It would be interesting to see a breakdown of what really accounts for the majority of the price differences. This article mentions some things in passing but ultimately doesn't conclude with the main quantitative insights.
Indeed it would. My gut feel from reading many articles like this is that in American healthcare everything is more expensive. There is more administrative overhead, the salaries for doctors are higher, owners of private hospitals expect more profit, drug companies has better profit margins, implant manufacturers have better profit margins. I have also heard the American hospitals spend more money on purchasing the latest equipment.
So my theory is that there is no incentive to cut costs, everyone in the healthcare industry profits form the inflated costs. Even the insurers do as long as they can keep raising the insurance costs.
Your health is priceless. You'd pay anything for yourself or your children. Therefore the going rate will be whatever maximizes profits, which doesn't necessarily mean providing services to everyone (at least in backwards countries) but usually means providing service to "most of the community", more or less.
That's why when very few people are tourists, its profitable for the tourists. Obviously this doesn't scale because if you can outsource basically all non-emergency medical care, prices will rise for tourism because the served group now earns 5x as much so "why not" charge 5x as much if the locals don't go there anymore.
Its no different than "tourist-y" restaurants and stores. Once the locals are chased away, prices explode to what the tourists can pay, what the locals pay doesn't matter, they're kicked out of the market.
Once the real economic value disappears, all thats left are scammers. So "everybody knows" that going to .mx for raw vanilla, tequila, and jewelry is a losing proposition because so many crooks are involved. You'll hear accusations of this for medical tourism, but its just not there yet. It'll take awhile but the economic forces are inevitable, at which point there will be true medical disaster stories about scammers.
Most of the difference here is that our hospitals have to fob off the money they lose from treating patients without health care onto those that do. They charge a lot more because every 5th or 6th person coming into the emergency room has no health care, must be given treatment, and will never be able to pay for it. Thus, we all take on that burden through a backdoor, round the corner, through the mailslot, rather than just by dealing with it and giving everyone health care....
That doesn't really explain how the healthcare can cost 5x or more. What you've said is that every 5th or 6th person is a free rider (presumably due to laws such as the COBRA http://en.wikipedia.org/wiki/Consolidated_Omnibus_Budget_Rec...) ... if that was the source of the added costs, it would suggest they would only be 1.2 or 1.5x higher, not 5x or more.
The #1 reason healthcare costs more is because of over-treatment. When providers are paid by the procedure, suddenly everyone needs a procedure (or ten). Combine that with third-party responsibility (insurance pays doctor, employer pays for insurance), opaque pricing structure (doctors are the only ones that can tell you if a procedure is necessary or not), and you have a "market" that is "broken".
Put simply, everyone wants "the best care" when they never have to actually pay for it. And as long as providers are incentivized to provide "the best care", they will do it, as lost as "best" equals "expensive".
Over-treatment doesn't explain why the same treatments cost more, though. The base charge for simply occupying a hospital bed for one day is absurdly high in the U.S. compared to just about any other country (Canada comes close, if you're a non-Canadian and therefore actually liable for it).
COBRA, from my understanding, doesn't give anyone a free ride. It just means that the former employee has to pay the costs themselves:
COBRA does not, unlike other federal statutes such as the Family and Medical Leave Act (FMLA), require the employer to pay for the cost of providing continuation coverage. Instead it allows employees and their dependents to maintain coverage at their own expense by paying the full cost of the premium the employer and the employee previously paid, plus up to a 2% administrative charge (50% for the latter 11 months under the disability extension).
COBRA doesn't mean you get free healthcare. It means you pay the rate that your employer did, plus a 2% administrative fee.
It's better than individual coverage because individual plans are made more expensive to counteract adverse selection (i.e. people who buy plans are sicker than those who don't) but it's not really affordable for someone who just got laid off.
That's important but add in increased pay, litigation, and huge medical billing overhead.
Just think every time a company negotiates prices both sides spend time which is why stores list prices and don't let you negotiate but car dealerships do.
