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).
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!