Sunday, July 8, 2012

Transparency in Health Care

A few months ago, I dislocated my shoulder twice within 2 weeks and being unable to pop it back in, I went to the emergency room. I received treatment, and a few weeks later, I received the bill from the hospital. The first occurrence cost about 3300 dollars and the second occurrence cost 2800.

My health insurance plan reduced the actual cost to about 700 dollars each and, being on an 80/20 plan, my share came to around 140 dollars. I can only imagine what would have happened if I didn't have health insurance and was unable to bargain down the cost of face value of the bill.

If I did have to pay for the full cost by myself, I would have had a few questions. The first of which being, how the hell could my visit have cost around 3000 dollars? In my first visit, I was there for a total of 2 hours and spent half of that time waiting for treatment. The second visit I was there for 5 hours and spent 4 of them waiting. Had I known the second visit would have taken so long, I would have tried to go to another emergency room.

Both times, I really received about 1 hour worth of actual health care. The rest of the time was spent waiting with a bunch of other people in a thoroughly depressing waiting room. How could that have been worth 3000 dollars? Everybody has heard of the stories of 27 dollar pills of aspirin and 300 dollar syringes, but it hits home a lot quicker if you're stuck with the full freight of the bill.

Second, why doesn't the hospital display the actual prices for services rendered? The kind of billing practices that hospitals use would be illegal under any other industry. Imagine buying a Big Mac and then having McDonald's bill you for 20 dollars a few weeks later. That seems patently ridiculous, but it's perfectly acceptable in the health care sector.

There is a huge problem with transparency. As consumers, we don't know how our health insurance companies bargain with health providers. And we don't know the actual prices for the services we pay for. It's almost impossible to drive down prices in a system where the price discovery mechanism doesn't work because only a few parties know the prices and the actual consumers don't.

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