The Man Who Was Treated for $17,000 Less
online.wsj.com
online.wsj.com
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.
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.
Its also useless for anything other than stuff done in hospitals.
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.
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.)
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.
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.
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
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.
Why do the existing single payer systems outperform the USA's private health plan system, measured in both cost per capita and life expectancy?
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.
Sadly, most people forget this. They think that healthcare is somehow immune from the laws of economics, that it is "special."
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!"
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.)
Deliberately putting things in your eye does have one advantage, you can easily fish out any bits of grit that get in there by accident.
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.
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.
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.
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.
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".
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.
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.
And there are the other couple of billion people on the planet that cannot afford a dollar per day for a meal.
...partly because of healthcare costs, which is the number one cause of bankruptcy in the US. You're making our point.
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.
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.
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.
http://www.nytimes.com/2013/08/06/science/a-lab-grown-burger...
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.
Similarly, in this case “paid for by the Koch brothers” is the most relevant part of his qualification here, not “surgeon”.
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.
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.
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.
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.
Those people generally don't exist. The best we can hope for is some reasonable amount of transparency along with a variety of opinions.
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.
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.
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!
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?
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.
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)
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.
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.
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)
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.
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.
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.
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)
"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.
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."
"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."
If this patient had been negatively affected by Obamacare in any way, I'm sure the author would have gleefully pointed it out.
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.
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.
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.
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.
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.
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.
We have to fix healthcare in total before we can say thats a done deal, but it is the right direction.
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.
And how much of healthcare spending does emergency care constitute? There's no reason not to drop pre-paid plans for non-emergency services.
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.
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.