer). Sharing here in case others have the same issue: https://www.nytimes.com/2019/08/09/business/medical-tourism-mexico.html

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