The cost of the aspirin depends on these things lol. Look up 340B.
There is a drug called Oncaspar. It's >$16,000 for one patient, and 5 cents for another (acquisition cost). Same drug, widely different acquisition cost.
There is a drug called Oncaspar. It's >$16,000 for one patient, and 5 cents for another (acquisition cost). Same drug, widely different acquisition cost.
It sounds like within the industry, hospitals are facing the same problems as consumers, and they need more price transparency from their suppliers as well. Hopefully increased requirements towards hospitals to explain their pricing will lead to hospitals demanding slightly more transparency and slightly more consistency from the other companies they work with.
Seems like 340B (I hadn’t heard of this before, thanks!) may have been created with recognition of this inelasticity.
If we can limit prices this way, all it would take are a few more laws to put more price limits in place.
Read that again and work through your objections. Ideally something's price is higher than its cost so the company can make a profit, but there are so many obvious exceptions that its nice, but not necessary. Thus, who cares how much the pill coming down line costs to manufacture, unless you start hacking into the free market and set price controls, and say that pharmaceutical companies are only allowed to make 20% profit (or however much), Martin Shrekili's play, of buying pharmacutical companies and simply raising prices of drugs, is a legal move under capitalism, no matter how reprehensible that move may be.
jonathan-adly is making the argument that the inherent "cost" of drugs is itself highly variable for hospitals, and that means it's normal and expected that hospitals should not be able to tell patients the price of procedure before it happens. I'm arguing that the "cost" of the drugs is not actually that variable, that hospitals are just downstream of another part of the industry that is engaged in the same price-hiding behavior that hospitals are engaged in.
Of course, under Capitalism "cost" doesn't determine price, the market determines price. But I would also point out that under Capitalism, signing a contract usually involves the terms of that contract being made upfront. Pretty much every other industry in America has figured out how to put a price tag on the products they sell, and I'm not sympathetic towards the medical industry just because up until now it's never needed to learn how. Apple sources its components from manufactures, those manufacturers could change their prices someday. But Apple still puts a price tag on iPhones, and because it needs to put a price tag on iPhones it's incentivized to form long-term contracts with suppliers and to demand a level of consistency in the prices its suppliers offer.
Hospitals haven't needed to do that in a long time.
Price transparency is an important part of most industries under Capitalism, and the medical industry hiding behind variable "cost" as an excuse to avoid pricing their products shouldn't be something we tolerate.
Martin Shrekili's practices (as abhorrent as they might be) are a different conversation. I think that price limits and price transparency are two very different issues.
There's nothing inherent to Capitalism that prevents variable priced contracts.
>Pretty much every other industry in America has figured out how to put a price tag on the products they sell,
Maybe for mass produced products they have, but certainly not for custom work. You aren't paying for a product but for a custom service. Paying a doctor to fix your body in many cases is more complex than paying someone to build a house, a bridge, or a piece of software. You won't even get an upfront price for something as simple remodeling your kitchen. A contractor estimates that it will cost $20k and then finds that a leak in your attic completely rotted some of the framing, now it's $50k. A builder starts digging the foundation to your house only to discover a huge boulder that has to be moved.
There are parts of medicine that could be made more transparent, but there is an inherent complexity that makes complete or even mostly complete price transparency impossible.
Definitely not the norm though, and it is inherent to Capitalism that price transparency is an important part of creating an efficient market.
But sure, it's not a rule. A lot of common things in Capitalism aren't rules, but they're still often signals of a healthy market.
> You won't even get an upfront price for something as simple remodeling your kitchen. A contractor estimates that it will cost $20k and then finds that a leak in your attic completely rotted some of the framing.
A contractor will not however replace the framing and then charge me after the fact. They'll discover the rotten framing, inform me of the new conditions and the new price, and then let me decide. A good contractor will walk me through that process.
> but there is an inherent complexity
Not in the places that we're talking about. The kind of complexity and guesswork and change in procedure you're talking about is not present in the situations that jonathan-adly discusses above. The inherent complexity of fixing someone's body and the inherent variability of what drugs/procedures will be necessary to do so is a good explanation of why pricing a surgery or an entire hospital visit is very difficult. But it is not a good explanation for why hospitals have claimed that the price of a single x-ray is "unknowable".
It most certainly is the norm when purchasing complex custom services.
>A contractor will not however replace the framing and then charge me after the fact. They'll discover the rotten framing, inform me of the new conditions and the new price, and then let me decide. A good contractor will walk me through that process.
If a surgeon could keep your chest open on an operating table while they walked you through the process this analogy would work.
>a good explanation of why pricing a surgery or an entire hospital visit may be difficult. But it is not a good explanation for why hospitals have claimed that the price of a single x-ray is "unknowable".
jonathan-adly has done a great job explaining why drug prices are difficult to calculate upfront.
As for the price os a single x-ray. I'm sure the average cost of a single x-ray could be calculated. But how much is that worth when the entirety of the hospital visit is going to be a variable cost? If you're only interested in a single x-ray, there are already outpatient imaging clinics that will give you the upfront cost.
An x-ray is not is not a complex custom service.
> But how much is that worth when the entirety of the hospital visit is going to be a variable cost?
This is the exact same argument that hospitals used to use against itemized pricing, and yet it turns out that requiring hospitals to give itemized bills on request has pretty solidly been a good thing for consumers.
There are a huge number of reasons for this, not the least being fostering competition and putting natural pressure on the market to justify its prices helps it become more efficient, and these kinds of opaque systems will almost always naturally lead to inflated prices. There's little reason to believe that up-front price transparency for individual itemized procedures and drugs wouldn't also be good for the same reasons.
At the very least, this would help with the many health decisions that consumers make that aren't happening during life-threatening situations. Most of the time that I get an x-ray, most of the time when I'm being offered pain medication, most of the time when I'm making decisions about whether or not to opt for anesthesia before a procedure, I'm awake and not in danger of immediately dying.
It really doesn't make sense to keep leaning on the most extreme life-or-death situations as a defense for why a hospital can't walk me through the price differences in several different brands of pain medication. But sure, we'll make an exception for surgeons operating while a patient is literally unconscious during a time-sensitive procedure. Most health visits (and the vast majority of all preventative care procedures) do not fall into that category.
> jonathan-adly has done a great job explaining why drug prices are difficult to calculate upfront.
Let's make this simpler. johnathan-adly says:
> The cost of the aspirin depends on these things
Here's Rite-Aide's page that comes up when I search for an aspirin: https://www.riteaid.com/shop/medicine-health/pain-fever-reli...
Why is it that Rite-Aid can give me an upfront cost for an aspirin, and a hospital can't? 340B is a rebate system, it doesn't force doctors to avoid talking to patients about the baseline price differences between comparable off-the-shelf name-brand and generic drugs.
The kinds of easy issues you're talking about don't need to happen in a hospital. You can already go to an outpatient imaging clinic for an x-ray, a dermatologist's office to have a mole removed, or an urgent care to suture a laceration.
If you need emergent care or you want an elective procedure that requires a hospital stay, you're into the realm of custom services with variable pricing.
>This is the exact same argument that hospitals used to use against itemized pricing, and yet it turns out that requiring hospitals to give itemized bills on request has pretty solidly been a good thing for consumers.
Has it? Has it driven down prices? Has the demonstrated value been worth the cost? Or has it just pushed hospitals into creating longer bills with more creative items and charges. Creative line items like $500 for aspirin perhaps?
Even better: clearly the market has proven that it's possible to offer these services with transparent pricing. Why can't hospitals keep pace?
This also raises the question why preventative care often falls into the same category. Lawyers have a predictable billable rate, personal physicians and doctors often don't. Most scheduled hospital procedures require multiple consultations and planning before the procedures take place. Most of that stuff is not transparently priced.
There's no reason why a hospital shouldn't be able to figure out the cost of minor anesthesia before a scheduled minor surgery. That's not a surprising part of the procedure, that should be something that's fully negotiated with insurance and disclosed to the patient beforehand so they can decide.
> Has the demonstrated value been worth the cost?
Yes, absolutely, you can find tons of stories online about people negotiating smaller bills because itemized bills turn out to include services that they never requested (and in some cases services that were never even actually performed). If you talk to experts about managing personal health costs, pretty much all of them will tell you to always request an itemized bill after you visit a hospital or doctors office.
It's also absolutely worthwhile because you're seeing creative line items like $500 for aspirin that prove that the costs of the services aren't being based on market rates. That's really important information because it opens the door to other questions like "why are these prices what they are", and "can you tell me in advance before you give me a $500 aspirin?"
I mean... you're saying this is the norm in complex industries, it absolutely is not. Complex industries are complex because they don't know up front what they'll be billing you for. That's not even remotely the same thing as "we think your stay should cost $5000 for reasons we can't disclose, so I guess we'll jack up the aspirin cost after the fact to try and prevent anyone from questioning us."
It is extremely worthwhile to put hospitals in a position where they have to answer consumers why an in-patient aspirin is priced so much higher than the market rate for the drug. I don't know if this is your intention, but what you're implying when you say that the itemized bills aren't accurate is that hospital pricing isn't based on any kind of competitive or visible market rate, or even anything objective at all. Which is a pretty bold claim.
Other industries with high-variability pricing exist, but they're not just making up numbers completely out of thin air after the fact and then lying about line items to try and justify that cost. Hopefully hospitals aren't doing that either. But if they're not, if they are actually basing their prices off of the combined prices of the services they provided... then we gotta ask about that $500 aspirin, because that's a weird price.
1. You shouldn't be admitted to a hospital for those minor clear-cut procedures. 2. Hospitals receive public funds to offset the costs of some services. 3. Hospitals are required to provide certain services regardless of the customer's ability to pay.
>Lawyers have a predictable billable rate, personal physicians and doctors often don't.
Laywers will tell you their billable rate, and can give you a semi accurate estimate for simple services. For more complex services their estimates have enormous error bars.
>There's no reason why a hospital shouldn't be able to figure out the cost of minor anesthesia before a scheduled minor surgery. That's not a surprising part of the procedure, that should be something that's fully negotiated with insurance and disclosed to the patient beforehand so they can decide.
If you're talking about local anesthesia sure, but in that case you're unlikely to actually need to be admitted to a hospital unless it's an emergent condition. If you're talking about general anesthesia then there's a reason that an anesthesiologist or a CRNA with many years of training is required to be present.
> Yes, absolutely, you can find tons of stories online about people negotiating smaller bills because itemized bills turn out to include services that they never requested (and in some cases services that were never even actually performed).
Yes but do you have actual data that the benefits are worth the cost? Has it actually driven down health prices in the US overall? Was the additional complexity actually worth it?
>It's also absolutely worthwhile because you're seeing creative line items like $500 for aspirin that prove that the costs of the services aren't being based on market rates.
I think you're not understanding the point of this. You're not going to actually save money by declining to take an aspirin. Of course hospital services aren't based on market rates. Hospitals are required by law to offer certain services regardless of the ability of patients to pay, most patients are insulated from the actual costs through insurance, many patients have zero out of pocket costs, complex procedures are impossible to accurately estimate, and the free market has an inherent problem with extremely price inelastic services.
It's not a free market, and unless we are willing to make drastic changes to society, it never will be. Pricing transparency for hospital commodities is such an insignificant part of health care costs that it's a gigantic waste of everyone's time.
1. All of these simple procedures are part of hospital visits. If your leg is broken, you're going to get an x-ray. Most surgeries are scheduled, and those scheduled procedures also don't clear this bar. And again, we get into the question of why preventative care suffers from the same problems. Your position seems to be that once any part of the procedure becomes variably priced, there's no point in trying to price any other part of the procedure. That's a pretty big leap to me, that's not how other industries work. And hospitals don't even work that way, because they itemize their eventual bills to insurance companies.
And I guarantee that insurance companies are not saying "who cares about the individual procedures you performed or what a technician's hourly rate is, the whole thing is variable anyway so there's no point in justifying any of it, just charge us what you think is fair."
2/3. I'm not asking them to tell me what their rebates will be or what discounts they might give me, I'm asking them to tell me what the maximum amount is they want for a standardized procedure. Possible rebates or lower prices that they can't predict are fine. I want a max price for that specific item.
> For more complex services their estimates have enormous error bars.
And hospitals still can't even clear this bar, they can't even tell me what a procedure's price is including error bars.
If hospitals could price their services as well as lawyers, we probably wouldn't be having this conversation right now.
> Yes but do you have actual data that the benefits are worth the cost? Has it actually driven down health prices in the US overall? Was the additional complexity actually worth it?
To those people, to the people who reduced their bills, yes. Is your assertion that we should only be looking at aggregate benefits? Community health pools and charity drives haven't reduced health care costs overall, but they have helped individuals avoid bankruptcy, and I suspect those individuals are grateful they exist.
I'm also confused at what you mean by additional complexity. Are hospitals giving itemized bills to insurance companies or not? It's really not a big ask for consumers to want to be CC'd into that conversation that should already be happening.
> It's not a free market, and unless we are willing to make drastic changes to society, it never will be.
Then socialize it. If you want to argue that the free market isn't a good fit for health care, fine. But that's not really an argument for keeping prices secret, it's an argument for socializing health care and taking it off the free market.
Which, incidentally, if your position is that health care should be socialized, line-item pricing also helps with that because it makes it obvious that the pricing is screwed up. You're upset that line-item pricing doesn't solve everyone's problems, but you can't solve a problem until it's obvious that it exists. At the very, very least, itemized bills and transparent pricing show that a problem exists.
That, on its own, even if nothing else mattered, would make these regulations worthwhile. No entrenched system in the world ever changes unless you put pressure on it.
Hospitals can provide an itemized bill after the fact. Not before. They also go back and forth with insurance companies multiple times. It's not actually based on the costs to the hospital. The final itemized bill is the end result of complex negotiation. It isn't actually based on cost.
>"who cares about the individual procedures you performed or what a technician's hourly rate is"
Insurance companies don't care what a technician's hourly rate is.
>I'm asking them to tell me what the maximum amount is they want for a standardized procedure. Possible rebates or lower prices that they can't predict are fine. I want a max price for that specific item.
No surgery is standardized. If you literally want the max price, it's going to be so high you'll never be able to pay it. It won't help you. The individual items don't matter--they're fiction.
>Then socialize it. If you want to argue that the free market isn't a good fit for health care, fine. But that's not really an argument for keeping prices secret, it's an argument for socializing health care and taking it off the free market.
It's not. And it should be public. As long as it's not a free market, none of the normally price discovery mechanisms work at any level in the supply chain. There's no way to provide prices upfront. Any attempt to will fail is just a colossal waste of time. Any list of prices you see is going to be an elaborate piece of fiction.
>To those people, to the people who reduced their bills, yes.
Those people didn't actually reduce their bills because of itemized pricing. They would likely have been able to reduce them regardless. They negotiated with the hospital successfully after the fact the same way an insurance company would.
Hospitals are usually willing to negotiate a bill because they'd rather have some money than none. Whether that's knocking off a line item for $500 aspirin, or nocking 10% off off an opaque $5,000 bill makes no difference.
>Which, incidentally, if your position is that health care should be socialized, line-item pricing also helps with that because it makes it obvious that the pricing is screwed up.
Average prices for procedures can be calculated after the fact. They can be useful in the aggregate. For non commoditized services the averages aren't remotely useful for an individual.
Unfortunately what we actually have, between patents and other monopolies the government has instituted on drug manufacturing and distribution, is nothing like capitalism.
You could replace patents with trade secrets and have many of the same problems (along with some others).
The problem is that when patents are no longer an option trade secrets (or public funding) become essentially the only viable option to pay for the majority of drug research.
If a drug is unique and desirable, forcing doctors, suppliers and patients into contracts that don't allow reverse engineering is the most likely outcome. In extreme cases drug companies could require patients to only be treated in a doctor's office.
In the case of drugs that can't be kept secret, given the time and effort necessary to develop, much of the economic incentive for that research evaporates.
>Patents are thus only viable for those things which would not be expected to remain secret.
That's not how the math works outs. You can easily construct a counter example where a drug has a greater than 50% chance of remaining secret during the length of the patent, yet taking the patent has a greater expected value.
At least we agree on that much. My point is that when the patent is preferable (in the vast majority of cases, as you say) it implies that a trade secret would not have been expected to last as long as the patent—which makes the patent strictly worse from the public's point of view. We've granted a 20-year monopoly in exchange for revealing information which would have otherwise become public, without restrictions, in less than 20 years.
Maintaining tight control over the distribution of the drug only gets you so far, especially when the underlying research is already public knowledge. Trade secrets, unlike patents, don't block independent discovery, and only the rarest and most expensive drugs would warrant complete control over the supply chain.
As for the incentive to perform the research, that ultimately comes from the patients desiring treatment, not the pharmaceutical companies. Eliminating the monopolies would not reduce the demand for treatments, though it would reduce the profitability of individual pharmaceutical companies.
> You can easily construct a counter example where a drug has a greater than 50% chance of remaining secret during the length of the patent, yet taking the patent has a greater expected value.
Yes, if you are not confident that you can keep a trade secret then the patent becomes the better option. (Isn't that what I said before?) "Greater than 50% chance" is not what I would call "confident". It doesn't change the fact that patents only have a positive net expected value to the recipient in the situations where the public is expected to lose by granting a patent rather than having the knowledge kept as a trade secret for a time. The interests of the applicant and the public are diametrically opposed; if the patent applicant wins, the public loses.
Change it to any arbitrary likelihood below 1. The expected value of a drug during the length of the patent maybe arbitrarily greater than the expected value of a drug after that time period due to reasons other than duplication (alternative unrelated treatments etc..). If it is expected that drug will make nearly all of its total value during the length of the patent, then even a 1% chance of duplication means that the expected value of taking a patent is higher.
Such an extreme disparity between expected value during the patent length and after isn't even necessary when you factor in the additional costs of attempting to maintain a trade secret.
>It doesn't change the fact that patents only have a positive net expected value to the recipient in the situations where the public is expected to lose by granting a patent rather than having the knowledge kept as a trade secret for a time. The interests of the applicant and the public are diametrically opposed; if the patent applicant wins, the public loses.
This is wrong because it ignores the additional costs (both direct and indirect) of maintaining the trade secret.
>We've granted a 20-year monopoly
Minor point--most drug patents have an effective date of about 10 years because of the time it takes to bring a drug to market.
>Maintaining tight control over the distribution of the drug only gets you so far, especially when the underlying research is already public knowledge.
Without the potential benefit of patent protection, we'd almost certainly see research become less open to begin with.
>Trade secrets, unlike patents, don't block independent discovery, and only the rarest and most expensive drugs would warrant complete control over the supply chain.
Probably, but those drugs would become immensely more expensive, or the reward available to an individual company for developing them would go down. Every novel drug would likely warrant some extra level of control (and expense).
>though it would reduce the profitability of individual pharmaceutical companies.
The direct cost of maintaining trade secrets would effectively act as a tax on all pharmaceutical companies doing novel drug development. As would the direct cost caused by duplication of drugs during what would have been the patent protection period. Add in the indirect cost of decreased openness, and the only way to maintain the exact same level of drug research we have today without patents would be to increase public funding for drug development.
I think that's probably a better system to be honest.
Your argument about cost to manufacture isn't relevant in the same way that the marginal cost of a flying one more passenger on an airline isn't relevant. We all pay different prices for airline seats. Hospitals pay different prices for the same pharmaceuticals.
There are a lot of smart people working in healthcare. A lot of people go into the industry thinking they know better and wash out. See the latest Berkshire Hathaway + JPM + Amazon failure.
> Hospitals pay different prices for the same pharmaceuticals.
Right, that's exactly what I said:
> It sounds like within the industry, hospitals are facing the same problems as consumers, and they need more price transparency from their suppliers as well. Hopefully increased requirements towards hospitals to explain their pricing will lead to hospitals demanding slightly more transparency and slightly more consistency from the other companies they work with.
Drugs in a clinical setting are priced on a per unit basis (which might be per mL), usually with a flat markup over cost. In practice, that can mean a patient getting IV drug treatment could receive two different charges for the same drug in the same day. If it's a hard to find drug and they deplete batch 1 from supplier A, then administer batch 2 from supplier B, the cost per unit could change by multiplies.
Using the earlier airline example, it's like trying to say what the cost of a generic flight is. The answer is always going to be it depends.
Combining that kind of cost structure with a transparency requirement means you get unusable, and as parent commenter mentioned, laughable results. It's not malicious compliance driving this garbage price transparency, it's a fundamental misunderstanding of how the healthcare system works.
Right, so again, exactly what I said:
> It sounds like within the industry, hospitals are facing the same problems as consumers, and they need more price transparency from their suppliers as well. Hopefully increased requirements towards hospitals to explain their pricing will lead to hospitals demanding slightly more transparency and slightly more consistency from the other companies they work with.
jonathan-adly suggests that it's laughable to assume that a hospital could get a predictably priced supply of aspirin from it's suppliers. And I'm sorry, but no it's not. Everybody else has figured out how to do this. The market has already proven that it is possible to predictably price an aspirin tablet for consumers before you hand it to them.
If hospitals can't do that, then it signals that either something is very wrong with how they operate, or (from the sound of things) something is very wrong with their supply chains.
The value here is in asking why hospitals can only provide laughable answers to a question that other segments of the health industry have been competently answering for decades now. I'm not saying it's necessarily the hospital's fault. I'm saying that something is pretty clearly wrong with their model for sourcing even generic drugs, given that they are one the only parts of the health industry that has this problem.
It's complicated. You're oversimplifying it.
Look, people are pointing me at rare drugs, drugs that don't have generics and that are only available on prescription, people are pointing me at the costs of surgeries and emergency care.
I'm really only asking about the absolute simplest part of this equation. Why can't hospitals predictably price the generic over-the-counter non-prescription drugs that I can buy at predictable prices communicated per-purchase in basically every single grocery store in America? Even GoodRx, for all of the variability on different drugs from different sources, is still able to show the price from each source up front. It's able to pull off transparent pricing.
If hospitals could do even just that, then we could move on and have a conversation about complexity. But they apparently can't even clear the lowest possible bar. Every single over-the-counter drug in a shopping mart will have a price tag on it when I pick it up. It is clearly possible to reach at least that level of competency. We don't even need to talk about the rare drugs or the complicated procedures.
Edit: it occurs to me that you may be focusing on stable, predictable prices over time. To be clear, I'm not even asking for that. I'm asking that at the moment a nurse walks up to me to put an aspirin in my hand, they should be able to tell me what the price is. I'm not asking for standardization across hospitals or static pricing across time, or even consistent pricing across a single visit. I'm asking for the price to be known before the drug is placed in my hand. That is something that pretty much everybody else has figured out how to do, it's the lowest possible bar to clear.
The price (chargemaster) that the hospital might list for all of the a-la-carte care you're provided is totally separate from how they will get paid on it. If you present at the ER and are triaged with stabilizing care, the nurse can't tell you that price because it will depend on your status at discharge, which is not yet known or in her scope of license to determine. If the doctor sees you and sends you home, that's one price (tied to Medicare outpatient prospective payment system or OPPS). Depending on how severe your issue is, the triaging care, such as pain relievers, may or may not be included in the "evaluation and management" procedure coding level you're assigned. There's one of those codes and typically separate bills for both the facility and the attending physician on your visit. If you're admitted to the hospital, what happened in the ER is not really relevant anymore, because now the facility portion of your care will be paid for based on your diagnosis related group (MS-DRG) at discharge, which has no bearing on how many a-la-carte services/drugs you received. Your insurer negotiates payment per DRG (usually as a spread to Medicare) but the hospital, recognizing that they can get screwed and lose a fortune if they have a really complicated case, will probably negotiate a stoploss provision for "outlier claims", saying something like after $750,000 of billed charges, we don't want MS-DRG reimbursement anymore, we want 35% of billed charges.
The regulation, primarily driven by Medicare, prevents any of this from being simple enough to communicate at point of care.
That doesn't even touch the administrative burden of documenting and collecting on all of that care. If your care wasn't meticulously documented by providers making hundreds an hour to type longform notes, it's essentially free, because no provider will risk billing for care they can't support with documentation. Once insurance pays (or not, they might deny the claim), they will often say "yeah we agreed to pay you x but the patient has 20% coinsurance so here's 80%, you need to talk to him about the rest". The hospital and especially caregivers are not aware of how much of your annual out of pocket max you've spent (thereotically they could check with the insurer, but not realistically in an ER), so maybe you have 20% coinsurance or maybe you don't, only you and the insurance company can realistically know that before the hospital sends the bill.
So now that you've glimpsed one hellscape of a reimbursement scenario, which price did you want the nurse to tell you?
It's totally insane and it all starts with CMS and the insurers. The hospitals would love to simplify and have menu pricing for your care, run your card, and send you on your way. No insurer would contract to pay that way because it would "incentivize the providers to administer unnecessary care".
Wait, hold on sec though. I've dealt with navigating inpatient vs outpatient coverage with my insurance compacts. It impacts what they will pay and it impacts what their coverage is, but that's a very different thing than telling the hospital what its prices need to be.
A hospital knows what it wants to charge for an aspirin tablet. Separately, some of that cost is going to be covered by insurance (maybe 100%, maybe 80%, whatever). Maybe there's going to be have to be separate negotiation afterwards to figure out what the insurance is willing to pay. Maybe the hospital won't get to charge what it wants, because the insurance company will whittle them down or move the entire procedure into a separate coding level.
But being able to predict the outcomes of that is more than I was asking. I am fine with a situation where a nurse goes to hand me an aspirin and says, "just so you know, this will be $5, though of course your insurance may end up covering it or negotiating you into a different code where you pay something lower." Because, again, other industries have figured out how to do this. A psychiatrist will not be able to tell you before the visit how much your insurance is going to pay, or even what the final price that they negotiate with your insurance will be. But you'll still know the general price of a session beforehand, the base amount that they want to charge.
Is there a reason why a hospital can't even tell me even just what the maximum amount is that the aspirin they're about to place into my hand would cost inside of their walls?
> That doesn't even touch the administrative burden of documenting and collecting on all of that care. If your care wasn't meticulously documented by providers making hundreds an hour to type longform notes, it's essentially free, because no provider will risk billing for care they can't support with documentation. Once insurance pays (or not, they might deny the claim), they will often say "yeah we agreed to pay you x but the patient has 20% coinsurance so here's 80%, you need to talk to him about the rest". The hospital and especially caregivers are not aware of how much of your annual out of pocket max you've spent (thereotically they could check with the insurer, but not realistically in an ER), so maybe you have 20% coinsurance or maybe you don't, only you and the insurance company can realistically know that before the hospital sends the bill.
This still feels like a lot of words to essentially agree with what I was originally saying -- that the entire process is not used to price transparency, and that this is not the result of an inherent complication in healthcare itself, it's the result of a system that at every level has gotten used to the idea that consumers shouldn't get to know what they pay, and that prices should be determined behind closed doors, not through an open market process.
If from the beginning, nobody tolerated getting mystery bills days or weeks after a hospital visit, would insurance companies have felt this comfortable demanding that hospitals follow a specific payment structure? Would hospitals have been as willing to accept supply contracts where the prices fluctuated so much?
After all of this conversation, we're still kind of back to the original point, which is that it's really good to put pressure on this system, that transparent pricing showcases the various issues with the system in a very public way, and that shining light on those issues and making them obvious to consumers may lead to improvements across the board. If the problem starts with insurance companies, then great. Attempts at transparent pricing open the door for public conversations where the public and regulatory boards ask "why is the insurance company refusing to pay the transparent prices that the hospital is offering?"
I mean, you bring up the (very common) scenario of insurance companies and hospitals disagreeing about what a procedure should cost and only agreeing to pay part of it. That's something that happens because there isn't a market rate for any of these procedures, and there's honestly no way to determine whether the insurer or the hospital is being reasonable. Price transparency helps with that, it gives us a more accurate picture of what the normal variation in prices are for a procedure across the entire industry.
I think that it might be coming across that I blame hospitals entirely for this, and I really don't, I'm focusing in on hospitals to make the point that the pricing outcomes are worse in hospitals than in most other industries. I understand that insurance makes this more complicated, I understand that suppliers make this more complicated, I understand that hospitals are trying to figure out how to bill as much as possible within the scope of regulations that dictate some price limits depending on context. What I'm saying is that price transparency regulation puts pressure on those systems to get better, and that it's good to put pressure on those systems to get better, and (most importantly) that there's nothing about medical care that inherently means those systems need to be this way. We have other examples of parts of the industry that have proven that this kind of complexity for the end consumer could be lower. We could have a medical system with transparent billing, the complications you're bringing up are regulatory, administrative, and contractual; they're not laws of nature. They're complications that were invented by human beings (not necessarily by hospitals specifically) and spread across the entire industry, because there was no incentive not to invent them.
Yes, insurance companies also need transparent pricing for hospitals. That doesn't mean that hospitals don't need transparent pricing for consumers.