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Yeah, except many (most in my area) healthcare providers do not have fixed rates for service, and prices that are offered are often just estimates, with no real recourse if the estimate is off by a wide margin.

My wife had elective surgery- I had a high deductible plan at the time with an HSA account. When we asked what the total cost would be, the quote was ~$1100. The total bills that came to us were well over three times that. There is no real recourse for this, we wrote letters, called governing agencies in our area and were nearly sent to collections before I just paid for it.

Free market capitalism is far from what we have in almost every service-based industry in my experience, and companies fight tooth and nail to ensure it stays that way.

When we asked what the total cost would be, the quote was ~$1100. The total bills that came to us were well over three times that.

That sounds like an opportunity, no? If I were a hospital, I'd start providing cost guarantees to my patients and their insurers.

In fact, some of that is already starting to happen with capitated payment systems. Instead of paying for each procedure, a hospitals get a fixed amount per patient per year. If they can keep costs low, they keep the difference. If they can't, they take a loss.

It's important to remember a lot of healthcare providers are hamstrung by current regulations as well. Even just to start a new hospital, you need to get a "certificate of need" from your state.

Healthcare is far from a free market in the US.

>If I were a hospital, I'd start providing cost guarantees to my patients and their insurers.

Why? Healthcare consumers are largely price insensitive. They currently have no incentive to 'shop around' and reward lower priced providers.

We are only starting to see innovative service providers that are trying to change this.[0]

[0]http://www.npr.org/2015/10/09/447098694/why-most-people-don-...

With the advent of high deductible plans, there is a ton of incentive for patients. If your deductible is $5,000, every dollar you save on medical costs is money in your pocket. They are becoming more and more common.

> While Government-led solutions often seem superior in theory, they rarely work out that way in real life.

Same for free-market solutions, especially in an industry with enormous barriers to entry like the telecom world.

> There is no reason to pay $1,500 for an MRI when there is another place across town willing to do it for $500.

Good luck getting a quote for a medical procedure in the US. Hospitals frequently can't tell if you if insurance will even cover a surgical procedure until the day before, let alone what the price will be (and said price will vary from insurance company to insurance company, and patient to patient).

The place across town might have shitty radiologists, too. A patient is unlikely to have any access to evaluate that aspect.

The prices for medical procedures in the U.S. are fixed at the well-known, stable amount of whatever the provider thinks it can pry out of you and your insurer.

If you go to a mechanic, and get a quote for your auto repair, in most cases that quote is the maximum amount you can be required to pay. To charge more, or to add on services you did not request, would trigger consumer protection laws against deceptive business practices.

If you go to a physician's practice, and get a quote for your human repair, first off, congratulations are in order for getting any number at all prior to service. But unfortunately, that number that you got is pure coprographitto, and it won't be the upper limit on what you pay.

It's much like those e-commerce deals where you can't see the sale price of an item until you add it to your shopping cart. Except in this case, you don't see the price under after you buy the item. And the sale price has a negative discount, meaning you actually paid more for it. You can't meaningfully comparison shop under those conditions.

This is why those high-deductible plus healthcare savings account plans intended to spur comparison shopping cause people to simply forego treatment altogether instead. The only price people can really be sure of is that not going to the doctor at all costs $0 now out of pocket. Going to any doctor can range from "I can actually afford this," to "healthy and bankrupt beats rich and dead, I guess."

With the individual mandate described by Obamacare, the price of not going to the doctor at all is $695 for each adult, plus $347.50 for each child, plus 2.5% of after-tax income.

Wrong in a couple ways.

First, it's the higher of the per-person fee of $695/adult, $347.50/child, to a maximum of $2,085 or 2.5% of income up to the average annual price of a bronze plan on the exchange ($2,448 in 2014). Not "plus", and there are sensible caps.

https://www.healthcare.gov/fees/fee-for-not-being-covered/

Second, that's the price of not having insurance. You can have insurance and not see a doctor (and this is a fairly common choice for folks with a sky-high deductible).

>There is no reason to pay $1,500 for an MRI when there is another place across town willing to do it for $500.

Why should everyone need to individually comparison shop for every medical procedure? Why do two places in the same geographic area have a 3x price discrepancy? Shouldn't I be able to just get an MRI without having to worry that my doctor, or other medical provider, is ripping me off?

Why do two places in the same geographic area have a 3x price discrepancy?

Because determining the cost basis for medical procedures isn't all that easy. It's not hard to figure out what the MRI machine costs, but how about the physician and nurses? How about the building? They do a lot more than just MRIs at these hospitals/clinics. From what I've heard from people working in hospitals, the hospitals themselves have no idea what their procedure costs actually are.

What they do instead is charge as much as they can for each procedure and hope they turn a profit at the end of the year.

Join an HMO, they do this work for you.

Free market competition does not exist in this situation. Verizon has a literal monopoly.

Competition in the market does precisely nothing when there are few participants, all of them shysters (due to high barriers to entry), and there is no meaningful adult supervision. Note that the libertarian crowd would like to ban the adults from the room because it increases freedom.

When I was in the ER last (knife accident in the kitchen) I asked the front desk lady if they could bill me through an honest coding service. I even offered to pay extra for an error-free bill. Didn't prevent them from tacking on the tetanus shot I never got.

There's also no reason to charge $500 when there is another place across town that manages to charge $1,500.

In markets where incumbents collude on prices to achieve unreasonably high margins there are usually opportunities for new entrants to enter the market, lower prices, and rapidly capture market share. Government's job is to make sure that there are no artificially high barriers to entry. Sadly, when Government is corrupted it can collude with incumbents and increase barriers to entry to the detriment of consumers.

Yes, the question is absent a government, or at least given some theoretically perfectly business neutral government what are the barriers to entry for (in tfa) an infrastructure company or (in this thread) a modern hospital. I suspect that while compliance with various regulations do add barriers the "natural" barriers are already high enough to keep out sufficient competition to exert real downward pressure.

I'm not sure that's true. Most insurance plans pay a percentage of charges with the patient on the hook for the remaining 10-20%.

If I were a patient, I'd go for the $500 MRI and pay $100 out of pocket instead of $300.

You could only go for the $500 MRI if someone gave you the choice though. If the market will bear a $1500 MRI the two or three hospitals you might have a choice between don't have any real incentive to lower prices. Neither hospital is likely to believe there's a huge untapped market for MRIs that will make up for the loss of profit and an extra $1000 per MRI of profit means they'd have to at least quadruple their volume to make up for the smaller margin.

I think the point is that there are already hospitals that have those kind of price differentials.

Most expensive brain MRI is $5,560. Least expensive $218. Both in NYC.

Most people can access out of network providers. If you're paying 10% in-network, the $5,560 MRI is $556. If you're paying 50% out-of-network, the $218 MRI is $109.

The problem is price transparency and aligned incentives to take advantage of different prices.

What about providing more people access to the technology?

The two problems there are:

-are the enough more people to justify the loss of profit

-that sounds like socialism you filthy altruist and we the board of directors will have none of that.

granted both of those presume that this hypothetical hospital is being governed by a profit motive which isn't always the case but one of the things you see argued fairly commonly on HN is that insurance hiding the cost of medicine has allowed hospitals to jack up rates because the insurance companies can bear higher costs than any individual consumer... which if true and not a correlation/causation error does imply that a profit motive is at play here.