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Having worked in a tech startup adjacent to healthcare insurance one of the biggest reasons healthcare costs are out of control is largely a result of how healt

Having worked in a tech startup adjacent to healthcare insurance one of the biggest reasons healthcare costs are out of control is largely a result of how healthcare is billed. Most consumers (i.e. those insured under an employer-offered plan) are very far removed from the actual price of a service because, assuming a medically necessary service or drug is covered, you are paying up to some deductible, coinsurance, or copay but usually never anything that closely resembles the retail price. Most insurance companies operate off a "network model" where they go out and negotiate contracts with different providers/hospitals to get discounted rates that are usually pegged to Medicare prices (which is as low as the prices go). Large employers can negotiate good rates through insurance companies as well to drive prices down to control their own healthcare costs. The opaqueness with which care is paid means that consumers receiving care have little incentive to shop around for prices, quality, value, etc., which means providers can basically charge whatever they think the gov't (through medicare/medicaid) will pay and a percentage above medicare/medicaid for everyone else. Of course, if you are uninsured or go out of network (i.e. your insurance company has no contract with the provider you saw), then you're going to be asked to pay ridiculous retail prices that very few people actually ever pay. If you look at the difference between price trends for elective vs non-elective care (i.e. cosmetic surgery, LASIK, cosmetic dermatology), prices for non-elective care outpaces elective care by a long shot with the main difference being consumers pay out of pocket for elective care and actually put pressure on prices whereas consumers do not for insurance-covered non-elective. The reality is that if you are ever in this situation you should ALWAYS negotiate. There's a reason medical debt is bought for pennies on the dollar because 1) difficulty actually collecting "patient responsibility" in the first place and 2) everyone know these retail prices are completely BS.

tomkarlo 9y ago
It's definitely a problem that pricing is opaque and disconnected, but have you considered that maybe healthcare isn't a good candidate for a market solution? Even without this problem, customers have relatively little ability to choose providers or price shop, and they often don't really understand what they're being asked to buy. By extension, it seems like the key difference between "elective" and "non-elective" care is that one of them is elective... it's going to be a very different market when a consumer can choose to buy something or not buy it at all, vs. when they have to buy something and may not even understand what or why they're buying it. It's not necessarily that consumers are shopping prices more or being stronger negotiators, it's partially just that demand naturally falls if prices start to rise too much.
- dawhizkid 9y ago
  One of the bigger problems in healthcare is also over-utilization i.e. getting things are are technically covered under insurance but not objectively medically necessary or getting a more expensive brand name drug over a chemically equivalent generic drug. Agree that the patient-provider relationship today is usually "I'm a doctor and I'm going to tell you to do this, this, and this" regardless of cost, and we go with it because if we're insured under today's system it means marginally more out of pocket dollars for us. If you had an high deductible plan with an HSA (i.e. paying pre tax dollars out of a health savings account), I'd bet psychologically you'd be more choosey when shopping around for healthcare and/or ask more questions of your provider around "is this really necessary?" or "is there a cheaper option?"
  - tomkarlo 9y ago
    I have a high-deductible plan, and have had one for ~7 years now. It doesn't really change my decision process that much, honestly. Especially when I'm considering a procedure that my doctor has told me I need, but I don't know / understand the technical details of... I will try to go in-network, but I don't really have the capability to go shop around and assess which providers will give me a better outcome per dollar spent. I especially don't usually have the necessary skill set to assess if some cheaper option that's not my doc's first choice would really be a good choice. With healthcare, it's not just about "what's the cheapest option", it's also "who will deliver the best service"... given the relatively limited ability to optimize the first, I generally will focus on the second, and I think that's what most folks do - they go with providers they trust. It all comes back to my original point: healthcare, particularly non-elective healthcare, is not well-suited to a free market solution.
    - Consultant32452 9y ago
      Assuming you are not an auto mechanic, how do you go about deciding which cars to purchase? If you're unable to discern whether your doctor's preferred solution is the best one, then what is the purpose of asking your doctor in the first place? Or how would it be beneficial if the "worst" provider was forced to charge you the same as the best provider?
emodendroket 9y ago
> The opaqueness with which care is paid means that consumers receiving care have little incentive to shop around for prices, quality, value, etc., which means providers can basically charge whatever they think the gov't (through medicare/medicaid) will pay and a percentage above medicare/medicaid for everyone else. Of course, if you are uninsured or go out of network (i.e. your insurance company has no contract with the provider you saw), then you're going to be asked to pay ridiculous retail prices that very few people actually ever pay. I never find this argument compelling, for two reasons: 1. Things are similar in this regard in other OECD countries, yet the US has prices wildly out of proportion with them. 2. Normal people do not have the expertise to know whether they need medical care. That's why they go to the doctor. Making them pay more out-of-pocket simply leads to them foregoing necessary care. Furthermore, if you're bleeding out and need immediate medical attention you're not exactly in any position to "shop around."
- pdonis 9y ago
  Part of the problem is that three very different kinds of things are being conflated. If you have an emergency and need immediate care, yes, you can't shop around. That is what insurance is supposed to be for: dealing with unanticipated expenses that you can't pay out of pocket. However, most health care is not like that. It's either predictable, regular expenses like annual physicals, or unpredictable but small expenses like getting a course of antibiotics if you have an infection. These would seem to be easily bought and sold on a market, yet our health care system insists that we do it through "health insurance", when these items are not even insurable items to begin with. The third category, and the one that is the hardest to deal with, is non-emergency conditions that require expensive treatment, like cancer. Ideas like having a large risk pool make sense for these kinds of conditions, but again, our health care system insists on doing everything that way, even though it doesn't make sense for other kinds of conditions. And again, this kind of risk pooling is not really "insurance" in the way that covering emergency care is (although there are similarities).
  - matthewdgreen 9y ago
    I don’t know what health insurance plan you have, but most (even decent) plans now have relatively high deductibles. My BCBS family plan has $6000/yr deductible before anything gets covered. I doubt that I’m an outlier, and this effectively means many Americans are already paying for non-emergency care as you propose. Prices and premiums still suck. So what’s the actual proposal here?
Slansitartop 9y ago
> The opaqueness with which care is paid means that consumers receiving care have little incentive to shop around for prices, quality, value, etc., which means providers can basically charge whatever... This opaqueness problem can never be completely solved for healthcare at the consumer level. A significant fraction of healthcare consumption occurs in urgent or outright emergency settings where "shopping around" cannot reasonably occur.
abalone 9y ago
> The opaqueness with which care is paid means that consumers receiving care have little incentive to shop around And how would healthcare "consumers" be able to "shop around" while in an emergency situation? This is the standard free market fantasy. It's all too common among healthcare startups, given that they are nearly all market-based solutions by nature and have a built-in incentive to ignore socialized medicine as a solution. You'd think if we were really serious about improving our healthcare system we'd, you know, look at stuff that works and is field-tested, like for example the healthcare systems in basically all the other industrialized nations in the world.
DanBC 9y ago
I live in England. My health care is free at the point of delivery. I have no idea what it costs. The health care professionals treating me tend not to have any idea what it costs either. Some accountant somewhere in the Trust will know, and will bill the appropriate code to the Clinical Commissioning Group. But if you compare like for like treatment in England and the US you'll find the cost to NHS England is far lower than the prices charged in the US.
- switch007 9y ago
  > I have no idea what it costs. £124bn ($175bn) give or take a few pounds. That does of course include some other people's health care too ! ;)
  - Broken_Hippo 9y ago
    Total, sure. But not for each individual procedure, which effectively takes money out of the equation for care. When this happens, care changes as does follow through - or at least it has with me moving from the US to Norway.
mabufo 9y ago
you shouldn't have to shop around for medical care
- cgmg 9y ago
  Why not?
chrisgd 9y ago
The really expensive procedures cannot be shopped around. There isn't time. I hate this focus on personal responsibility instead of for-profit hospitals, orthos with ownership in rehab clinics, university owned for profit doctor groups, insurance comoanies with higher expense ratios than medicare and medicaid, etc. HCA can overbill medicare more in a month than all the shopping around could potentially save in a year
u801e 9y ago
> The reality is that if you are ever in this situation you should ALWAYS negotiate. There's a reason medical debt is bought for pennies on the dollar. I wonder if it's possible to buy your own (or a close friend's) medical debt). If someone has to pay $200000 in debt, but could buy that debt for $2000, then that may be the easiest way to "pay it off".

tomkarlo 9y ago

It's definitely a problem that pricing is opaque and disconnected, but have you considered that maybe healthcare isn't a good candidate for a market solution? Even without this problem, customers have relatively little ability to choose providers or price shop, and they often don't really understand what they're being asked to buy. By extension, it seems like the key difference between "elective" and "non-elective" care is that one of them is elective... it's going to be a very different market when a consumer can choose to buy something or not buy it at all, vs. when they have to buy something and may not even understand what or why they're buying it. It's not necessarily that consumers are shopping prices more or being stronger negotiators, it's partially just that demand naturally falls if prices start to rise too much.

dawhizkid 9y ago
One of the bigger problems in healthcare is also over-utilization i.e. getting things are are technically covered under insurance but not objectively medically necessary or getting a more expensive brand name drug over a chemically equivalent generic drug. Agree that the patient-provider relationship today is usually "I'm a doctor and I'm going to tell you to do this, this, and this" regardless of cost, and we go with it because if we're insured under today's system it means marginally more out of pocket dollars for us. If you had an high deductible plan with an HSA (i.e. paying pre tax dollars out of a health savings account), I'd bet psychologically you'd be more choosey when shopping around for healthcare and/or ask more questions of your provider around "is this really necessary?" or "is there a cheaper option?"
- tomkarlo 9y ago
  I have a high-deductible plan, and have had one for ~7 years now. It doesn't really change my decision process that much, honestly. Especially when I'm considering a procedure that my doctor has told me I need, but I don't know / understand the technical details of... I will try to go in-network, but I don't really have the capability to go shop around and assess which providers will give me a better outcome per dollar spent. I especially don't usually have the necessary skill set to assess if some cheaper option that's not my doc's first choice would really be a good choice. With healthcare, it's not just about "what's the cheapest option", it's also "who will deliver the best service"... given the relatively limited ability to optimize the first, I generally will focus on the second, and I think that's what most folks do - they go with providers they trust. It all comes back to my original point: healthcare, particularly non-elective healthcare, is not well-suited to a free market solution.
  - Consultant32452 9y ago
    Assuming you are not an auto mechanic, how do you go about deciding which cars to purchase? If you're unable to discern whether your doctor's preferred solution is the best one, then what is the purpose of asking your doctor in the first place? Or how would it be beneficial if the "worst" provider was forced to charge you the same as the best provider?

emodendroket 9y ago

> The opaqueness with which care is paid means that consumers receiving care have little incentive to shop around for prices, quality, value, etc., which means providers can basically charge whatever they think the gov't (through medicare/medicaid) will pay and a percentage above medicare/medicaid for everyone else. Of course, if you are uninsured or go out of network (i.e. your insurance company has no contract with the provider you saw), then you're going to be asked to pay ridiculous retail prices that very few people actually ever pay. I never find this argument compelling, for two reasons: 1. Things are similar in this regard in other OECD countries, yet the US has prices wildly out of proportion with them. 2. Normal people do not have the expertise to know whether they need medical care. That's why they go to the doctor. Making them pay more out-of-pocket simply leads to them foregoing necessary care. Furthermore, if you're bleeding out and need immediate medical attention you're not exactly in any position to "shop around."

pdonis 9y ago
Part of the problem is that three very different kinds of things are being conflated. If you have an emergency and need immediate care, yes, you can't shop around. That is what insurance is supposed to be for: dealing with unanticipated expenses that you can't pay out of pocket. However, most health care is not like that. It's either predictable, regular expenses like annual physicals, or unpredictable but small expenses like getting a course of antibiotics if you have an infection. These would seem to be easily bought and sold on a market, yet our health care system insists that we do it through "health insurance", when these items are not even insurable items to begin with. The third category, and the one that is the hardest to deal with, is non-emergency conditions that require expensive treatment, like cancer. Ideas like having a large risk pool make sense for these kinds of conditions, but again, our health care system insists on doing everything that way, even though it doesn't make sense for other kinds of conditions. And again, this kind of risk pooling is not really "insurance" in the way that covering emergency care is (although there are similarities).
- matthewdgreen 9y ago
  I don’t know what health insurance plan you have, but most (even decent) plans now have relatively high deductibles. My BCBS family plan has $6000/yr deductible before anything gets covered. I doubt that I’m an outlier, and this effectively means many Americans are already paying for non-emergency care as you propose. Prices and premiums still suck. So what’s the actual proposal here?

Slansitartop 9y ago

> The opaqueness with which care is paid means that consumers receiving care have little incentive to shop around for prices, quality, value, etc., which means providers can basically charge whatever... This opaqueness problem can never be completely solved for healthcare at the consumer level. A significant fraction of healthcare consumption occurs in urgent or outright emergency settings where "shopping around" cannot reasonably occur.

abalone 9y ago

> The opaqueness with which care is paid means that consumers receiving care have little incentive to shop around And how would healthcare "consumers" be able to "shop around" while in an emergency situation? This is the standard free market fantasy. It's all too common among healthcare startups, given that they are nearly all market-based solutions by nature and have a built-in incentive to ignore socialized medicine as a solution. You'd think if we were really serious about improving our healthcare system we'd, you know, look at stuff that works and is field-tested, like for example the healthcare systems in basically all the other industrialized nations in the world.

DanBC 9y ago

I live in England. My health care is free at the point of delivery. I have no idea what it costs. The health care professionals treating me tend not to have any idea what it costs either. Some accountant somewhere in the Trust will know, and will bill the appropriate code to the Clinical Commissioning Group. But if you compare like for like treatment in England and the US you'll find the cost to NHS England is far lower than the prices charged in the US.

switch007 9y ago
> I have no idea what it costs. £124bn ($175bn) give or take a few pounds. That does of course include some other people's health care too ! ;)
- Broken_Hippo 9y ago
  Total, sure. But not for each individual procedure, which effectively takes money out of the equation for care. When this happens, care changes as does follow through - or at least it has with me moving from the US to Norway.

mabufo 9y ago

you shouldn't have to shop around for medical care

cgmg 9y ago
Why not?

chrisgd 9y ago

The really expensive procedures cannot be shopped around. There isn't time. I hate this focus on personal responsibility instead of for-profit hospitals, orthos with ownership in rehab clinics, university owned for profit doctor groups, insurance comoanies with higher expense ratios than medicare and medicaid, etc. HCA can overbill medicare more in a month than all the shopping around could potentially save in a year

u801e 9y ago

> The reality is that if you are ever in this situation you should ALWAYS negotiate. There's a reason medical debt is bought for pennies on the dollar. I wonder if it's possible to buy your own (or a close friend's) medical debt). If someone has to pay $200000 in debt, but could buy that debt for $2000, then that may be the easiest way to "pay it off".