A month ago, I was traveling in Germany with my family and my daughter had an emergency, so I had to go to a German hospital in the middle of the night. Within 1 hour, they had given my daughter an ultrasound and two doses of medicine to treat her problem, the cost to me: $130 euro, and I didn't even use my health insurance (which does cover international emergencies)
3 years ago, I had a gallbladder attack in Shanghai. I didn't know what was happening at the time, it felt like a heart attack, like I was dying. Went to a Chinese hospital, they did an ultrasound, chest x-ray, CT scan, EKG, blood and urine tests within 2 hours, plus gave me morphine and antibiotics. The cost was on the order of $200.
I don't think the problems with the US healthcare system can be boiled down to capitalism vs socialism alone, it's much more nuanced than that.
Also, comparing a highly automated, elective procedure, that takes 1-2 people, and on an out-patient basis from a private office to something like a heart bypass or hernia surgery I think oversimplifies the situation.
If a doctor tells you that you need to have an MRI and a biopsy, how are you, an untrained "consumer" supposed to know a) whether or not it's really needed or excessive and b) how to shop around for it. c) if you can't afford it, and it's not an emergency, but it could save your life later, what then?
If someone gets routine upper GI endoscopies if they have a high genetic potential for esophageal cancer, and they can't afford these procedures, should they just wait until they are chocking from cancer and go to an emergency room so the state can pay for much more expensive late stage cancer treatments?
I'm all for comparison shopping, but there's still an element of right-to-healthcare for preventative care for those that can't afford it, and there's still the issue that people can't be expected to reason properly about risks and costs when their life is on the line. If a doctor prescribes a test, chances are, you'll want to do it out of fear alone of what might happen if you skip it.
I used to be on a High Deductible Health Plan, which is designed to be just like the author suggests: only for catastrophes. For anything else, you use a Health Savings Account (a tax free account you put money into) and use it to just pay cash prices.
IT WAS HORRIBLE. The concept of course, is great. But the problem is one of chicken and egg. Because the entire system is set up for 3rd party payment, NOBODY, and I mean NOBODY, has a clue what they charge for anything. Go ahead, take the challenge. Ask a receptionist or even a doctor how much they charge for a procedure. They have no idea.
The effect was that going to any medical appointment was a crap shoot. I had no clue what I was going to be paying until AFTER treatment. The amount of friction in just getting a price was so painful that shopping around was impossible. Since "shopping around" is the whole basis behind "price clearing" in markets, the current system of HSAs implemented by Bush is bullshit. Had he gone all the way, and just forced every insurance company to only offer HDHPs, then it would be different. Medical providers would have been forced to share pricing information.
It might have been your HDHP plan. I know the one my employer offers still have "networks". That is, the fees are pre-negotiated by the plan (you basically pay the same as for the non-HDHP plans). It's not hard to find out what they are either.
My family is having exactly the same experience with our HDHP.
I like the cost of the plan (and I'm saving every last red cent I can to cover future expenses) but I'm regarded like I'm crazy when I bring up cost to providers.
Is it possible to pay cash prices without an HSA? I'm under the impression that if you have health insurance (high deductible or not) you are required to use it.
The one time I asked for a cash price for a shot at a hospital, it was pretty quick for the receptionist to give it to me. (Incidentally, $150 cash vs. the $300 bill that came in the mail later, since I used my insurance. For a shot of Rhogam.)
That depends. Some providers are contractually bound (and in some jurisdictions laws also apply) into "preferred provider contracts" that require the provider to bill your insurance and disallow them from taking cash.
I could certainly be wrong, but I'm not aware of any requirement to always use insurance. However, if you pay for treatment out of pocket wouldn't you still need to involve your insurance company somehow in order for your payment to be counted towards your deductible?
I don't think expenses count towards a deductible unless it was related to an insurance claim in the first place.
If I have a $5k deductible, I could pay cash and claim it was $5k for anything, and that now the insurance companies needs to start paying their share. I'm sure they wouldn't like that.
At no point was I touting Obama. My criticism for Bush, and Republicans, in general, is they are more focused on preserving the existing status quo (and the current beneficiaries of it) than they are in advancing free market principles. This is exactly why he did the half-ass measure of HSA's while still leaving the exsiting insurance industry absolutely unchanged.
I think the notion of Obamacare representing what Obama, or even most people on the left, "wanted" is patently false. Obamacare isn't what they wanted. Its what they could get after the insurance lobby and the Republican establishment scared old people into thinking a single payer system would involve them being subjected to "death panels." Let's not forget the signs labelled "Keep the government off my Medicare".
The Republican party once (correctly in my mind) opposed Medicare. Now they rely on its recipients to keep them in office, and even expand it (Bush). Which is proof to me that they are the political party of the "I am doing well in teh current system, so don't change anything!" crowd than the actual libertarian reformers they pretend to be.
No offense to the Show HN tool you are talking about, (I applaud anyone building anything) but it wasn't nearly as sophisticated as people think it was. It was just a pretty web app put on top of a DB loaded with data from a spreadsheet that was released by CMS.gov (Center for Medicare/Medicaid Studies) which is a breakdown for all of the major hospitals in the country, priced out by procedure code. It's a very cool dataset, and I recommend checking it out.
Its also useless for anything other than stuff done in hospitals.
...capitalism vs socialism alone, it's much more nuanced than that.
Profiteering. Seems pretty simple to me.
I'm exhausted by the -ism debates and mythical free markets. To me, it's about the incentives. So I support a single payer using the capitation model, reward wellness vs treating disease.
With ACA (Obamacare), I hope that we're on our way towards single payer in the USA. Meanwhile, I'm impressed with improvements gained so far with the modest initial reforms (eg health exchanges).
Who would have thought that a well regulated market with price transparency would lead to price competition? /sarcasm
The free markets are mythical because they're not allowed to happen. Single payer is a horrible idea. Why would you trust a centralized agency (which can be bribed and corrupted so easily) with such an essential service? The government purchasing healthcare from outside organizations is bound to be overrun with special interests and obscene contracts (like we see with the military). I want to be able to vote with my wallet; I don't want a single entity, especially one that can levy taxes and borrow massive amounts of money from the Fed, to have a monopoly. The State will then just choose winners and losers, make certain activities illegal so we can't test alternatives, etc. I just don't see how that can end well.
single-payer != single provider. Single Payer systems are insurance, they don't provide service, they doll out cash.
The only function of an insurance company is to pool funds and distribute them. In theory, overhead should be very low and there's not much to innovate on except to figure out the best ways to deny coverage or detect fraud.
Profiteering is too simplistic of explanation. If you read up on the various regulations and how they create incentives for hospitals to do this, it makes more sense.
And you have to be careful with the regulations you institute. A LOT of the current problems with the US healthcare system are due to gov't regulations. If you want to see an example, just google "average selling price ASP" and see the utter mess that regulation created for Medicare. Doctors and pharmacists milk the hell out of that gov't regulation. Same with 340b.
"Take the examples of Lasik eye surgery or cosmetic surgery. These services are not covered by insurance. Providers compete on the basis of quality, outcomes and price. And prices have continually dropped as quality and services have improved—unlike the rest of health care."
Sadly, most people forget this. They think that healthcare is somehow immune from the laws of economics, that it is "special."
I like this argument, too, but the common response is that Lasik and cosmetic surgeries are elective - voluntary improvements to your body that are a sort of luxury that lend themselves to competition (shopping around, taking your time). By contrast, a lot of expensive medical procedures are much more critical and time-sensitive (you could say the demand is much less elastic), which makes it a lot harder for competition to work (though more price transparency might help!), especially if as another comment says[0], "You get taken to a hospital out of your control, and they're allowed to decide what services to provide and as well as the price they're going to charge you..."
What the commenter suggested is exactly the situation right now: the hospital sets the prices as astronomically high as possible because they can get away with it, because the patients aren't paying it. Don't you think introducing patient choice into the equation would put some downward pressure on prices? And certainly if it puts any downward pressure on prices, it's a better situation than we have now.
> Don't you think introducing patient choice into the equation would put some downward pressure on prices?
If you could magically make healthcare look like an Econ 101 market where rational choice theory and perfect competition both were even remotely reasonable models of what was going on, sure.
But "patients don't pay directly for services" isn't even close to the only way that healthcare doesn't look like an Econ 101 market. Rational choice theory is a deeply and fundamentally flawed model to start with, but its a tolerable approximation of behavior in lots of important cases (mostly, classes of products which are frequently purchased and used and whose utilities are very clear upon use, allowing any misperceptions about expected utility to be resolved so that most purchase decisions are in fact made with reasonably strong information about costs and utilities.)
Look, the rest of the developed world does as good or better (by most measures) healthcare than the US at vastly lower cost (whether measured per capita or per GDP), and they don't do it by making patient pay directly for services. The whole idea that we have to resort to abstract Econ 101 theory to determine how to control prices in healthcare ignores the fact that the rest of the developed world exists.
If you're having a heart attack, are you really in a position to negotiate on price? At all? I get that there might be some downward pressure, but what prevents the hospital from just laying an absurd bill on you after the procedure?
It's somewhat akin to emergency non-medical services - say, a tow truck, locksmith, or plumber. Many of these services cost quite a bit more than they should. Why? Because the people who need them are in no position to shop around.
> The hope with a real free market is that you wouldn't have to negotiate in that situation, the prices would already be reasonable.
The theoretical efficiency of a real "real free market" depends on the ability to evaluate and choose options in a competitive market for purchasing goods and services based on perfect knowledge of the costs of and utility from each purchase.
There's a whole lot of reasons that a deregulated market for "purchasing treatment for a heart attack you are currently experiencing" is not likely to have the features that theoretically create efficiency in a "real free market".
The real point to them being elective luxuries is that the would-be consumer can actually walk away entirely. You needn't get lazik from anyone. The same can't be said of many/most medical procedures.
You can't research the market and just skip getting a knee replacement altogether, the way you could with lazik. To say nothing of more serious problems.
The point is that consumers are still able to bid down prices despite having no choice but to participate in the market. Individual sellers still have to convince individual buyers to buy their products, and to do so they have to price their goods competitively. It doesn't matter that there is no alternative to participating in the food market because there are alternatives within the food market.
If my breaks need replacing or my A/C goes out, I'm not going to use my car insurance to pay for that, because that would make the insurance really expensive, and create a similar price insensitivity. I don't see how that's different than getting knee surgery or whatever.
OTOH if I get in an accident where I'm not at fault (let's assume the other person didn't have insurance), I'll use my insurance to fix the car, because it's a sudden emergency with a high cost. I don't see how that's different than a heart attack or whatever.
I don't see why people conflate all medical care into one group. Routine care and emergency care are clearly separate.
Every time I hear how much Lasik surgery has improved, I'm gladder I haven't let those damned lasers anywhere near my eyes. :-)
For the hackernews spin, this trick works for software too - I learned it at my first job, where each client had a different stack and we had to evaluate lots of enterprisey vendors: look at the improvements. The same thing that makes vendors tell you their software will make you toast and find you dates makes them unable to resist crowing about the improvements from version to version. If you're choosing between two identical-looking products, go with the one whose recent release notes have things like "Fix problems when mixing Russian and Right-to-left scripts on EBCDIC systems" rather than, "Now includes support for backups!"
I'm glad I bit the bullet and got lasik last year. It beats the nonzero risk of eye infection every time I touch my eyes with contact lenses. These problems can cause vision loss and sometimes require eye removal: http://www.webmd.com/eye-health/news/20061010/lasik-surgery-...
I have some solid lenses made out of plastic, held in front of my eyes. "Non-contact Lenses", I suppose you'd call them. Or perhaps, "binocularettes"? Anyway, they're sort of like monocles, but attached to a little frame that fits around my ears and above my nose, keeping the lenses in place. A minor hassle but you soon get used to it.
Ask me on my death bed to be sure - but I'm pretty sure that the risk of eye removal from my non-contact lenses is pretty low. I much prefer it to the creaky old technology of actually putting things in your eye. Progress!
(I used to have some fashioned from pure glass, and they were pretty decent - much more resistant to scratches - but obviously glass comes with a risk of breakage and therefore shards of glass in your eyes. I have to admit that such a thing never actually happened while I had them, though.)
Many people will unabashedly say that they believe healthcare to be special. It's not uncommon to hear people say that they don't believe profit motive has any place in healthcare. I don't buy it. I don't see how healthcare is any more special than, say, food production (both are obviously vital to health), yet I think most people have come around to recognizing that profit motive is a spectacular way to organize the production and distribution of food.
Of course healthcare is special, it's not a normal market because of extreme demand inelasticity. Food is special too, but it manages to function as a market because we have a food surplus, a plethora of replacement goods within the food category and it's much less specialized to produce.
This doesn't mean that people don't deserve to earn a living. The doctor in the article managed to find a way to make the man's procedure happen without taking a loss on it.
But it's an inaccurate simplification to consider healthcare a market like any other -- inaccurate simplifications hurt any system and that's why our current 'market' system has more bureaucratic red tape, higher prices and worse outcomes than actual socialist systems in the rest of the western economies.
Emergency medicine is inelastic and not conducive to price shopping and other research.
But, what percentage of medicine falls into that category?
For example, I currently have a shoulder injury. I'm meeting with an ortho specialist next week. And it will likely require surgery to correct.
So, while I "need" the surgery, there's no real hurry. I could take an extra week to meet with several providers and ask about pricing.
Of course, I won't do that, because my medical plan is paying the vast majority of the cost. I'll just get nickle-and-dimed with co-pays for the next 6 months.
As another example, I'm very likely going to be switching to a medication that costs $60,000/year for a variety of reasons.
It's slightly elective (my mother has the same issue, but has been okay) but highly probabilistic (my situation could be much worse if I don't take it). There are alternative medications, but they involve injections weekly or daily (which I've been doing), don't cost much less, and produce side effects that make it very difficult to work.
The kicker? The active ingredient is DMF, which I can buy in bulk for 1000x less. I've looked up the pricing, so I feel like I am applying some amount of analysis in determining that it's worth the cost. But it does feel like, even accounting for need to recover expenses of doing medical trials, this is a bit ridiculous.
There's no hurry on your shoulder surgery, but there's also no point at which you say "Geez, at that price I'd rather not", like it's iMax tickets for Iron Man 3. Maybe there's a point at which you literally can't make it happen and are forced to live with it but it is not a Normal Good with Econ 101 supply/demand curves.
I guess that one could contend that our current f'd up situation is a random historical accident rather than a somewhat predictable outcome from treating an essential good as a market good. But you certainly can't claim it's a functioning market, for any definition of functioning or market.
What separates heathcare from a food is you know how hungry you are you have no idea what blood tests should be done. And the person ordering blood tests has no incentive to hold back as they make more money the more they do and can be suied if there to passive.
If the goal is to celebrate the free market, food production is probably not a great analogy. In the US it's heavily subsidized, regulated, watched and manipulated to ensure that the market doesn't act too much like a free market. [1]
Housing and Utilities are that way too. When you get right down to it, every vital fundamental service is backstopped in similar ways. At least inasmuch as disqualifying them from being great examples.
Which rather deprives us of a simple analogy between "How Health Care Might Be" and some other current market for a vital human need.
[1] Which may well work itself out in the end, but is given to trouble in the short run from things like fraud, bubbles, panics and crashes -- things society has voted that they like less than government manipulation of the market.
People think profit is a dirty word, especially if it is made "helping people." But why is it bad to make money helping people and not bad to make money not helping others, like people who make millions from selling fast food or selling iPhone apps?
Isn't most of the country obese? And don't we breed crops to look good over being nutritious? Aren't large portions of the population without reasonable access to grocery stores?
Many people will unabashedly say that they believe fire fighting to be special. It's not uncommon to hear people say that they don't believe profit motive has any place in fire fighting. I don't buy it. I don't see how fire fighting is any more special than, say, food production (both are obviously vital to health), yet I think most people have come around to recognizing that profit motive is a spectacular way to organize the production and distribution of food.
Cosmetic and eye surgery, are for the most part, elective and the pool of potential clients pretty vast, depending on how it's marketed.
Other surgeries/treatments are necessary (not as elastic) --it's not as if people would say, well, I have an extra $$$$$ so let me get a hip replacement. They are forced into having to (by the nature of the situation). I'm saying the economics are different, but that's not to say that scale should not apply to non-elective surgeries, but just that maybe to a lesser degree.
Healthcare most certainly is covered by the laws of economics. It's a service for which there is inelastic demand. Laisk and cosmetic surgery are optional, so the price influences the quantity demanded. Nobody would buy a $100,000 cheeseburger. Treatment that's needed to end suffering or make people functional again is inelastic; if you charge someone's annual salary, he still has to pay it.
It's true that there could be competition on price for non-emergency care. It's okay for someone to eat cheap, low-quality food or live in shitty housing, because for the most part they'll be okay. Should there really be a Ramen of surgery? Are you really willing to inflict that on people?
A good portion of this country is. Those of us who voted Democrat aren't.
Some major insurance companies covered LASIK about 10 years ago, but have since stopped. My LASIK was paid 100% by my insurance co in 2003. I heard the logic that paying $2000 in 2003 was cheaper than paying $150-300 per year for exams, lenses & frames for 10-15 years.
I paid out of pocket for mine, but breakeven for me was 5 years because I previously wore one-day contacts ($$). For most contacts-wearers breakeven is around 10 years.
There are some interesting tidbits in the article, but it falls apart in the last paragraph when we see the true motive of the article: "Sadly, we are heading in the exact opposite direction. ObamaCare expands the role of the third party and practically eliminates the role—and the say—of the patient in the delivery of health care. Will they ever learn?"
And then you see the writer's bumper at the end: "Dr. Singer practices general surgery in Phoenix, Ariz., and is an adjunct scholar at the Cato Institute."
So it's a Cato Institure article (Koch brothers) on the Wall Street Journal (News Corporation/Fox News/Murdoch) designed to end with an anti-'ObamaCare' message. How far the Wall Street Journal has fallen since Fox bought them in 2007.
So you're fine with the ideas presented in the article, until you realize that the author is associated with groups that tend to share those ideas? I don't understand.
His affiliation means his facts and actual investigation of the full story are suspect. His motivation is clear in that it was designed to be an anti-'ObamaCare' piece, which fits right in with the Wall Street Journal/Fox News/Murdoch's mission. Just as the facts and full story would be suspect in a pro-ObamaCare piece on MSNBC or Daily Kos.
> That is one of the most blatant statements of a textbook fallacy I've seen in a while. The affiliations and motivations of the arguer do not affect the trueness of facts or the validity of arguments. (baddox)
The affiliations and motivations of the arguer DO affect things when the "facts" he is using can't be independently verified or objectively measured. This especially applies when the arguer is speaking from personal experience, which is intimately colored by his prejudices. The arguer isn't looking to provide a balanced perspective on an issue, they're looking to prove their point through any means necessary. Including the invention of "facts", stretching of the truth, omission of facts which contradict their worldview, etc.
> The affiliations and motivations of the arguer DO affect things when the "facts" he is using can't be independently verified or objectively measured.
Not so. If facts can't be independently verified or objectively measured, then that's case whether they're spoken by a well-known expert in the field or a well-known liar.
> His affiliation means his facts and actual investigation of the full story are suspect.
That is one of the most blatant statements of a textbook fallacy I've seen in a while. The affiliations and motivations of the arguer do not affect the trueness of facts or the validity of arguments.
I knew I’d see this comment before I opened the HN discussion. Yes, it is fallacious to reject arguments to do the source. No, it is not unreasonable to use known facts about a speaker to weight the trust placed into their statements!
You would be rightly skeptical of an athlete’s endorsement of a brand of shoes they are being paid to sponsor, even though a disinterested athlete would be well qualified to comment, as a professional.
Similarly, in this case “paid for by the Koch brothers” is the most relevant part of his qualification here, not “surgeon”.
But it does mean his facts are more likely to be wrong. Or lacking the full story and the other facts that disprove his point and are conveniently left out. Remember, the Cato Institute (Koch brothers) and News Corporation (Murdoch) are intentionally biased organizations that design studies and stories to make specific points that further their agenda. This anti-'ObamaCare' piece in the WSJ carries about as much weight as a pro-'ObamaCare' piece in a left-biased rag.
It carries no weight. The article casts aspersions on Obamacare, but does not give a single example of how Obamacare has or will affect this patient.
We are told that this patient chose a low-cost health insurance policy due to his financial situation. He is exactly the sort of person who is likely to benefit from Obamacare when the subsidies kick in.
People that disagree with me shouldn't be allowed to own a newspaper or write for one, especially if they disclose their affiliations at the bottom of the article.
You seem to be suggesting that the only valid opinions on any topic are those that originate from a person without any bias but who is somehow intimately informed about the topic.
Those people generally don't exist. The best we can hope for is some reasonable amount of transparency along with a variety of opinions.
The best we can hope for is people attempting to take their personal bias out of reporting and investigate the full story, especially when what happened contradicts their worldview. Real journalists do this. News Corporation (Fox News/WSJ/etc) specifically does the opposite.
I don't think that and never claimed it. In fact, I've done the opposite if you look through this thread. But saying 'others post blatantly biased articles, too' doesn't excuse the fact that the Wall Street Journal is very obviously doing it here.
When you say real journalists take their personal biases out of their reporting and then immediately say that Fox News does the opposite, that certainly comes across as suggesting that Fox News doesn't do real journalism and that its competitors do.
And I certainly didn't say "others post blatantly biased articles" so I don't know why you used quotes when you summarized (and distorted) my comment.
Honestly, I think the term 'bias' is thrown around a bit too much and has a pejorative sense that shuts down discussion of the underlying ideas. Subjective vs. objective is probably a better way of characterizing news reports although I would argue that when you are talking about broad public policy it is pretty difficult to be 100% objective since everyone is affected by broad public policy.
So we canceled the surgery and started the scheduling
process all over again, this time classifying my patient
as a "self-pay" (or uninsured) patient.
Yeah, how well does that strategy work when you're having a heart attack and are moments from death?
I quoted him a reasonable upfront cash price, as did the
anesthesiologist. We contacted a different hospital and
they quoted him a reasonable upfront cash price for the
outpatient surgical/nursing services.
And what would have been his recourse if the doctors all came back and said, "Sorry, $20,000 is our best offer. Pony up!"?
It's not like you can typically elect not to get medical care without dire consequences, so the demand structure is totally broken for an efficient market.
And, of course, we're taking the doctor at his word that his price was "reasonable". How on Earth is a layperson supposed to know what a "reasonable" price for a medical operation is? I don't even know what a reasonable price for having a plumber come over and fix a leaky drain is!
I see this argument a lot. It's really unhelpful if you're trying to resolve the big challenges. The reality is that around about 90% of all healthcare spend can be done in a normal, thought out manner. The car accident/heart attack/ambulance can I negotiate my surgery dialogue is such a small part that using it really distracts away from the main issues.
This was an incredibly disturbing story. It's a pity that it takes a partisan tone at the end. You can just as easily draw the conclusion that all of this pricing shenanigans would be solved by a single government body setting prices for surgery as you can for opening it up entirely to market forces.
The reason that it comes up a lot is because it's not that small of a part.
Before I met her, my wife went to the hospital with severe pneumonia. She was there for over a week, partially due to a surgical error by the hospital. During this time she was fired because she ran out of sick days. This cancelled her insurance. The hospital then charged her $30,000 for a bunch of procedures that she never had the chance to see a price for on account of being unconscious most of the time. She went to the billing department and mentioned that she was now unemployed and without insurance. She offered to pay what she could, but they calculated that they could make more selling the debt to a collection agency, who is still asking us for the full $30k.
Now that I've calmed down a little, I want to say that you are right that 90% of healthcare spending can be handled in a reasonable way. Prescription drugs, birth control, check-ups, and routine treatments could certainly be handled better. However, the reason that the other scenario comes up so often is that the remaining 10% can be completely catastrophic.
Hey, that's a horrible story. What this article highlights is that due to the dysfunctional nature of the current healthcare system a procedure that all parties agreed to do the surgery at $3000 vs the original quote of $30,000. If the system was fixed your current wife might have faced a bill of $4000 vs $30,000 based on an extrapolation. Still not great but a lot better.
You could get there two ways. You could have clear transparent pricing for hospitals and you could look at that pricing ahead of time and determine your preferred hospital in case of an emergency. Or the government could set hard prices (as we're starting to see now in MA which is leading the way in the US in terms of this direction)
the reason that the other scenario comes up so often is that the remaining 10% can be completely catastrophic.
And the reason that it can do so is that the 10% of cases where the patient really, genuinely has no choice are lumped in with the 90% of cases where there is a choice.
The article makes this point: it notes that what most people call "health insurance" is actually a prepaid health plan: they pay premiums in advance for predictable health care expenses--the 90% of cases--at prices that a third party negotiates. The whole point of "insurance" is supposed to be that it protects you against unpredictable expenses--the 10% of cases--by spreading risk. But our system of "insurance" is broken because it doesn't separate the two things.
He's not saying that this is a good thing he's using this as an example of how broken the medical system is. Did you read to the end? Or did you just get annoyed after the first few paragraphs and write this screed?
No, the author's argument is that this kind of negotiation is what ought to happen all the time; his example of brokenness is that insurance rules distort the marketplace and drive up prices. Far from objecting to haggling, he thinks it should happen more often. This is a fairly typical free-market argument. The parent post by munificent advances the counter-argument that patients are not always in a position to haggle over prices.
Ah, I thought of the surgeon wanting a free market similar to car pricing. There's the MRSP that is high but not crazy; you can haggle but, overall, prices would go down so you wouldn't have to haggle in order not to die or go bankrupt ...
The author is arguing that we should use a free market for healthcare. He cites exactly one anecdote where a free market exchange happened to have worked out in the patient's benefit and then generalizes that to the entire healthcare industry.
But he completely fails to take into account the fact that healthcare is about as far from an efficient market as you can get:
1. Patients often need healthcare right now or they will die which does not give them the time, opportunity or mindset to weigh alternatives and make an informed choice.
2. Patients are often unconscious when healthcare decisions must be made.
3. Patients are constrained in their choices by time and place. When you need healthcare, you often need it immediately and are unable to travel, which means you can only choose from the venues nearby.
4. Quality of product is nigh impossible for a patient to ascertain. You might be able to find the outcome history for a few care providers you're considering, but that presumes you can reliably tell which doctor will actually be the one to give you care. If you take a turn for the worse when they're off duty, now it's out of your hands.
5. Patients can't pick and choose pieces of care. Assuming somehow you do have the data to make decisions about which nurses, facilities, equipment, doctors, and anesthesiologists you want, you can't pick and choose them and assemble your own A-Team.
No one argues that the medical system isn't broken, but arguing that we should replace it with individual customer chosen free markets is making the claim that somehow a bunch of stressed out amateurs with little time or medical knowledge who are currently suffering a medical malady will somehow be able to bargain more effectively than what we see now.
I'm Canadian so I think the US healthcare system is simply barbarous ... the US is a third world county in many respects.
But, this is not how the free market works. When I bought my entertainment centre it cost around $3000 after haggling ... the MRSP for all the pieces was around $3500.
This example was the MRSP was $23000 AFTER the insurance covered a bunch of it. The negotiated cost was $3000.
In a free market system the MRSP would come down and none of these points would really matter (the constrained people would pay $3500 instead of the haggled price of $3000)
My definition of reasonable: 1) First establish a reasonable hourly rate for each person in the OR (doctor, anesthesiologist, assistants). Add all that up. Then add in the amortized cost of the equipment used (knives, heart monitor, bed sheets), add in the medicine costs, then add a 20% overhead fee (guess) for the operating room / hospital. Somehow I don't come out to a figure anywhere near to a hundred grand (or 20 or 50k).
In India, "health insurance" has very little impact. It is essentially for hospitalization. This is the ideal situation as per the article: let healthcare negotiate with patients.
But look at the downsides: no standardization of procedures or facilities, price gouging is common and doctors+hospitals controlling prices.
The fallacy here is that the patients can shop and bargain for care they need. It isn't so in so many situations due many distortions in free market utopia. Perhaps, someone needs to hack a new solution to insurance.
So what do you do if you don't have $3,000 to pay for what can be a life-threatening operation (a hernia)? The Cato Institute answer, let the person die, is economically nonsensical. The economic value of that person's lost labor is almost certainly worth way more than $3,000.
Originally the hospital required $20,000 up front. These were the two options discussed in the article. Is there a third, better alternative that they missed?
The system in the UK, while not perfect, is actually pretty damn good. It's a national pass-time to be rude about the NHS, but when Obamacare was in the press* we all suddenly remembered how good we've got it.
There are all sorts of criticisms one can level at the US Health "system" (as well as the UK NHS), but it fundamentally has to come down to efficient use of resources. In the UK, we pay money to the NHS (via tax) and the NHS spends it on our healthcare, in the form of people's wages and equipment costs etc. Internally, the NHS is set up to get the best healthcare result overall for the entire country, with the money it has.
In the US, there's an extra party - the insurance company. You pay your money to them, and then they pay some of that to the hospitals etc. for your healthcare. The key is some of - they're a business, with costs to pay, and profits to extract. You're making less efficient use of the money overall.
Capitalism, when used properly, is a great way of getting efficiency. For consumer goods lower costs means lower prices so more sales, so more money. Capitalism working perfectly, so the consumer is paying as little as possible. But the insurance companies aren't incentivised to produce efficient healthcare, the very opposite. They're not evil (mostly), that's just how the market is.
* Possibly still my favourite quote from any newspaper ever, was a sadly ill-informed "Investor's Business Daily" trying to be rude about the NHS, saying "if Stephen Hawking were British, he's be dead".
Stephen Hawking IS British (I've seen him in Cambridge), and has been well cared for by the NHS to live to the ripe old age of 70 - very rare for someone with Motor Neurone Disease.
We have a state system in Uruguay too, and it's amazingly better than the one in the U.S. as well.
One difference, I think, is that it reduces the imbalance of power between consumers and providers. The state can and does force prices down.
It sucks if you want the absolute best healthcare, but you can get that by paying (it's not forbidden), but the healthcare we do get is "good enough".
It's also lacking in preventive medicine, quality of life and cosmetic, but I'll take that over the U.S. system anytime.
We have private emergency systems, and they work extremely well for the consumer, my girlfriend had a burn from scalding water and was treated by a doctor within 5 minutes, for U$ 15. Doctors at those emergency services are criminally underpaid, though (as little as U$ 500 per 6 hour-shift monthly)
In my experience having a high-deductible health insurance policy that that I purchase myself I think this bit of the article can't be understated.
"I explained that just because he had health insurance didn’t mean he had to use it in every situation. After all, when people have a minor fender-bender, they often settle it privately rather than file an insurance claim. Because of the nature of this man’s policy, he could do the same thing for his medical procedure. However, had I been bound by a preferred-provider contract or by Medicare, I wouldn’t have been able to enlighten him."
My wife and I have run into multiple cases in the last two years where our providers would have offered substantial discounts for paying cash, however because of the provider's contractual obligation (and state law, to boot) they are unable to accept cash payment and are required to bill our insurance at a higher rate than their cash discount. Since I have a high deductible I end up paying for the procedure out-of-pocket at a higher rate than if I could have just paid cash. It's maddening.
I'm not a health-care professional, so I don't know: But wouldn't you be able to not tell the hospital that you have insurance? Pretend like you don't have any from the beginning? Or can this backfire?
The practices we had our issues w/ were an imaging clinic and a pediatrician. I kinda expect that telling either one of them that we didn't have insurance would have resulted in them refusing to take us as patients. My wife and I talked about trying it with the prospective next provider, actually.
I entered in thinking it was journalism, and it wasn't until the end that I realized I had been reading an editorial. That colored what I had just read, but it's my fault for missing the "Opinion" category at top.
The anecdote was interesting and informative. If nothing else, Americans should remember to ask about "cash discounts" at health care providers.
The conclusions, though, are pure whargarbl:
"the only way to make health care more affordable
is to diminish the role of third-party payers."
Really? The ONLY way? That's how all other countries do it?
"ObamaCare expands the role of the third party and
practically eliminates the role—and the say—of
the patient in the delivery of health care."
This patient lowered his bill by exercising his "role and say," and that illustrates that Obamacare has eliminated the role and say of patients. Wait, what?
If this patient had been negatively affected by Obamacare in any way, I'm sure the author would have gleefully pointed it out.
If you choose to buy partial insurance (for example high deductible, AKA major medical insurance) make sure you buy one with very good negotiators!
The value you get from paying below list price will likely be more than the value from the insurance payments.
The patient in this article didn't have such a plan, they have essentially a HSA, they paid a premium to have some cash paid toward procedures, but the "insurance" company didn't do any work on his behalf to lower the premiums - because they have no reason to, they pay a fixed amount.
> "Most people are unaware that if they don't use insurance, they can negotiate upfront cash prices with hospitals and providers substantially below the "list" price."
Substantially below list, but still well above what insurance providers pay.
Even when you can self-insure in the US, if you actually find yourself needing medical care, it would have been cheaper not to.
Except on the short-term scales and/or when you're young and may well not need to see a doctor for several years at a go.
Until we're able to remove the emotion from the discussion I don't see a resolution to the issue in the States. To me it's the number one challenge to our ability to compete. The cost of health care is often the deal breaker in our decision to hire someone domestically or farm that work overseas.
We pay far more money than anyone else, and for a poorer outcome. I only hope that others read something like this and grasp the importance of finding a solution.
For a lot of stuff, the idea of pre-negotiating price between patient and provider sounds great. I'm not sure how emergency care can work well though without some third party to help set fair pricing.
You get taken to a hospital out of your control, and they're allowed to decide what services to provide and as well as the price they're going to charge you. After the fact your only leverage to negotiate the bill down is declaring bankruptcy.
Here's a wild idea - it is handled by the state. (Unless you already have insurance)
So... if you don't have insurance, guess where you can go? That's right - to the emergency room, where they are legally obligated to treat you. And if you don't/can't pay, then the hospital. It is one of the costs of doing business, and if you are a county hospital, then the cost is eaten by the gov't.
Needless to say, without handling the rest of the healthcare industry, just having the state pay for emergency care won't work.
What you'll end up with is a one-way ticket toward emergency rooms packed with people there to get routine (non-emergency) care. Or, you get people that have legit emergencies caused by lack of routine care... pick your poison.
Or the opposite: Have the state take care of routine preventative care (exams, age-related tests, etc), the patient would have a high-deductible policy for stuff like cancer, auto-accidents, etc. And everything else people pay on a fee-for-service basis.
Society benefits because we're paying to ensure a basic level of health for everyone and not the current system of inflated prices. The insurance industry gets to stay in business (which they wouldn't under a government run single-payer system), and patients benefit because they get to shop for a provider based on outcomes and price, for everything that isn't catastrophic.
I agree with you, but that ripples outward. If I don't have to pay for emergency care, then why pay for insurance at all? I can just go hang out in the emergency room and they will take care of me. I realize a large sum of people do that right now, but that just reinforces how broken our current system is.
We have to fix healthcare in total before we can say thats a done deal, but it is the right direction.
Honestly, I think that the final answer really ought to be state-run hospitals that provide intensive and emergency care for free, and state-run doctor practices that serve as GPs and whatnot for communities. Private practices can exist, but they get to play in the market normally and price accordingly.
The problem is the metric crapton of Americans who will grind the system down as they fall prey to the beetus and obesity, and the number of wrongheaded bozos who think that letting the .gov handle this is somehow automagically a bad idea.
Here's a better idea: require all hospitals and Dr offices to publish fee schedules in a centralized location, allowing the customer to price-shop procedures. Then there would be downward pressure on prices, and you could plan in advance of elective procedures.
Operator, I'm having a heart attack! Please direct me to the nearest centralized location of the fee schedule, so that I might begin studying my options.
There's no reason you couldn't compare costs before an emergency occurs. Not that you'd know off the top of your head which hospital is cheapest for any given procedure when you need it, but you could get a good general idea.
On a similar note: many hospitals can and will negotiate your bill after the fact. A family member has had procedures performed that cost in excess of $20k, but was able to negotiate the bill to less than $5k. Although I am not sure if this is the norm.
It's as if there were a monopoly on health care and the monopoly is charging whatever they think they can get away with. I am shocked. Shocked I tell you!
Sarcasm aside, I didn't know about these "preferred provider" contracts. That's just some good-old, down-home, anti-competitive behavior, right there.
Instead, we have a DOJ more interested in chasing after and "making an example of" young men who violate a university network use policy. Damn, I bet Rockefeller wishes he were still alive.
There is no such thing as a free-market in health-care. Period.
Patients are not customers. We don't shop. And you know what the biggest tell-tale about that is? Hospitals don't advertise. Sure, you see ads for a handful of elective procedures like teeth whitening and boob jobs - but when did you see an ad for hernia surgery?
Now, it would be an interesting world where there was indeed some sort of marketplace for healthcare, where when you're doctor tells you you need something, from medication to a test, you can punch it into an app to get the best price. Providers could compete with each other on price.
But here's the thing: do we really want to buy healthcare based on price? I don't. And I know too many people in other parts of the world (Canada and Australia, to be exact) who have nothing but good things to say about their socialized healthcare.
I believe in capitalism's power to generate wealth, but I also believe that healthcare should be socialized in the US. It is horrible the way people are overcharged for procedures, and that happens because there is NO MARKET.
Where I live (Philadelphia) I see a lot of advertisements for hospitals, and for treatments for serious conditions like cancer. Not so much "we'll do it for $whatever", but certainly language like "we are the best hospital in the region for (issue)".
You're already buying your healthcare based on price! The difference is that your insurance company is doing it for you (assuming you are insured). That's why they have "in-network" providers.
3 years ago, I had a gallbladder attack in Shanghai. I didn't know what was happening at the time, it felt like a heart attack, like I was dying. Went to a Chinese hospital, they did an ultrasound, chest x-ray, CT scan, EKG, blood and urine tests within 2 hours, plus gave me morphine and antibiotics. The cost was on the order of $200.
I don't think the problems with the US healthcare system can be boiled down to capitalism vs socialism alone, it's much more nuanced than that.
Also, comparing a highly automated, elective procedure, that takes 1-2 people, and on an out-patient basis from a private office to something like a heart bypass or hernia surgery I think oversimplifies the situation.
If a doctor tells you that you need to have an MRI and a biopsy, how are you, an untrained "consumer" supposed to know a) whether or not it's really needed or excessive and b) how to shop around for it. c) if you can't afford it, and it's not an emergency, but it could save your life later, what then?
If someone gets routine upper GI endoscopies if they have a high genetic potential for esophageal cancer, and they can't afford these procedures, should they just wait until they are chocking from cancer and go to an emergency room so the state can pay for much more expensive late stage cancer treatments?
I'm all for comparison shopping, but there's still an element of right-to-healthcare for preventative care for those that can't afford it, and there's still the issue that people can't be expected to reason properly about risks and costs when their life is on the line. If a doctor prescribes a test, chances are, you'll want to do it out of fear alone of what might happen if you skip it.