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Comment by anonymoushn | Hacker News Reader

This is a red herring. It is not surprising that the cost of care can vary wildly when the customer cannot possibly know the cost of care before purchasing it. Even a person with no immediate need for care cannot obtain the best price since no hospital will provide him or her with a price up front.

"Posting prices publicly" is not the same thing as "completely deregulating the industry" or "repealing EMTALA."

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The customer generally cannot even know the cost of care after purchasing it. Not only is the issue muddled by insurance companies' negotiated rates, but the line item prices on doctors and insurance statements are almost complete nonsense. Really they just say what broad category the care fell under for record and insurance purposes, and there is no way to tell if you have, for instance, been double billed for a procedure. The only times I've been able to clearly tell what I paid for was when going to a specialist for a very specific procedure.

It is not surprising that the cost of care can vary wildly when the customer cannot possibly know the cost of care before purchasing it.

Even the healthcare professionals can't estimate the price of care before providing it, because it depends on the outcome of things like surgery and reaction to treatments which cannot be predicted. So there's no way to tell the patient beforehand that their care will cost x amount. In addition to this the customer often doesn't know what they want and has no basis for making an informed choice before seeing a doctor. This is fundamentally different than (for example) selling products in a supermarket where costs are known up front, shops can vary prices and quality, and people can shop around. So the benefits of patient choice of hospital and treatment etc are questionable.

Other countries spend far less using a single-payer system with comparable or better outcomes than the US according to the statistics on life expectancy and expenditure per capita on healthcare, so IMHO the US should have more and better regulation of the healthcare market, not less. Cutting out the insurance companies completely would be a good start, as at present they run a racket extracting billions from the US tax payer for questionable results.

> So there's no way to tell the patient beforehand that their care will cost x amount.

I call B.S. -- unless you're calling B.S. on the data.

There's something called "estimation" which comes in very handy when you don't know something with certainty.

If you have absolutely no idea, then you just guess the average cost for each patient with a similar background, with a disclaimer that it may not be accurate.

Problem solved, unless you don't want to do it because then it'll prevent you from ramping up the prices unnecessarily later.

Tell me my surgery will cost $100,000 at hospital X and $200,000 at hospital Y (both of which are close to me and staffed with competent employees). It won't influence my decision as long as my insurance company doesn't care. I'll pick based on the doctor and the insurance company can negotiate either bill (down to a very similar level, I presume).

If I don't have insurance, I may be swayed by the $100,000 price, but either way they'll have to sue me to get all of the money that they ask for.

Problem definitely not solved. There's too much uncertainty, and comparisons are too hard.

This happens all the time in software. Non-techies put a project out for bid. They will get estimates from a variety of consulting companies. The estimates could easily vary by an order of magnitude. Do they go with the lowest, because they are the most efficient operation? Or is the low price a sign that they're the dumbest, and are underestimating? Do they go with the highest, because in a market economy price is correlated with value? Or are those guys just the gougers?

And medicine is worse, because things are so contingent. Complications get complicated indeed. And the person trying to make the decision is pretty likely to be sick. I tell you true: deciding what to do about cancer is hard enough without trying to organize and judge a multi-round competitive bidding process.

Claiming something is "too hard" never got anyone anywhere.

Neither did waving away problems as if they didn't exist. If you can solve this, solve it. But arguments of the form "in theory there's a solution, so problem solved" aren't a step forward; they're a way to prevent others from trying.

> they're a way to prevent others from trying.

What exactly was I trying to prevent others from trying?

Well, I was assuming that you were participating in the conversation, rather than just seizing upon a sentence and nitpicking.

The conversation was about the role of the free market in health care.

User curt said that the only way to solve health care pricing was through the free market via individual choices. Mikeash said that would only work if we were happy to let people die of treatable diseases. Anonymoushn said that was a distraction, that the market would be fine if people could know prices up front. Grey-area said that predicting costs was basically impossible, so the market-based solution was unworkable.

You jumped in to say that prices were predictable through this new thing we hadn't heard of called "estimation", saying that this solved the problem. The problem, presumably, being how price opacity and unpredictability make a hash of individual-choice market mechanisms.

So I have no idea what you were trying to do, but as far as I can tell, it was either a) pushing people back toward an unworkable market-based solution for health care, thus preventing them from moving toward a solution that doesn't fit with the fundamentalist liberarian ethos so popular on HN, or b) you're doing this: http://xkcd.com/793/.

Given that you ignored the meat of my point twice in a row with nitpicky comments, as well as doing the same to the previous poster, I'm figuring b.

I was actually responding just to the issue of predicting costs, not to the upthread issue of whether or not a free market is a good idea.

Predicting costs is a benefit regardless of whether or not we have a free market -- I was saying that nothing is completely unpredictable; estimating based on the average value of a treatment gets you much further than knowing nothing at all.

Claiming costs are inherently unpredictable is equivalent to calling B.S. on this report -- that the values in the report are meaningless. Clearly, they're quite meaningfull.

I never claimed estimation = "problem solved", I just said that it's a step forward that needs to happen. But you came along and just dismissed the idea because it wasn't a solution.

And my reply, which you thought was ignoring your comment, was that a step forward doesn't have to be a solution -- you can't just dismiss it because it doesn't stamp "Problem solved" on the bottom of the page.

Unless you or others are claiming that being given an estimate of costs HURTS anyone, I don't see how you can argue it's a bad idea. "Problem not solved" never solved any problem.

Responding to some random sentence in the middle of a discussion as if you actually have something relevant to say is annoying, and a big waste of other people's time. If you want to go off on a tangent, say so. Then nobody has to try to figure out what you're on about.

Predicting costs is not an inherent benefit. That only is useful if somebody will change a decision based on the prediction. Otherwise, it's wasted effort. My mom was on Medicare throughout her cancer treatment, and I promise you: not knowing the costs was perfectly fine.

In fact, not knowing was better. The cognitive load of a major illness is huge. Not knowing is also better for most medical personnel. Their goal should be to maximize patient outcomes. Asking them to juggle some sort of cost-benefit tradeoff in the middle of treatment adds an insane and impossible burden.

Also, you quite literally did say "problem solved" after proposing SWAG estimation as a solution to a problem. Maybe you wanted me to have some other understanding, but I have no idea what it would be. And, since you admit you are off on some sort of tangent, I don't really care.

Alternatively just charge everyone the average cost, with no disclaimer.

In fact you can do that before the need for care is even known, and you can call it insurance.

How shall emergency rooms operate? Also, how shall people make an initial determination on care when no diagnostics have yet to be performed?

> How shall emergency rooms operate?

Not all emergency room decision-making happen with blood pumping out of your pulmonary artery. There are parents who take their babies to ERs, and through repeat business decide to like one better (maybe because it's cheaper, maybe because it's a bit more expensive, but never have any waiting time) than the other. There are consumer reporters who will look into why one hospital is cheaper than the other. Smart phone "Yelp for hospitals".

EDIT: Forgot the conclusion: This will drive down prices in the general case, which will also result in lower prices for the emergency case, even if in an emergency you don't have the luxury of calmly evaluating all the options.

> Also, how shall people make an initial determination on care when no diagnostics have yet to be performed?

The same way you decide which restaurant to go to before you know exactly which dish to have: Ranking by a general cost/quality scale.

I wouldn't bank on free markets fixing emergency room problems. While anecdotally some parents may choose to take their children to one hospital or another, I doubt this is a statistical norm. I imagine most people choose the nearest emergency room for most emergencies, and hold off for an appointment with a doctor otherwise. Sometimes, it's just a baby with colic. But sometimes (increasingly in a country with a serious obesity problem) it's a heart attack, and no one is going to drive their dad 45 minutes to the cheap hospital when the one that will save his life is 10 minutes away. Because of this I don't think hospitals have any incentive to drive down ER costs.

But maybe I'm projecting, since my experience with ERs tends to be "Oh shit... get me to a hospital now Google Maps" rather than "I should Yelp some reviews of hospitals, because I have time."

Of course it's hard to predict what will happen. But right now, nobody has an incentive to even check, so obviously it doesn't happen.

Some people will live 10 minutes from one ER and 45 from the next. But some will live 25 from one and 30 from another. Or have three within 15 minutes (ie. short enough that they're equidistant for "the baby has colic"). Some will have more time than money and drive 45 minutes if it means saving $20.

But there's another factor in free markets you're not accounting for: new entrants. If an ER charges high rates because they're the only player in the area, someone could set up a competing ER and charge less.

I love how easy everyone always makes this sound. Yeah, just setup a hospital near the other hospital and make your prices lower. I'm sure they wouldn't respond by lowering costs until I'm driven out of the market and then immediately raise them again.

And amazingly we still have businesses that compete and don't price all their competitors out of business. So I don't think this is an obvious conclusion.

The reason that this is so is because of regulations.

Or it could actually have nothing to do with regulations. Something called imperfect competition: very few people want and sell the exact same thing. That makes it very difficult to sell superior products at lower cost.

As far as I can tell it is very difficult to prosecute for predatory pricing in the US. This doesn't particularly matter, since it is an awful idea and almost no businesses would do it anyway.

Actually you are not allowed to set up a hospital near another hospital; you need a "certificate of need". I'm not kidding.

Oh, a CON. Hayek probably had some fun with that.

Doctors have no idea how much a procedure or test cost (and they don't care or want that burden)--that stuff is generally insulated by insurance. In my experience, they are vaguely aware of the price of different prescriptions (after insurance) because that directly affects the patient. The economic forces are all out of whack. I'm not blaming doctors--the information should be more easily available to them to provide to the patient.

I'm not in the medical industry (but my g/f was seeking out her own insurance recently), but I would guess that the ER would work similar to a car mechanic. Where the paperwork you're already signing upfront includes a flat price you're paying for diagnostics. Then after the diagnostics (or possibly at the same time you signed the diagnostic paperwork), you agree to a price range for treatment/tests. It would itemize the fixed costs and estimate the variables. If things go outside of that range, there's an amendment. You walk home with the bill.

"Each blood test: cost $X" "Each x-ray: cost $Y"

etc etc.

That way patients can ask the doctors if the tests are actually needed.

You're right that emergency care becomes a lot more complicated.

In actuality, it would be: "Each blood test paid by insurance company $A costs $X, Each blood test paid by insurance company $B costs $Y." Etc.

I really think a big part of the problem in healthcare pricing is insurance company policies regarding networks and guaranteed volume. Your auto insurance doesn't demand you use a certain body shop, why should your health insurance?

Here's a practical example that recently came up for me. My wife is a nurse at a few clinics. At one clinic, she's got health insurance and that clinic provides IUDs via their hospital, which she wanted to get. At this clinic, the price billed to her insurance would be $4700.

At another clinic she works at, she could get the same IUD brand and procedure for $600.

When she asked her insurance about it, they said they would pay 100% of $4700 in-network but 60% of $600 out-of-network. Obviously, being selfish, she decided to let the company eat the $4100 they would otherwise save so that she would pay $0 instead of $240.

Because that $4700 isn't the cost the insurance company is paying. The real reason you can't go without insurance in the US is they're negotiating steep discounts - where I live it's supposed to average 80%.

It may well be they paid less than $600 for a procedure that lists at $4100.

And of course the government numbers don't take this into account, so what they've published is pretty much worthless.

I doubt it. That $4700 is what was listed in the insurance packet, then again in the bill along with a few other minor expenses incurred during the procedure, and finally paid for by insurance in a later notice to us. The 100% is because of ACA requirements.

I don't disagree with you that insurance companies negotiate different discounts, though, which is what I was trying to get at in my post regarding pricing.

The gov't lists medicare reimbursement which is basically the insurance price maximum. Some insurers get better than medicare pricing.

You know what is wild though? Federal employees aren't insured by medicare but instead the federal govt pays private insurers to insure them!

If the Feds went to single payer for its employees, things would change quickly.

>That way patients can ask the doctors if the tests are actually needed.

How does this work? If a doctor prescribes a blood test, he's already said it's needed. Put yourself in a doctor's shoes for a minute. You told the patient he needs a blood test. Then he asks you whether it's actually needed.

How can you possibly say "Nah, just kidding. We don't need that one"?

One of the most important questions you can ask of a doctor is "what happens if we do nothing?"

That works for treatment, but not so much for tests. If you don't know what's going on you don't know what happens if you don't do anything.

Doctors order tests to help them choose the right treatments.

If they have absolutely no idea what the possibilities are then they wouldn't be ordering tests anyway.

>Doctors order tests to help them choose the right treatments.

No they don't, except in very rare cases. Doctors order tests to make a diagnosis. The treatment follows from that.

>If they have absolutely no idea what the possibilities are then they wouldn't be ordering tests anyway.

I'm not sure a doctor would have "no idea what the possibilities are" unless you don't have any symptoms. If you don't have any symptoms, why are you at the doctor's office?

> > Doctors order tests to help them choose the right treatments. > No they don't, except in very rare cases. Doctors order tests to make a diagnosis. The treatment follows from that.

What I said didn't contract what you said. If test => diagnosis => treatment then test => treatment.

Without a diagnosis, how could a doctor possibly know the answer to the question "what happens if we do nothing"?

I never said without a diagnosis.

It's pretty rare to arrive at a diagnosis without tests.

Overtesting is more or less a thing in the U.S. Many tests are not harmless, so even a person who carries an infinite amount of money around would do well to question the necessity of tests.

>Overtesting is more or less a thing in the U.S.

I don't believe that. Over the years I've had to fight to get tests that turned out to be important, and I'm suspicious of government studies showing "overtesting" right when the government is in the process of taking over health care.

You can certainly eliminate a lot of testing without affecting mortality rates significantly. But that's because in absolute terms a lot of extra people have to die before mortality rates are affected significantly.

need it != it would be useful

Because a plumber from idaho can make better decisions about whether the hacking cough + bloody sputum requires a chest x-ray than his doctor.

Right.

And why should healthcare cost money? That's pinning quality of health to how much money you make.

And that's just plain immoral.

Well, let's look at the alternatives. If we don't want people to have to pay for the services they use, we can let people enslave doctors. Or, we can steal from every citizen in the whole country and use the resulting money to pay the doctor. This second option would be called "single payer," and it is my preferred policy, but it does not seem to be obviously morally different from enslaving doctors or obviously morally preferable to requiring people to pay for the services they use.

Or, and I'm going out on a limb here, and we could have a thing called a "democracy", where we jointly decide to pay for health care for everybody. And then we could come up with some sort of system for sharing out the costs of the joint project in a more-or-less equitable fashion.

Right, this is what I proposed. We should democratically agree to use the threat of violence to steal money from everyone to pay for medical services for everyone.

Theft implies unwillingness. So sure, in the sense that paying your share of a group meal you ordered is theft, yes.

More like: we agree together to set up a society, then people in it have to follow the rules. If you don't like that, there are rules that let you change the rules.

"equitable"? That's a 100% subjective term. Of course if someone else is paying it's equitable. If you're paying for someone else, it's not.

Actually, if somebody else is paying for me, that's inequitable. I like to pay my way.

That something is subjective doesn't mean that it's unknowable. Justice is subjective, but that doesn't mean we should abolish the courts and the police. Those institutions will never be perfect, but we can nonetheless always work toward perfection.

First off the courts and police have nothing to do with health care. Secondly, the courts don't dispense "justice", and judges will tell you that first thing as you arrive for jury duty. They dispense the law.

Justice is 100% subjective, but we have a reasonably good system for it. Equitable is also 100% subjective, and it is equally possible to pursue it.

We call it a justice system, but it's not. It's a legal system. That was my point. Once you start trying to dispense justice you fail.

So? We have sewage systems, but their purpose is health. Imperfect systems are how we work toward ideals.

We evaluate the legal system in large part by whether the outcomes are just. For example, the revision of the three strikes law in California is happening because a number of people have received obviously unjust sentences. And we got the law in the first place because many people thought that letting serial offenders free to harm people again was unjust.

"Equitable" is another one of those ideals, and that it is just as subjective as justice or health. But we can work toward it.

Which is the greater moral disservice - a set price, to be paid for by a non-profit, heavily regulated healthcare org -- or letting people die because they can't afford to go to a hospital that isn't overrun by MRSA?

It's not clear to me what you are proposing. Particularly, the source of funding in your proposal seems to be something like "A miracle occurs, and then the healthcare org is sufficiently funded to pay for people's health care."

One could just as easily ask "Which is the greater moral disservice - a global food distribution network that ensures every person will have safe sustenance, or letting people starve because of regional droughts, tyrannical governments, and currency speculators?" but the question does not apparently lead to any actionable policy decisions.

Why should food cost money? Why should shelter cost money? Why should heating oil cost money?

Because those industries work better when they do*

Just like health care works better when it is provided by a single payer.

* In the case of shelter, temporary shelter for those who need it is also provided free of charge, but that is not the normal situation for most people.

No, it's not a red herring. It's two different problems with the same industry.

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