10 ms·

Price transparency is the number 1 hurdle facing American healthcare. How are you supposed to fix a cost problem if you don't know what anything costs? Worse

Price transparency is the number 1 hurdle facing American healthcare. How are you supposed to fix a cost problem if you don't know what anything costs? Worse yet, how can there be a market for a service if there are no prices??? Less than 10% of healthcare expenditures are emergencies, that leaves a lot of room for shopping around. I'm also really glad that people are starting to realize that Obamacare had critical conceptual failures. There was nothing in the ACA that tackled healthcare costs, it was only concerned with spreading healthcare costs. Affordable healthcare is not the same thing as affordable health insurance. The Democrats are certain that they already know the right answer, lack of data be damned. The Republican leadership on the other hand doesn't really grok yet that there is a problem (or rather currently they think that Obamacare is the problem, when in truth Obamacare is neither the problem or the solution).

wmeredith 9y ago
I tend to agree. Pick any healthcare service and call around to your local hospitals and try to get them to tell you what it costs. Half the time they'll tell you THEY don't know. The other half of the time they'll just refuse to tell you. It's insanity, and I suspect it's because you are not the customer. The insurance companies are. The incentives are all wrong.
- neaden 9y ago
  If they do tell you it's not like they'll fine it binding either. Or good luck finding an error in billing in what they give you and then successfully contesting it. There area also all the ways they slap on random charges. The article mentions a $40 holding baby fee! I think a big part of why this isn't seen as a bigger problem is most people don't have direct experience with it. I've managed to be healthy and avoid any surprise medical bills so far in my life so it would be easy for me to assume this stuff would be taken care of by my insurance if anything happens. I know enough people who have horror stories to know that isn't the case though.
  - Cacti 9y ago
    I believe the fees like 'holding a baby' are a result of them determining an overall cost to charge you, average, per hour, then itemizing it out for legal or tracking reasons. So you weren't being charged $40 to hold the baby for a minute, it's you are being charged $40 for a minute, during which you held the baby.
    - neaden 9y ago
      I don't think that is correct in this instance. The example comes from this same author a previous time here: https://www.vox.com/2016/10/4/13160624/medical-bills-birth-delivery https://www.vox.com/2016/10/4/13160624/medical-bills-birth-d... . Here is a quote from an uninvolved pediatric nurse on where the charge comes from: "doing 'skin to skin' in the operating room requires an additional staff member to be present just to watch the baby. We used to take all babies to the nursery once the NICU team made sure everything was okay. "Skin to skin" in the OR is a relatively new thing and requires a second Labor and Delivery RN to come in to the OR and make sure the baby is safe." I think the charge is justifiable, but keep in mind no one is telling the new parents "Do you want to hold your new baby right now? It'll be $40." They are just offering and allowing people to accept not knowing they'll be charged.
spraak 9y ago
>> The Democrats are certain that they already know the right answer, lack of data be damned. The Republican leadership on the other hand doesn't really grok yet that there is a problem (or rather currently they think that Obamacare is the problem, when in truth Obamacare is neither the problem or the solution). Great summary of the situation !
random023987 9y ago
> There was nothing in the ACA that tackled healthcare costs, it was only concerned with spreading healthcare costs. That's because it was a political solution. If it tackled healthcare costs, it would have been swiftly killed by the health care industry.
- chimeracoder 9y ago
  > That's because it was a political solution. If it tackled healthcare costs, it would have been swiftly killed by the health care industry. Awkwardly, it's the other way around. Providers and private insurers would actually love a transparent pricing system. The entity that benefits the most from the lack of transparency is Medicare, and that's why it's almost certainly never going to happen anytime soon. Implementing a transparent price in the market would make it much more difficult for Medicare to extract money from private insurers via sub-cost reimbursement rates, and so they'd pull out all the stops in preventing it from happening. That's actually what happened with the ACA itself, and it's why the ACA explicitly didn't tackle pricing transparency at all. It wasn't an accident.
  - Retric 9y ago
    [Citation needed] US federal + state + local governments spend an obscene amount of money on healthcare. Including extra funding to keep many rural healthcare facilities open etc. Other countries spend less government money per person on Universal healthcare than the US spends right now. Considering it's far from a universal system it's already subsidizing healthcare costs.
    - chimeracoder 9y ago
      > US federal + state + local governments spend an obscene amount of money on healthcare. Including extra funding to keep many rural healthcare facilities open etc. "Extra funding to keep rural healthcare facilities open" is exactly what I'm referring to. Medicare rates are below what would be needed to sustain practices if they operated solely off of Medicare reimbursement rates. Medicare reimburses about 7% less than the costs of supplies, which means they're already losing money even before they have to pay things like staff wages, building maintenance, etc. The way they stay in business is by charging privately-insured patients much more, in order to cover the difference. Some providers don't see a lot of privately-insured patients, and for those, Medicare provides two different payment programs (separate from normal reimbursements) in order to keep them in business. Otherwise, they would end up closing shop[0], because there's no way that they could sustain themselves off of Medicare reimbursement rates alone. For various reasons, this is more common in rural areas than it is in urban areas, though the program you're referring to does apply to some non-rural hospitals too. So yes, when you say "Medicare pays extra funding to keep rural healthcare facilities open", you're actually referring to the exact reason that private insurers would love a transparent pricing system. It's not like Medicare pays this money to any rural facilities - they are forced to pay extra money to facilities that don't see enough privately-insured patients to cover the losses that they're making on Medicare patients. Private insurers (and providers) would love to have a transparent pricing system, because that would mean they wouldn't have to bend over backwards just to break even on their Medicare patients. This isn't hypothetical; Medicare paying extra to these hospitals is a relatively new practice, and it was passed by Congress after a large number of hospitals were forced to close because they went bankrupt treating mostly or exclusively Medicare patients. [0] Or just stop seeing Medicare patients, which is what many have done.
chimeracoder 9y ago
> Price transparency is the number 1 hurdle facing American healthcare. How are you supposed to fix a cost problem if you don't know what anything costs? Worse yet, how can there be a market for a service if there are no prices??? Less than 10% of healthcare expenditures are emergencies, that leaves a lot of room for shopping around. I agree with you, but this will almost certainly never happen in the US, because Medicare benefits too much from the lack of transparency to allow it to pass. Politically, actual price transparency is a non-starter for Democrats. In theory it could be for the Republican party, but as you point out, they're not really acting rationally at the moment either, to say the least.
- ThrustVectoring 9y ago
  Could you please explain further how Medicare benefits from the lack of price transparency?
TruthSHIFT 9y ago
I'm not a healthcare expert, but my understanding is that Medicare does address the cost transparency issue. Services simple cost what the government says they cost.
- chimeracoder 9y ago
  > I'm not a healthcare expert, but my understanding is that Medicare does address the cost transparency issue. Services simple cost what the government says they cost. Medicare is the root of price opacity in the medical system. Medicare determines prices by fiat, with no mandate to ensure that the rates are sustainable. As a result, Medicare's reimbursement rates are about 7% less than COGS in the aggregate. In other words, even if hospitals cost nothing to run and everyone worked for free, they would still lose 7% on each Medicare patient (on average) in purchasing the supplies necessary to treat them. How is that the providers still manage to stay in business? By marking up prices for private insurers (and therefore uninsured patients too, whom they are required by law to present the same price at the initial bill). Private insurers end up negotiating this down to some multiple of what Medicare reimburses, and this entire process is why there's no feasible way to have a transparent pricing system. It all depends on what the mixture of private-to-public insurance is for the patients that the provider sees, because they need to charge enough to make up for the loss that they're taking on Medicare patients. The fact that Medicare reimburses below-COGS isn't a secret; Medicare itself even has not one but two separate programs to subsidize providers who see a "disproportionate" number of Medicare patients. In other words, they're pretty open about the fact that private insurance is subsidizing the cost of care for Medicare patients, preventing any possibility of price transparency.
  - nradov 9y ago
    It's not that simple. If the payers other than Medicare had more negotiating power relative to large provider organizations then they could also drive down prices. The providers have a lot of room to stay in business and trim fat by eliminating waste, reengineering processes, cutting staff compensation, and squeezing suppliers.
    - 9y ago
frgtpsswrdlame 9y ago
>Price transparency is the number 1 hurdle facing American healthcare. How are you supposed to fix a cost problem if you don't know what anything costs? Worse yet, how can there be a market for a service if there are no prices??? Less than 10% of healthcare expenditures are emergencies, that leaves a lot of room for shopping around. Price transparency is a band-aid on the real problem: we've corrupted the market with EMTLA. Since hospitals can't turn you away other people have to pick up that tab. Maybe what we should be asking ourselves is why we want healthcare to be a market at all? We have the capability to remove wealth from the equation of health entirely so why not?
- rconti 9y ago
  Is EMTLA (had to google it, Emergency Medical Treatment and Labor Act) really the problem? Eg, do the costs of covering this "free" treatment make up the majority of hospital bills we get charged? If our prices are 2-4x other countries, I have a hard time believing that the "real" problem is emergency services for those without coverage. My wife works in a trauma center so I'm well aware of how much they do for the uninsured (along with what they do NOT do for them), but I have a hard time believing the scale is an order of magnitude.
  - frgtpsswrdlame 9y ago
    What I mean to say is that there is an original sin in our marketplace and that sin in EMTLA. Our society doesn't really like the idea of the sick and poor dying just outside the ER's doors (like in a truly free market) so we have EMTLA to make sure that doesn't happen. It's also reflective of America's cultural attitudes towards death and the amount of money that is spent buying our loved ones just one more month, week, day. All of which is to say that generally we seem quite uncomfortable with the idea of someone else being able to afford more "life" than we can. So maybe we should just toss the idea of marketizing our healthcare entirely.
- lend000 9y ago
  > We have the capability to remove wealth from the equation of health entirely so why not? Do we? I think the world needs at least one private healthcare market powerhouse to drive the advancement of medicine -- right now, it's mostly the US. If you are content with the current state of medicine, then yes, we can shut off the progress valve and more equitably distribute the healthcare technology we have now. Quality of providers will likely decay over time as well, once the incentives are gone. However, even this is easier said than done. Or we can address how cheap most healthcare expenses ought to be (in terms of cost to administer / raw materials + manufacturing + R&D (much of which was done decades ago, for common medicine)), and ask why are they not? Well, the reasons are pretty blatant. We have a combination of oppressive occupational licensing (it is too difficult to become a practicing doctor -- $$$ and decades of time), FDA-imposed pharmaceutical monopolies, inability to opt-in to experimental treatment (which also means malpractice insurance is always a major expense), artificial demand via Medicare and Medicaid (which artificially pump up the prices of all things they cover, especially drugs, and because they only apply to part of the population, they distort the market even more than universal health care would), overly broad and long-lasting IP law (patents, specifically), amongst others. I think a more free healthcare system would advance faster, save lives, and be cheaper. We have one of the most government distorted healthcare economies in a world, including compared to countries with universal health care systems. As an aside, re: the cost to become a doctor via Medical school, that is part of our expensive US education system, which is expensive for similar reasons (tuition prices are highly correlated with financial aid grants and federal student loan availability). So basically, the common worldview that we need more government intervention is garbage. We just need government intervention in the right places (and nowhere else), preventing fraud and holding criminals liable.
ThrustVectoring 9y ago
IMO the lack of price transparency is deliberate - it aids in price discrimination, AKA charging customers individually based on what they're capable of paying depending on their assets and insurance. Price discrimination in normal goods is limited by willingness to pay, while healthcare is degenerate in this sense because willingness is essentially infinite.
jedrek 9y ago
Price transparency is a lingering issue in American retail, period. How many advertised prices have surcharges, taxes, tips, fees, additions, etc?
harshreality 9y ago
I would say that Obamacare is a problem, in several ways: 1. It's important to note that people buying insurance for themselves is a small minority of the market (employer-provided and medicare/medicaid are the big parts of the pie), so it's absurd for the architects of Obamacare or any alternative health law to penalize (edit: or threaten to penalize, without conferring coverage in exchange for the penalty... no can do, that would be the evil public option!) the exact people they need to help the most: people whose employment doesn't provide insurance, and who don't qualify for medicare/medicaid. If you're in a large health insurance pool with people negotiating for better coverage and pricing on your behalf, and the org behind the pool is already committed to paying the pool's insurance costs, things work pretty well. That's not a healthy private health insurance market; that's an opaque, balkanized system. 2. The (increased) number of insured is commonly cited by proponents of Obamacare as the metric demonstrating success. The numbers I've seen, however, show that while yes, more people have insurance, fewer people can actually pay their medical bills if they actually have to use their insurance. I have every reason to believe that's true, due to opaque pricing, massive deductibles for most plans, and the rapidly ballooning price of even the most basic plans. How is more coverage a success when most of those newly covered people can't pay their bills? 3. The obvious: healthcare insurance costs are skyrocketing. Obamacare can't be a success if just the cost of health insurance is going to start pushing massive numbers of lower-income people out of the marketplace. 1a. A tangent from point 1: The tie between employers and health insurance must die. There's too much incentive to do things that are just awful when most larger corporations will just eat the cost of reasonably good health insurance, and tweak their business elsewhere (increase prices; decrease other employee benefits) to make up those health insurance expenses if they go up.
- nradov 9y ago
  The architects of Obamacare (ACA) didn't penalize people buying insurance for themselves on exchanges. In fact low income consumers receive subsidies. Being forced to buy insurance might seem like a penalty to some people who formerly went without, but in reality those people were freeloaders because if they showed up at an emergency room then the rest of us ended up paying for them indirectly. Although there are certainly flaws that need to be fixed, on balance the system is now fairer and more people have access to care.
tryingagainbro 9y ago
Let's see: 911 this is an emergency. My husband had a heart attack. Please send an ambulance from the cheapest hospital in our area and send it ASAP. USA is ROTTEN when it comes to healthcare. How can I be charged $200 for a blood test when insurance pays like $11 ??? I understand bulk pricing, but WTF??? You can do dozens of blood tests in some Eastern European countries for around $50 and get the results 3 hours later at private clinics. I am 110% that the labs came from Western Europe and maybe even USA. Want to be sure, do them at another clinic! Young people are better off getting used to paying $100+ in cash to see a nurse that time a year they get sick and have catastrophic insurance. I am certain that a nice chunk of employees that get paid in healthcare have nothing to do with patient care, but bureaucracy. Need to start fresh but ...good luck on that. Those making the money can buy Congress several times over.
sjg007 9y ago
Price transparency is basically a red herring. Prices are largely set by the CMS (medicare and medicaid) and sometimes insurance companies will pay a little bit on top sometimes depending on their clout and competition from other providers / insurers. The hospital counters with the "master charge" sheet which is overinflated fiction. Then they have a giant song and dance negotiating prices / threatening to pull their patients etc... But the bulk of their revenue comes from medicaid/medicare patients so prices basically round down to those reimbursement rates. Then the ACA keeps costs down by having doctors focus on quality rather than quantity. If patients are readmitted they get dinged on their medicare reimbursement rate. There are also other provisions in there as well to regulate reimbursement rates as well. The ACA also reduced health care induced bankruptcies. You still may have high premiums but those were addressed by subsidies in many cases. Taking on people with pre-existing conditions was also addressed by subsidies. The expectation is that as these people get healthier, the whole system will eventually converge to a steady state where cost is mostly regulated by the CMS. If insurers don't want to play ball then the government should just let people buy into medicaid. We already pay medicaid and medicare taxes anyway.
- nickbauman 9y ago
  This is a great summary. Emphasizes changing the incentives in the system is the key. If we incentivize a healthy overall population over fee-for-service quotas we get out of these conflict-of-mission scenarios where the system appears to be about making profits for some actors over everything else. However, Trump's E.O. to kill the subsidies essentially destroys the ACA completely. We're left with a baroque, Kafkaesque flourish on the status quo before the ACA.
- cheald 9y ago
  > The ACA also reduced health care induced bankruptcies. Do you have a source for this? I actually went looking for this info a while back and couldn't find anything either way. Chapter 7 bankruptcies have declined since 2010, but it's insane to pin that on the ACA given that we were coming out of the Great Recession and we'd had a massive spike of personal bankruptcies as a result. I couldn't find any credible information on the impact of the ACA on medical bankruptcies, and IIRC, personal bankruptcy rates are just now coming back into line with where they were in ~2006 post-BAPCPA.
wwweston 9y ago
> There was nothing in the ACA that tackled healthcare costs This isn't true. It's reasonable to argue that there are potential cost control efforts that weren't included or implemented correctly or that what was included/implemented wasn't effective enough. But it is false to state that there was nothing in the ACA that was meant to address healthcare costs. There's a lot you can read about this. Here's two examples: https://www.newyorker.com/magazine/2013/12/09/controlling-health-care-costs https://www.newyorker.com/magazine/2013/12/09/controlling-he... https://www.rwjf.org/content/dam/farm/reports/issue_briefs/2011/rwjf71451 https://www.rwjf.org/content/dam/farm/reports/issue_briefs/2... (RWJF has a ton of stuff worth reading, btw.) That first one is particularly important to digest for anyone who thinks price transparency should be among the primary solutions to health care costs issues. If you think incentives matter -- and I'd assume anyone who's hoping price transparency is a solution does -- then it's worth considering the fact that fee-for-service itself has an incentive built in that's inimical to cost control, and transparency and competition may not be enough to solve it. I'd also say that even if there were no other consideration than expanding access, you could credibly argue that is itself a cost control, at least if the HotSpot theory of expenses is correct: https://www.newyorker.com/magazine/2011/01/24/the-hot-spotters https://www.newyorker.com/magazine/2011/01/24/the-hot-spotte... People have been talking about this for a long time: emergency interventions are expensive. Preventative care might control costs. Expanding access to services and making preventative care affordable removes incentives against seeking it. There's a tension here between that, of course, and letting consumers bear some first-dollar costs to give them incentives to do some rationing. It's almost like there's no easy answers. And if you're really concerned about health care generally or the ACA specifically, make sure you actually read the bill: https://www.healthcare.gov/where-can-i-read-the-affordable-care-act/ https://www.healthcare.gov/where-can-i-read-the-affordable-c... You might even find out that some of the people who worked on the bill included provisions to have US hospitals "establish and make public a list of its standard charges for items and services." Or you might find that there's an entire section called Title III that's about "Improving the Quality and Efficiency of Health Care." Almost like the people who worked on this really had thought about the relevant issues as much as a reasonably intelligent random citizen working in the tech industry has. :) Doesn't mean there aren't problems with it or we couldn't do better. But we can't do better as long as people who care to talk about it don't have a clear and accurate idea of what has actually been done.

wmeredith 9y ago

I tend to agree. Pick any healthcare service and call around to your local hospitals and try to get them to tell you what it costs. Half the time they'll tell you THEY don't know. The other half of the time they'll just refuse to tell you. It's insanity, and I suspect it's because you are not the customer. The insurance companies are. The incentives are all wrong.

neaden 9y ago
If they do tell you it's not like they'll fine it binding either. Or good luck finding an error in billing in what they give you and then successfully contesting it. There area also all the ways they slap on random charges. The article mentions a $40 holding baby fee! I think a big part of why this isn't seen as a bigger problem is most people don't have direct experience with it. I've managed to be healthy and avoid any surprise medical bills so far in my life so it would be easy for me to assume this stuff would be taken care of by my insurance if anything happens. I know enough people who have horror stories to know that isn't the case though.
- Cacti 9y ago
  I believe the fees like 'holding a baby' are a result of them determining an overall cost to charge you, average, per hour, then itemizing it out for legal or tracking reasons. So you weren't being charged $40 to hold the baby for a minute, it's you are being charged $40 for a minute, during which you held the baby.
  - neaden 9y ago
    I don't think that is correct in this instance. The example comes from this same author a previous time here: https://www.vox.com/2016/10/4/13160624/medical-bills-birth-delivery https://www.vox.com/2016/10/4/13160624/medical-bills-birth-d... . Here is a quote from an uninvolved pediatric nurse on where the charge comes from: "doing 'skin to skin' in the operating room requires an additional staff member to be present just to watch the baby. We used to take all babies to the nursery once the NICU team made sure everything was okay. "Skin to skin" in the OR is a relatively new thing and requires a second Labor and Delivery RN to come in to the OR and make sure the baby is safe." I think the charge is justifiable, but keep in mind no one is telling the new parents "Do you want to hold your new baby right now? It'll be $40." They are just offering and allowing people to accept not knowing they'll be charged.

spraak 9y ago

>> The Democrats are certain that they already know the right answer, lack of data be damned. The Republican leadership on the other hand doesn't really grok yet that there is a problem (or rather currently they think that Obamacare is the problem, when in truth Obamacare is neither the problem or the solution). Great summary of the situation !

random023987 9y ago

> There was nothing in the ACA that tackled healthcare costs, it was only concerned with spreading healthcare costs. That's because it was a political solution. If it tackled healthcare costs, it would have been swiftly killed by the health care industry.

chimeracoder 9y ago
> That's because it was a political solution. If it tackled healthcare costs, it would have been swiftly killed by the health care industry. Awkwardly, it's the other way around. Providers and private insurers would actually love a transparent pricing system. The entity that benefits the most from the lack of transparency is Medicare, and that's why it's almost certainly never going to happen anytime soon. Implementing a transparent price in the market would make it much more difficult for Medicare to extract money from private insurers via sub-cost reimbursement rates, and so they'd pull out all the stops in preventing it from happening. That's actually what happened with the ACA itself, and it's why the ACA explicitly didn't tackle pricing transparency at all. It wasn't an accident.
- Retric 9y ago
  [Citation needed] US federal + state + local governments spend an obscene amount of money on healthcare. Including extra funding to keep many rural healthcare facilities open etc. Other countries spend less government money per person on Universal healthcare than the US spends right now. Considering it's far from a universal system it's already subsidizing healthcare costs.
  - chimeracoder 9y ago
    > US federal + state + local governments spend an obscene amount of money on healthcare. Including extra funding to keep many rural healthcare facilities open etc. "Extra funding to keep rural healthcare facilities open" is exactly what I'm referring to. Medicare rates are below what would be needed to sustain practices if they operated solely off of Medicare reimbursement rates. Medicare reimburses about 7% less than the costs of supplies, which means they're already losing money even before they have to pay things like staff wages, building maintenance, etc. The way they stay in business is by charging privately-insured patients much more, in order to cover the difference. Some providers don't see a lot of privately-insured patients, and for those, Medicare provides two different payment programs (separate from normal reimbursements) in order to keep them in business. Otherwise, they would end up closing shop[0], because there's no way that they could sustain themselves off of Medicare reimbursement rates alone. For various reasons, this is more common in rural areas than it is in urban areas, though the program you're referring to does apply to some non-rural hospitals too. So yes, when you say "Medicare pays extra funding to keep rural healthcare facilities open", you're actually referring to the exact reason that private insurers would love a transparent pricing system. It's not like Medicare pays this money to any rural facilities - they are forced to pay extra money to facilities that don't see enough privately-insured patients to cover the losses that they're making on Medicare patients. Private insurers (and providers) would love to have a transparent pricing system, because that would mean they wouldn't have to bend over backwards just to break even on their Medicare patients. This isn't hypothetical; Medicare paying extra to these hospitals is a relatively new practice, and it was passed by Congress after a large number of hospitals were forced to close because they went bankrupt treating mostly or exclusively Medicare patients. [0] Or just stop seeing Medicare patients, which is what many have done.

chimeracoder 9y ago

> Price transparency is the number 1 hurdle facing American healthcare. How are you supposed to fix a cost problem if you don't know what anything costs? Worse yet, how can there be a market for a service if there are no prices??? Less than 10% of healthcare expenditures are emergencies, that leaves a lot of room for shopping around. I agree with you, but this will almost certainly never happen in the US, because Medicare benefits too much from the lack of transparency to allow it to pass. Politically, actual price transparency is a non-starter for Democrats. In theory it could be for the Republican party, but as you point out, they're not really acting rationally at the moment either, to say the least.

ThrustVectoring 9y ago
Could you please explain further how Medicare benefits from the lack of price transparency?

TruthSHIFT 9y ago

I'm not a healthcare expert, but my understanding is that Medicare does address the cost transparency issue. Services simple cost what the government says they cost.

chimeracoder 9y ago
> I'm not a healthcare expert, but my understanding is that Medicare does address the cost transparency issue. Services simple cost what the government says they cost. Medicare is the root of price opacity in the medical system. Medicare determines prices by fiat, with no mandate to ensure that the rates are sustainable. As a result, Medicare's reimbursement rates are about 7% less than COGS in the aggregate. In other words, even if hospitals cost nothing to run and everyone worked for free, they would still lose 7% on each Medicare patient (on average) in purchasing the supplies necessary to treat them. How is that the providers still manage to stay in business? By marking up prices for private insurers (and therefore uninsured patients too, whom they are required by law to present the same price at the initial bill). Private insurers end up negotiating this down to some multiple of what Medicare reimburses, and this entire process is why there's no feasible way to have a transparent pricing system. It all depends on what the mixture of private-to-public insurance is for the patients that the provider sees, because they need to charge enough to make up for the loss that they're taking on Medicare patients. The fact that Medicare reimburses below-COGS isn't a secret; Medicare itself even has not one but two separate programs to subsidize providers who see a "disproportionate" number of Medicare patients. In other words, they're pretty open about the fact that private insurance is subsidizing the cost of care for Medicare patients, preventing any possibility of price transparency.
- nradov 9y ago
  It's not that simple. If the payers other than Medicare had more negotiating power relative to large provider organizations then they could also drive down prices. The providers have a lot of room to stay in business and trim fat by eliminating waste, reengineering processes, cutting staff compensation, and squeezing suppliers.
  - 9y ago

frgtpsswrdlame 9y ago

>Price transparency is the number 1 hurdle facing American healthcare. How are you supposed to fix a cost problem if you don't know what anything costs? Worse yet, how can there be a market for a service if there are no prices??? Less than 10% of healthcare expenditures are emergencies, that leaves a lot of room for shopping around. Price transparency is a band-aid on the real problem: we've corrupted the market with EMTLA. Since hospitals can't turn you away other people have to pick up that tab. Maybe what we should be asking ourselves is why we want healthcare to be a market at all? We have the capability to remove wealth from the equation of health entirely so why not?

rconti 9y ago
Is EMTLA (had to google it, Emergency Medical Treatment and Labor Act) really the problem? Eg, do the costs of covering this "free" treatment make up the majority of hospital bills we get charged? If our prices are 2-4x other countries, I have a hard time believing that the "real" problem is emergency services for those without coverage. My wife works in a trauma center so I'm well aware of how much they do for the uninsured (along with what they do NOT do for them), but I have a hard time believing the scale is an order of magnitude.
- frgtpsswrdlame 9y ago
  What I mean to say is that there is an original sin in our marketplace and that sin in EMTLA. Our society doesn't really like the idea of the sick and poor dying just outside the ER's doors (like in a truly free market) so we have EMTLA to make sure that doesn't happen. It's also reflective of America's cultural attitudes towards death and the amount of money that is spent buying our loved ones just one more month, week, day. All of which is to say that generally we seem quite uncomfortable with the idea of someone else being able to afford more "life" than we can. So maybe we should just toss the idea of marketizing our healthcare entirely.
lend000 9y ago
> We have the capability to remove wealth from the equation of health entirely so why not? Do we? I think the world needs at least one private healthcare market powerhouse to drive the advancement of medicine -- right now, it's mostly the US. If you are content with the current state of medicine, then yes, we can shut off the progress valve and more equitably distribute the healthcare technology we have now. Quality of providers will likely decay over time as well, once the incentives are gone. However, even this is easier said than done. Or we can address how cheap most healthcare expenses ought to be (in terms of cost to administer / raw materials + manufacturing + R&D (much of which was done decades ago, for common medicine)), and ask why are they not? Well, the reasons are pretty blatant. We have a combination of oppressive occupational licensing (it is too difficult to become a practicing doctor -- $$$ and decades of time), FDA-imposed pharmaceutical monopolies, inability to opt-in to experimental treatment (which also means malpractice insurance is always a major expense), artificial demand via Medicare and Medicaid (which artificially pump up the prices of all things they cover, especially drugs, and because they only apply to part of the population, they distort the market even more than universal health care would), overly broad and long-lasting IP law (patents, specifically), amongst others. I think a more free healthcare system would advance faster, save lives, and be cheaper. We have one of the most government distorted healthcare economies in a world, including compared to countries with universal health care systems. As an aside, re: the cost to become a doctor via Medical school, that is part of our expensive US education system, which is expensive for similar reasons (tuition prices are highly correlated with financial aid grants and federal student loan availability). So basically, the common worldview that we need more government intervention is garbage. We just need government intervention in the right places (and nowhere else), preventing fraud and holding criminals liable.

ThrustVectoring 9y ago

IMO the lack of price transparency is deliberate - it aids in price discrimination, AKA charging customers individually based on what they're capable of paying depending on their assets and insurance. Price discrimination in normal goods is limited by willingness to pay, while healthcare is degenerate in this sense because willingness is essentially infinite.

jedrek 9y ago

Price transparency is a lingering issue in American retail, period. How many advertised prices have surcharges, taxes, tips, fees, additions, etc?

harshreality 9y ago

I would say that Obamacare is a problem, in several ways: 1. It's important to note that people buying insurance for themselves is a small minority of the market (employer-provided and medicare/medicaid are the big parts of the pie), so it's absurd for the architects of Obamacare or any alternative health law to penalize (edit: or threaten to penalize, without conferring coverage in exchange for the penalty... no can do, that would be the evil public option!) the exact people they need to help the most: people whose employment doesn't provide insurance, and who don't qualify for medicare/medicaid. If you're in a large health insurance pool with people negotiating for better coverage and pricing on your behalf, and the org behind the pool is already committed to paying the pool's insurance costs, things work pretty well. That's not a healthy private health insurance market; that's an opaque, balkanized system. 2. The (increased) number of insured is commonly cited by proponents of Obamacare as the metric demonstrating success. The numbers I've seen, however, show that while yes, more people have insurance, fewer people can actually pay their medical bills if they actually have to use their insurance. I have every reason to believe that's true, due to opaque pricing, massive deductibles for most plans, and the rapidly ballooning price of even the most basic plans. How is more coverage a success when most of those newly covered people can't pay their bills? 3. The obvious: healthcare insurance costs are skyrocketing. Obamacare can't be a success if just the cost of health insurance is going to start pushing massive numbers of lower-income people out of the marketplace. 1a. A tangent from point 1: The tie between employers and health insurance must die. There's too much incentive to do things that are just awful when most larger corporations will just eat the cost of reasonably good health insurance, and tweak their business elsewhere (increase prices; decrease other employee benefits) to make up those health insurance expenses if they go up.

nradov 9y ago
The architects of Obamacare (ACA) didn't penalize people buying insurance for themselves on exchanges. In fact low income consumers receive subsidies. Being forced to buy insurance might seem like a penalty to some people who formerly went without, but in reality those people were freeloaders because if they showed up at an emergency room then the rest of us ended up paying for them indirectly. Although there are certainly flaws that need to be fixed, on balance the system is now fairer and more people have access to care.

tryingagainbro 9y ago

Let's see: 911 this is an emergency. My husband had a heart attack. Please send an ambulance from the cheapest hospital in our area and send it ASAP. USA is ROTTEN when it comes to healthcare. How can I be charged $200 for a blood test when insurance pays like $11 ??? I understand bulk pricing, but WTF??? You can do dozens of blood tests in some Eastern European countries for around $50 and get the results 3 hours later at private clinics. I am 110% that the labs came from Western Europe and maybe even USA. Want to be sure, do them at another clinic! Young people are better off getting used to paying $100+ in cash to see a nurse that time a year they get sick and have catastrophic insurance. I am certain that a nice chunk of employees that get paid in healthcare have nothing to do with patient care, but bureaucracy. Need to start fresh but ...good luck on that. Those making the money can buy Congress several times over.

sjg007 9y ago

Price transparency is basically a red herring. Prices are largely set by the CMS (medicare and medicaid) and sometimes insurance companies will pay a little bit on top sometimes depending on their clout and competition from other providers / insurers. The hospital counters with the "master charge" sheet which is overinflated fiction. Then they have a giant song and dance negotiating prices / threatening to pull their patients etc... But the bulk of their revenue comes from medicaid/medicare patients so prices basically round down to those reimbursement rates. Then the ACA keeps costs down by having doctors focus on quality rather than quantity. If patients are readmitted they get dinged on their medicare reimbursement rate. There are also other provisions in there as well to regulate reimbursement rates as well. The ACA also reduced health care induced bankruptcies. You still may have high premiums but those were addressed by subsidies in many cases. Taking on people with pre-existing conditions was also addressed by subsidies. The expectation is that as these people get healthier, the whole system will eventually converge to a steady state where cost is mostly regulated by the CMS. If insurers don't want to play ball then the government should just let people buy into medicaid. We already pay medicaid and medicare taxes anyway.

nickbauman 9y ago
This is a great summary. Emphasizes changing the incentives in the system is the key. If we incentivize a healthy overall population over fee-for-service quotas we get out of these conflict-of-mission scenarios where the system appears to be about making profits for some actors over everything else. However, Trump's E.O. to kill the subsidies essentially destroys the ACA completely. We're left with a baroque, Kafkaesque flourish on the status quo before the ACA.
cheald 9y ago
> The ACA also reduced health care induced bankruptcies. Do you have a source for this? I actually went looking for this info a while back and couldn't find anything either way. Chapter 7 bankruptcies have declined since 2010, but it's insane to pin that on the ACA given that we were coming out of the Great Recession and we'd had a massive spike of personal bankruptcies as a result. I couldn't find any credible information on the impact of the ACA on medical bankruptcies, and IIRC, personal bankruptcy rates are just now coming back into line with where they were in ~2006 post-BAPCPA.

wwweston 9y ago

> There was nothing in the ACA that tackled healthcare costs This isn't true. It's reasonable to argue that there are potential cost control efforts that weren't included or implemented correctly or that what was included/implemented wasn't effective enough. But it is false to state that there was nothing in the ACA that was meant to address healthcare costs. There's a lot you can read about this. Here's two examples: https://www.newyorker.com/magazine/2013/12/09/controlling-health-care-costs https://www.newyorker.com/magazine/2013/12/09/controlling-he... https://www.rwjf.org/content/dam/farm/reports/issue_briefs/2011/rwjf71451 https://www.rwjf.org/content/dam/farm/reports/issue_briefs/2... (RWJF has a ton of stuff worth reading, btw.) That first one is particularly important to digest for anyone who thinks price transparency should be among the primary solutions to health care costs issues. If you think incentives matter -- and I'd assume anyone who's hoping price transparency is a solution does -- then it's worth considering the fact that fee-for-service itself has an incentive built in that's inimical to cost control, and transparency and competition may not be enough to solve it. I'd also say that even if there were no other consideration than expanding access, you could credibly argue that is itself a cost control, at least if the HotSpot theory of expenses is correct: https://www.newyorker.com/magazine/2011/01/24/the-hot-spotters https://www.newyorker.com/magazine/2011/01/24/the-hot-spotte... People have been talking about this for a long time: emergency interventions are expensive. Preventative care might control costs. Expanding access to services and making preventative care affordable removes incentives against seeking it. There's a tension here between that, of course, and letting consumers bear some first-dollar costs to give them incentives to do some rationing. It's almost like there's no easy answers. And if you're really concerned about health care generally or the ACA specifically, make sure you actually read the bill: https://www.healthcare.gov/where-can-i-read-the-affordable-care-act/ https://www.healthcare.gov/where-can-i-read-the-affordable-c... You might even find out that some of the people who worked on the bill included provisions to have US hospitals "establish and make public a list of its standard charges for items and services." Or you might find that there's an entire section called Title III that's about "Improving the Quality and Efficiency of Health Care." Almost like the people who worked on this really had thought about the relevant issues as much as a reasonably intelligent random citizen working in the tech industry has. :) Doesn't mean there aren't problems with it or we couldn't do better. But we can't do better as long as people who care to talk about it don't have a clear and accurate idea of what has actually been done.