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What Happens When Doctors Only Take Cash (2017) (time.com)
119 points by SQL2219 on Jan 15, 2018 | hide | past | favorite | 166 comments



My local mechanic is required by law to tell me how much something is going to cost me before they start work. Why is my doctor not held to the same standard. Ever tried calling a provider to find out how much something is going to cost?

Sounds like the medical industry had better lobbyists.


Heh. I have tried to call to see the cost. I see a retina specialist twice a year. I recently changed to a high deductible plan with an HSA. I called to see what the cost of my appointment would be. They could not or would not tell me. Incall three separate times, talking to different people and different departments. I went in and continued asking the front desk. "It depends on the services you end up getting." Ok, sure, but for a standard appointment, what then? "I can't say." Listen lady, I'm looking for a ball park. $50? $100? $1000? $5000? "Oh, I can't imagine it will be that much." Which one? "We will have to just bill you after." So absolutely frustrating. It ended up being like $150. Without price transparency like a public menu, we won't get better.


The same happened to me when I had an HSA. Estimated price for a procedure was first $4000, then $2000, then $100. Eventually paid $500. they just seem to make up prices.


As the anecdotes offered in these threads illustrate, it is not possible to cost or value healthcare on an individual basis.

Therefore, any market for individual purchase of healthcare (whether via insurance or directly) can only have faulty price signals.

Systems based on markets with faulty price signals are wide open to manipulation.

The perpetuation of such markets is contemptible, and particularly so in the case of healthcare since there is a straight line to be drawn from dysfunctional systems to human suffering.


I don't think they necessarily make up the prices, but I wonder if there is an accounting reason for the "MSRP" on procedures being so high. I will frequently see things like a $2,000 charge to the insurance company and then it will show that they ended up paying something like $185 for the service and they disallow the rest.

Perhaps it is just to make sure they always get the max from the insurance companies. Or maybe they are able to write off the portion that the insurance company won't pay as a loss or bad debt.


I've heard explanations that it has to do with something called "pay master" software, which sets the prices - but they do set a high price as a negotiating point for insurance companies.

Personally, I believe this practice to be outright blatant fraud. There is a complete lack of price-transparency for the end-user, whether there's an insurance company involved or not. And for people who supposedly champion the so-called "Free Market", Congressional Republicans are certainly quiet on this one issue, when they're criticizing the current healthcare system and regulations.


That's what I read as well. Basically we need price transparency, insurances paying the same as the non-insured, and lower awards in law suits against hospitals/doctors and America would have one of the cheapest healthcare systems in the world in no time.


While I agree that lots of offices don't know their costs off hand, I have not had much trouble getting quotes for specific procedures.

The real problem is that I rarely have any reason to ask if my insurance is going to cover all of it.


from my limited experience with health care in the US, it seems more like a 3rd world bazaar where you haggle over it.


Odds are there is a State Law on point that requires a similar disclosure of estimates on medical services.

Take Florida Statute 581.026, titled Florida Patient’s Bill of Rights and Responsibilities

Subsection (4)(c)(5) reads: a health care provider or a health care facility shall, upon request, furnish a person, before the provision of medical services, a reasonable estimate of charges for such service.

In one case I represented a patient who video recorded asking a health care admin for an estimate and getting an answer of under $2,000. The bill ended up being somewhere between $12,000-$14,000. A single letter citing the law and the patients entire bill was discharged by the health care facility.


Discharged unto whom, thats the question.


Most likely, they just adjusted the price down to what the Patients Bill of Rights said, and ate the cost.

Or pushed it onto tax payers somehow.


I recall encountering the claim that hospitals will mark up the initial bill because they are used to dealing with insurance companies, and said companies will turn over very stone possible to drive the price down. Thus the markup is done to ensure the hospital get their expenses covered after the insurance companies are done with them.


The insurance companies don't do anything that isn't automated and easy. Everything billed is coded and the insurance company already has a set price for that code. If the medical providers don't agree, they can either try to appeal and get an exception or most likely adjust the billing codes until something more reasonable goes through, or they can refuse to accept that insurance plan in their office.


Even if that is true, a company will be successful in the degree they can do this more than the other companies in the same space. I don't think laws like this effectively lower the cost, because first of all, a good chunk goes to lawyers and patient advocates.

Also as the system gets itself more expensive, the mechanics that make it more expensive can also become more worthwhile! Its a spiraling costs issue.

Man healthcare in the U.S. is so broken.


> ate the cost.

If they ate the cost, someone else paid for it. Which means that prices in general take this into account. I'm not judging OP, but saying that the ability to apply that technique is not= the solution to the general problem. (Healthcare is expensive).


It's likely that the cost was nowhere near $12000. These huge bills are often the result of runaway price inflation and system-gaming and are totally untethered from cost.


Your assumption that "someone else paid for it" only holds if the price was directly tied to external costs and not their own profit.


So you say investors pay for it? Very generous on their behalf.


If a client rejects my initial quote but accepts my lower one (for exactly the same service), did I also 'pay for it'?


If the other clients pay the higher quote, and thus it is a better strategy for you to put a higher price whichonly a few haggle, you didn't pay for it. The rest of the customers subsidize the haggler.


Sure. But not exactly. No more than you paid extra when the bus boy dropped a load of dishes and broke them. In this case a mistake was made, and the business are the cost. It might have meant prices went up the following year, but I doubt it, as that wasn't really that much money.


Yes, they are fucking over someone else, by padding their bill, and hoping their insurance pays for it - which is why most of us are paying $2000+ /month, if we have an employer-provided plan. (keeps the real costs concealed from the people who are paying).


The problem really isn't the doctors but the structure of insurance and how people treat health care and health insurance similarly. The worst part is that high costs aren't directly the fault of insurance companies but of government having driven the need for insurance. Health care used to be all cash, and people carried catastrophic health insurance policies only. We are moving back towards that. This isn't stating my preference, one way or the other, just the historical facts.

On the back end, there is the cost of lawsuits that also drives up prices systemically.

And, finally, not everyone pays their bills to their insurance companies. Everyone else has to pay those costs.

In these ways, insurance will always be an every increasing spiral of cost, eventually.


> The problem really isn't the doctors but the structure of insurance and how people treat health care and health insurance similarly. The worst part is that high costs aren't directly the fault of insurance companies but of government having driven the need for insurance. Health care used to be all cash, and people carried catastrophic health insurance policies only. We are moving back towards that. This isn't stating my preference, one way or the other, just the historical facts.

> On the back end, there is the cost of lawsuits that also drives up prices systemically.

Here's one example. A (probably not domesticated) cat scratched someone. They went to get shots. Waited a couple of hours and got the shot. Bill in the mail for about $8k. Somehow, I really doubt Humana paid their 80% which is $6,400 but of course the patient has to pay the 20%. I suspect what is happening is that Humana pays close to $0 and the patient picks up the whole tab of $1,600.


Okay, so on the catastrophic-only front: what about chronic issues, like diabetes, or depression, etc? Insurance pays for the initial crisis - but ongoing treatment comes solely out-of-pocket?

Nobody can afford that. Especially with how drug prices have escalated. And in some of these chronic conditions, the end-stages become very costly.

Insurance absorbs the early costs of regular care, which PREVENTS both chronic conditions, and these costly end-stages. (This is widely-accepted science, not insurance company marketing).

So this catastrophic-only model simply is not tenable, will not work. Unless either these treatment prices come way, way, down. OR: we address the real source of the problem, which is that incomes have not come up to meet these niche costs which have inflated greatly, yet somehow avoided being measured and added to overall inflation statistics. ("hedonic adjustments", anyone?)

Trump actually campaigned on lowering drug prices. Yet for all we've sacrificed to endure a Trump presidency, they've done absolutely nothing to address this problem. And they won't. I assure you.

Therefore - the shitty-compromise solution must be: government pays. Because they're too cowardly to fix the problem any other way. Government pays until government can't. So they just borrow more. Not even "plain speaking" Trump has the balls to work these two problems. (Drug prices, and income stasis).


> Here's one example. A (probably not domesticated) cat scratched someone. They went to get shots. Waited a couple of hours and got the shot. Bill in the mail for about $8k. Somehow, I really doubt Humana paid their 80% which is $6,400 but of course the patient has to pay the 20%. I suspect what is happening is that Humana pays close to $0 and the patient picks up the whole tab of $1,600.

I totally get your point, but is that real example?

http://health.costhelper.com/cat-scratch-disease.html

Typical costs:

- For patients covered by health insurance, out-of-pocket costs typically consist of doctor visit copays, prescription drug copays of $5-$50 or more, or coinsurance of 10%-50%. Cat scratch fever treatment typically is covered by health insurance.

- For patients not covered by health insurance, cat scratch fever treatment typically costs less than $10 for over-the-counter pain relievers. For severe cases in which antibiotics are required, it typically costs from $30-$90 for oral antibiotics. For example, Drugstore.com charges about $30 for a two-week course of the generic antibiotic rifampin. It charges about $80 for a two-week course of the antibiotic ciprofloxacin. And it charges about $90 for a two-week course of the generic oral antibiotic azithromycin.

- In the extremely rare cases in which serious complications occur and hospitalization is required, cat scratch fever treatment can cost tens of thousands of dollars. According to Medscape.com, the median hospitalization charge[1] for cat scratch disease is about $46,140.


> I totally get your point, but is that real example?

Yes, it actually happened. Overland Park, Kansas around July 2013 if I remember correctly. Also no fever. More like rabies and tetanus shots from what I heard.

What if we could force all hospitals to disclose all financial transactions publicly? Would that help?


In a sane world, this would be the free market solution being pushed by the supposedly free market crusading Republicans. Seems like the obvious market-oriented approach to bring down costs: tell people what the costs are!

Instead, the only plan Republicans can come up with is kick more people off their insurance, and don't change anything else.


Indeed! If any of the "free market" guys would advocate price transparency and other measures to create functioning market I would start listening. Instead the only thing they seem to want is the freedom for providers and insurances to screw their patients and if the patient can't afford it, just die.


Reality is they don't know. They know how much it will cost them...sort of. They have a log of how much they charge for each procedure, and then individual insurance providers will pay a percentage of that. Some of which the hospital will pass on you. Even then, it is up to insurance company to figure out how much they will pay.

"Adam Ruins Everything" had a really good segment on this.


But it's no different with a car mechanic.

The mechanic gives you a quote. If the costs changes they get your explicit approval.

That would be nice to start there on the medical side.


Can't really do that in the middle of surgery...


It happened to me. I was in the middle of having half of my thyroid removed when my surgeon realized she had to remove the other half. She interrupted the surgery to call my wife and get permission even though she had already obtained it from me before I was put under.


The auto mechanic can't really ask for permission to use a fire extinguisher if the car catches fire either.

No one minds if there are common sense exceptions.


In happy-to-sue America, you need to have a codified common sense so that we don't end up with doctors getting sued for using their common sense.


Why could other scenarios be discussed prior to surgery?

Of course there may be emergencies that come up that are unpredictable, but that doesn't mean you can plan for some of it!


Because the cost is unknown until treatment is over.

Also, funny comparison, try to make it with software engineering.


Car mechanics have "book hours" for each task. It may take them less time, or more, but they charge what is in the book. For example, changing a headlight is 1/4 hour, at $120.00 an hour, so they charge $30.00 plus parts.

What I'd like to see for medical services, is something like an apendepticamy takes 1 hour to perform, plus 4 hours of prep, and 2 hours follow up spread over several weeks. The procedure uses one primary surgeon, one assistant, 2 nurses, an and anesthesiologist, each charging x per hour (depending on role / specialty). The hospital charges y per hour for the room, z for the supplies.

All of this is known ahead of time. Yes, there can be complications. Just like a mechanic can run across rusted on bolts that take longer to remove. But going by book time for everyone works out in the averages.

Heck, both dentists and optometrists work in this fashion for most of their services. Why can't the rest of the medical world get it together?


Have you never looked at an itemized medical bill? This is exactly how all medical practitioners in the US that accept insurance do things.

Every procedure, every Tylenol, every operating kit has a code and a price and that is all itemized and billed.

Try calling up your mechanic and asking for a quote. Tell them your car is not working right and you don't know what's wrong, but you want a quote before bringing the car in.

Now, if you call a medical practitioners and tell them exactly what tests or procedures you want, they can probably look that up for you.


> Because the cost is unknown until treatment is over.

If you held a mechanic to the same standard, they "wouldn't know the cost" either.

Maybe the doctor's office doesn't know your out-of-pocket cost, but they generally know (within a reasonable rage) how much they will bill the insurance company for. Perhaps an underlying problem is that a health insurance-medical pratcice contract prevents the medical practice from revealing the negotiated+contracted costs.

In the case that the nurse/doctor/surgeon decides to change the prognosis/prescription during the visit, there are provisions for that type of action with auto mechanics, too.


> Maybe the doctor's office doesn't know your out-of-pocket cost, but they generally know (within a reasonable rage) how much they will bill the insurance company for

We don't know either. In fact you have to build infrastructure just to know estimates, which will be cleared months later, and a result might be less or more price. It is not a transparent system for the provider either, specially when you are a small one.

> In the case that the nurse/doctor/surgeon decides to change the prognosis/prescription during the visit, there are provisions for that type of action with auto mechanics, too.

I honestly think the problem is fee-as-service, where you have to make very complex calculations based on how each thing is claimed. It would be very different if work was provided per-hour basis, or even per-result (complex, but market is leaning towards that right now).

Figure a software engineer consultant charging differently per language, platform, stack version, LOC, cost of materials etc each time he works an hour. IF you are an engineer try to picture how that works.

1- You diagnose a problem to solve

2- You look into a list of 70k items to look for the corresponding code to that problem (C10.023 Turn iterative code to recursion)

3- You now write what you are going to do to solve it

4- Now you have to pick a billing code (CPT code 94102 -> Iterative on GC language to functional programming language ). You estimate 94102 will pay 50$, but are tempted to put 94103 which will pay 75$, from Iteractive non GC, because actually your custom language settings have GC turned off, but are unsure if the insurance company will believe or care

5- The client asks you how much will charge, considering he is personally liable for 20% of it because the actual client doesn't re-imburse everything.

That was a single visit. Doctors get 12-16 a day.


Medical insurance reimbursement is based on correctly filling out a coded form (there are like 10,000 or more codes covering every type of service), waiting for some human at the insurance company to agree and provide payment, or often a protected argument about coding and necessity. Until a month or more later the doctor has no idea what the insurance will actually provide. The final cost will be determined by how many services are performed, how many interactions with various people occurred, how many supplies or drugs were used, tests run or ordered, etc. When you walk in and say I feel bad, it could be nothing or you are dying. Guessing what is wrong before they even see you is impossible.

Try estimating software development costs with no idea what is to be written. With software at least no one will die, and probably no one will sue if you are wrong.


Part of the problem is that no one negotiates the price with the hospital. "Oh, I'm insured. All I have to pay is the deductible"

What you want is a buddy like Ed who can get the cost knocked down by 90% https://youtu.be/pY-BGNjI2Rg?t=6m18s


>My local mechanic is required by law to tell me how much something is going to cost me before they start work. Why is my doctor not held to the same standard. Ever tried calling a provider to find out how much something is going to cost?

Does that include a situation where say, when emptying out the oil, the nut over the drain breaks off which necessitates changing the oil sump, except they then discover the engine mounts are rusted and now the engine needs to be lifted and the mounts replaced? (I'm not a car guy, but I hope this demonstrates the thought even if inaccurate)


> Does that include a situation where say, when emptying out the oil, the nut over the drain breaks off which necessitates changing the oil sump, except they then discover the engine mounts are rusted and now the engine needs to be lifted and the mounts replaced? (I'm not a car guy, but I hope this demonstrates the thought even if inaccurate)

Yes it does because the mechanic is required to call you and say, "Upon further examination we also need to do ______ with will cost $XYZ. Do you want to proceed with this?".

If you say no you can pick up your car and go somewhere else. It's not that the mechanic is taking on the risk of an oil change turning into a full engine rebuild. They're simply required to announce what they're going to bill you for before they start work.

That way if the mechanic say, "It'll be $500 for me to change your cabin air filter." you can find a new mechanic.


That happened to me: dealership mechanic offered to charge us $500 to diagnose (not fix, just diagnose) a problem, so we left and went somewhere else.

But, that idea ignores a fundamental problem with expert-based markets; it's impossible to me, as a non-consumer, to make a rational decision about which mechanic to use because to me, the mechanic is a black box. I don't have any way to immediately fact-check what they're telling me, and in the worst case, if a mechanic does something wrong, I may not find out about it until it's far to late to hold the do-er accountable. Thus, I can change mechanics based on the limited information I have available (price signals, perceived reputation) but, A) this distorts the market to optimize for low prices and perceived reputations instead of efficient prices for quality work, and B) I don't ultimately have any way of knowing whether I'm making the right decision when participating in this market. At least, not in the time frame where that knowledge is useful.

The same, holds true with 'free' health markets; I'm not a doctor so I can't accurately tell if my doctor is lying to me, which should cause similar distortions in an ostensibly free healthcare market. Additionally, as with an auto mechanic, if I need something done -now-, my demand for that service becomes completely inelastic, which means prices for emergency services/procedures should become obscenely high.

They already are today, and people are -already- getting forced into bankruptcy by emergency medical expenses, so I can't speak to whether or how a market sans insurance might change that phenomenon, but it seems to me that the goal ought to be to eliminate it entirely, and that in turn a 'free' healthcare market cannot be the end goal.

That said, I don't think I know enough about the subject to pick out a particular optimal solution to this problem. I like the -idea- of single payer or other universal healthcare solutions, but I haven't studied any of them in enough depth to analyse them critically; dealing with healthcare in the UK was a joy while I lived there, so I wouldn't mind having that experience here in the US, but that in turn requires a lot of government funding (among other things), and we can already see that that's unsustainable in the short term by what's happening to the ACA.


I'll let an ex-mechanic answer: me. In that situation the service writer (my go between me and the customer) calls the customer and tells them what is needed. If they don't want to do it, button it up and send them on their way. In your made-up example, there are fixes for a stripped drain plug that don't require dropping the oil pan. If it weren't for Jiffy Lube (who, more than once, stripped it before it got to me), I wouldn't have to know this, but I do. So let's use a real-world example.

Customer comes in for an oil change. Change the oil, go to start the car, it won't start. A bit of diagnosis later, and the ignition control module has coincidentally decided to die. It's an old GM, so thankfully it's only $35, but still: the car was running when the customer dropped it off. I hate those phone calls. Customer said, "okay, do it". Had they not, we probably would have just dropped a module in and eaten the cost. I mean, what are you going to say? "Umm, yeah, it's just coincidence that you need to spend $35 more before you can drive it home"?

I also tell customers ahead of time the possible outcomes of the work. Honda comes in needing a top-end job, but it has over 100K miles on it. I tell the service writer that we can do the job, but it stands a chance of blowing the rings. (New valves with better sealing on the top end, now the piston rings are the weak link.) Customer is informed, I do the job. Two weeks later, the Honda pulls up blowing smoke. Told you so. I forget the outcome, but I don't recall pulling the engine on that one.

But they don't always say, "yes". Customer comes in looking for an estimate on a brake job. You know that grinding you hear when your pads are shot to hell? Imagine what happens when you let that go for, say, a couple of months. Imagine no more, I'll tell you what happens: it'll grind the rotors down to the cooling vents such that what's left of the brake pad backing plate no longer has a solid surface upon which to grind. Of course wheel bearings are shot, calipers need replaced. It was a long time ago, but many hundreds of dollars were estimated. Of course this is on a piece of shit that isn't worth fixing for that much. The vehicle is not safe to drive by any means. Customer doesn't want to do the work (duh). What did I do? Put the wheels back on and let them drive off. We're mechanics, not the state police, but trust that there was discussion of what "the right thing to do" was.

Your surgeon is in the middle of heart surgery. You wanted an estimate on a (cardio) valve job. Surgeon gets in there, your arteries are all clogged up. Wake the patient and ask for approval on the extra expense? Button 'em back up and negotiate the cost later?

So the car analogy doesn't work for all cases, or very well at for human beings.


But the heart surgery example is the exception.

Many medical procedures and therapies have very predictable costs and outcomes. And have checkpoints to re-evaluate whether to proceed further.

And accountants and could probably also price in the cost of the occasional problematic case and include a buffer in the standard price to account for it.

There are plenty of straight forward ways to provide prices for the vast majority of medical procedures, if the proper incentives were in place.


And for the cases where a decision is needed mid-surgery, the patient should have someone standing by to represent their interests and make those decisions on their behalf.


People leap straight for the heart surgery example as if to imply it justifies the lack of price transparency for routine medical procedures where the patient is fully conscious. Why is that?


Well, you dont use your insurance for maintenance, you use it for accidents.. Compare accidental repair prices to medical prices, since you do use insurance for regular doc visits, comparable with maintenance


I've been wondering for a while now why health insurance companies exist at all. They introduce a massive bureaucracy and massive costs and provide very little value.

They evolved from a reasonable idea into a monster that just drains our system and do not provide enough value to justify their existence in my opinion.


I've studied this a little. There are many stories depending on what you choose to believe. I believe the current state of affairs is a consequence of tax policy; health insurance benefits are untaxed income, a tax policy often attributed to powerful labor unions in the early 20th century. ACA attempted to tax "Cadillac" plans but the sunrise on that was kicked years down the road and when it was about to take effect in 2015 the can was kicked again to 2020. The tax is likely to be repealed before then.

So health insurance remains an enormous untaxed income benefit, one that grows in importance as health care costs spiral up. As a wise person once said; If you want more of something, subsidize it. Thus our present health insurance regime.


> is a consequence of tax policy; health insurance benefits are untaxed income, a tax policy often attributed to powerful unions in the early 20th century.

I can't remember where I heard it, but IIRC employer-sponsored health benefits had to do with a fringe benefit that employers could give to attract employees during a national wage freeze (perhaps WW2).

I just found this timeline[1] that confirms my broken memory (@see 1943).

[1] https://www.ebri.org/publications/facts/index.cfm?fa=0302fac...


yes


These problems far predate the ACA.

I come from a large family (8 kids). When by mom was still alive, I asked her if making medical claims was a pain. Nope, she said: tell your information to the doctor, and sometimes she'd have to pay part of it.

Now, even with "gold plated insurance", many of my families doctors don't handle insurance; we pay them directly, and we have to deal with the insurance companies ourselves. My wife spends countless hours dealing with what I assume is willful incompetence. For example, filing four identical (other than date) forms for a series of physical therapy sessions, and having the insurance company approve two and reject two because the codes were wrong. Or the it was unreadable. Followup calls get a different person every time, and when they review it they say: oh, I don't know why it was rejected, that is fine. I'll personally make sure it gets fixed. And then it doesn't get fixed. Having to call five for six times for one bill is common.


Historically health insurance developed around the turn of the century along-side things like fire insurance. This sort of made sense at the time, when our understanding of health and our ability to treat disease was extremely primitive.

Eventually science progressed to the point that medical care was an inevitability in people's lives; which is a surprisingly recent development due to modern medications, lab tests, improved treatments and surgeries, increasing preventive care, etc. Faced with this sea change, developed nations around the world transitioned to some form of universal health coverage.

Only the United States persists in the delusion that an insurance-based system is an efficient way to provide healthcare.


> They introduce a massive bureaucracy and massive costs and provide very little value.

I very much disagree. When I didn't have medical insurance, doctors charged me twice what they charged the insurance companies. Insurance companies have a vested interest in reducing the costs of medical care, while doctors have a vested interest in increasing them. Screwing patients out of payments is not an aligned business model, but it only becomes worse when you don't have someone there fighting to reduce costs on your behalf, willing and knowledgeable enough to know when a medical test is superfluous, or over-priced.

Doctors are still prescribing name-brand drugs when equivalent generics are available. That's some really basic stuff that we're still struggling with. Forget it when a doctor asks for a test that you don't even know enough about to say what it does, let alone if you're getting fleeced for money. Insurance companies get to be the bad guy in the middle who both doctors and patients can blame for not paying for things the patient shouldn't have to pay for in the first place.

But remove that stop-gap and you're relying on the blind trust of the doctor to do the work of appropriately minimizing costs for patients in the face business pressure to do otherwise. And if there's anything I know about human nature, is that we're capable of doing what's best for us, while honestly and truly thinking that isn't the true motivation. I've had mechanics try to sell me on nonsense that more knowledgeable friends of mine recognized as a scam. You don't want that when it comes to what is already one of the biggest expenses in a person's life.


> When I didn't have medical insurance, doctors charged me twice what they charged the insurance companies.

You've identified the symptom but misattributed the cause. You ran afoul of the charge master system of billing, which is a byproduct of our insurance-based healthcare system and the laws which uphold it. In short, providers are "forced" to set their base rates high in the knowledge that insurance companies (their most significant revenue source) will negotiate a fraction of the posted rate. Meanwhile, federal law enforces (under very stiff penalty) that individuals cannot negotiate nor be given a discount from the base rate.

You are also correct to identify the inherent information imbalance in the doctor/patient economic exchange: you as the patient will never know for certain if the recommended course of treatment is appropriate. Realistically only a doctor has enough information to tackle that question. In a cash-based system you are indeed susceptible to abuses.

(In fact, this is one of the main arguments against concierge or "executive" medicine: they will frequently throw in wasteful and dangerous tests like full body scans which have absolutely no justification in medical science.)

But by the same token, insurance company incentives aren't aligned in your interest either, so there are even more abuses on that side.

I believe a single-payer system is the best compromise -- the government's incentives are best aligned to improve the health of the populace (securing a healthy workforce) at the least cost. ("Least cost?!", I can hear the scoffs as I type.) Only government systems have enough scope and lifetime to realize the long-horizon payoffs of preventive healthcare, and cannot so easily escape their failures (the way insurance companies could with lifetime caps). Many people are surprised to learn that Medicare is at least on par in terms of efficiency and above par in terms of patient outcomes and satisfaction.


My last visit to the dermatologist was over $1000 for an office visit that involved a skin tag clip with a scissors and two squirts of LN. Medicare negotiated that down 70% to their preapproved rate and paid about $300, of which I paid 20%. Medicare is just another insurance payer, not a health provider.

If you are talking about the US, we have several times in the past negotiated our bills down as much as 20%. It does not appear to me that there is anything illegal about that.

But it does gall that they try to charge someone without insurance and with no bargaining power the full rate, well knowing it’s a fake rate.


> Medicare is just another insurance payer

I should have been more careful with my terminology. I used "insurance" as a shortcut for private, for-profit insurance, excluding government insurers like Medicare.


”Meanwhile, federal law enforces (under very stiff penalty) that individuals cannot negotiate nor be given a discount from the base rate.” I negotiated a discount for an operation a few years ago. Is this law you’re speaking of relatively new?


Good question. My understanding of this was based on discussions with doctors. I had a bit of trouble finding a citation, so it's possible this isn't as cut and dry as I represented. I did run across this memo from DHHS in 2004 that might shed some light (although I'm not sure this still reflects current law).

https://oig.hhs.gov/fraud/docs/alertsandbulletins/2004/fa021...

It points out a pair of laws -- the Federal Anti-Kickback Statute, and the Social Security Act -- which may have caused some confusion about discounts and waivers. Hospitals, the memo assures, are free to offer discounted services under a specific set of conditions such as methodically established patient financial need, an inability to collect on bills, and given that the waiver does not in any way entice business (i.e., you can't advertise it).

But the implication is that you can't give discounts willy-nilly, as a provider, or risk federal audit.

A separate but related issue is that under-billing may be considered fraud by CMS. A doctor cannot provide a service which they do not bill for, nor bill for a code which is lesser in magnitude than the actual service provided. I can't say if anyone has ever been investigated for under-billing.

In any case it's worth adding that aside from legalities, there are severe ethical ramifications of offering discounts to certain patients and not others unless that decision is made by some impartial measure. You could imagine all kinds of kickbacks, favors, enticement, coercion, biases, and so forth rearing their ugly head if doctors are given the freedom to bill whatever they choose (less or more).


They exist becaude the government has created rules to try to force health insurance to be a national health system: companies are encouraged or forced to buy insurance for employees, the healthy are forced to subsidize the sick and elderly, and insurance must cover most treatments.

There are other non-insurance interventions like forcing hospitals to provide emergency care.


I've been wondering for a while now why health insurance companies exist at all.

My understanding is that benefits like healthcare were a means to attract employees by increasing their compensation without giving them cash per se. I don't know all the one and outs, but that is my understanding of the actual origin. Of course, like anything, it then evolved.


Yeah. I've worked a few places in the healthcare industry, and I've always felt that I'm part of some ancillary service that would be better if regulated and automated. For healthcare to get cheaper the system must be made smaller, people will have to find new jobs.


And yet, health insurance companies have very low profit margins, the lowest amongst the insurance companies. So who is getting all the money?


The high health care cost is due to a lot of unnecessary procedures being performed. This can happen in two ways.

First, there are a lot of tests and procedures ordered by doctors that only have some, but very small, benefits for the patients [0]. Doctors are incentivized to do this because each procedure has a set price (negotiated with insurance companies and Medicare / Medicaid) and the only way to get more revenue is to perform more procedures.

Second, patients themselves order a lot of procedures out of fear. Arguably, they can be better off without these procedures. A prime example is end-of-life care, where patients and families often want to "do everything possible" even if those intrusive medical procedures bring nothing but a few weeks of miserable living [1]. Those end-of-life procedures are extremely expensive while having questionable benefits in terms of bringing a "happy" life rather than just a longer life [2].

[0] https://www.scientificamerican.com/article/unnecessary-tests...

[1] https://www.npr.org/sections/money/2014/03/05/286126451/livi...

[2] https://www.amazon.com/Being-Mortal-Illness-Medicine-Matters...


Third, doctors order unnecessary but "by-the-book" tests to document things that they already know in case of a malpractice lawsuit.

https://en.wikipedia.org/wiki/Defensive_medicine


Insurance (including Medicare and Medicaid) can and do push back against things they identify as inappropriate treatment. There are many problems with this system -- too restrictive in some places, not restrictive enough in others -- but in theory this could be improved to act as a reasonable check on rogue doctors.

Another relevant effect worth noting here is CYA medicine: doctors order tests aimed at catching highly unlikely conditions to protect themselves against the hypothetical lawsuit that asks "why didn't you test for that?" Whatever the truth is about malpractice suits, the perception in the industry seems to be that these cases are overwhelmingly biased against doctors if even one question can be raised about the course of treatment.


Sure, but then the 'bad actor' is the provider, not the health insurance company.


It's a gigantic market though. (Revenue of $850 billion in 2016 according to https://www.statista.com/statistics/214544/total-revenue-of-... )

I'm not an economist, but it seems like a 5% margin on a $850 billion market is worth a 10% margin on a $425 billion market.


Thats not how capital investment works, at a certain scale, % of profit is all that matters, because it tells you how much you need to invest to make a buck.

Its a big market, but insurance companies are not the ones making a killing.


healthcare monopolies (hospital chains, lab chains; where nationally there is competition, but in local areas, particularly rural they are effectively a monopoly).

They charge whatever the fuck they want.

Also; equipment manufacturers and drug companies: who both abuse the shit out of our patent system. But even off-patent drugs are being priced ridiculously high now. Barriers to competition are still extremely high.

Since manufacturing capacity of IV bags was taken out in PR, there is a national shortage. This is NOW causing rationing (in effect). Prices are going up, but nobody's addressing the manufacturing problem - because: Puerto Rico.


It it too tin-foil-hat to think that the majority of shareholders in health insurance providers are medical professionals who benefit from the arrangement?


Providers get a decent slice, specially big hospitals and specialists.

Doctor pay is really high in the US and its very regulated. Its expensive to be a doctor (long schooling, expensive mal praxis insurance), license ceilings, state-licensing and effective banning of doctor importation.

Doctors get a decent share of the cost (1/10 i read somewhere), buts its still not the bulk. Nevertheless, just allowing doctors to come in and have unlimited licensing would hit costs a lot.


Pharmaceuticals


ding ding ding. These ones take most of the share.

It is quite incredible that the U.S., the symbol of freedom, can't freely import drugs from abroad. Considering the rampant use of pharma specially, dropping the costs 1/2 of meds would lower the cost of healthcare overnight by an enormous amount.


Yep.

An interesting bit of data that highlights just how profitable this industry can be comes from the wikipedia page for McKesson Corporation[1]:

> On June 24, 2013, The Wall Street Journal reported that McKesson Chairman and CEO John Hammergren's pension benefits of $159 million had set a record for "the largest pension on file for a current executive of a public company, and almost certainly the largest ever in corporate America." A study in 2012 by GMI Ratings, which tracks executive pay, found that 60% of CEOs at S&P 500 companies have pensions, and their value averages $11.5 million.

[1] https://en.wikipedia.org/wiki/McKesson_Corporation


yes, and before anyone says: "but muh R&D funding!" -- these companies generally have marketing budgets that are 2-3 times the R&D budget. (plus, most basic research is public or university funded). "but muh FDA certification costs" - - there are huge tax carve-outs for these. It's not a main driver.

And no: marketing is not necessary for these products. TV commercials and other ads to public: not necessary.


Also worth noting that the US is 1 of only 2 countries in the world which allows direct advertising of drugs and also is the #1 per capita spender on drugs.


Its incredible to me that an ad for prescription drugs can target consumers and pay off. I understand aspirin or over the counter stuff, but "ask your doctor about this drug" pays off? How is that reasonable at all.


bertolini walked away with 500 million when cvs bought aetna. those were health care dollars paid by working people as premiums


A drop in the bucket. Insurance executive compensation is not the problem.


health insurance is so expensive in the USA that it is usually cheaper to not have any... and the service providers usually give discounts for the uninsured... I wish that we still could get catastrophic-only health insurance, but Obama care doesn't allow me to do that anymore...


From my german perspective, every assumption in this article looks quite gross and barbaric.

Here, everyone is insured. If you break your arm, you get it fixed. If you get cancer, you get therapy. If you get the flu, you get a prescription. The overall cost is paid by the entire population, through the insurance system.

For what is the alternative? Maybe the overall monetary cost would be lower if everyone had to watch the price, but you would pay for it in human lives and suffering, when people have to decide between dying of illness or dying of hunger, or between lifelong pain or clothes for their children.


From my American perspective, the national health systems of other countries have their own barbarities. There is a reason why so many people from other countries come to the US for health care.

When I was looking to have a very serious health problem taken care of, I heavily researched getting the procedure done anywhere in the world. It was pretty obvious that all the best places to have it done were in the US. The facility we went to had quite a few patients from other countries - and we're not talking 3rd world countries. Many of these patients had already had care in their own country, where the care was botched or insufficient. They were coming to the US to get it done right. On their own dime.

Not sure how Germany is, but average wait time for an MRI in Canada is over 10 weeks.

https://www.fraserinstitute.org/studies/waiting-your-turn-wa...

In the US you can go right into an MRI on the same day. This is key to getting an appropriate standard of care.

In Canada, average wait time for an ultrasound is 4 weeks. Our pets get better care in the US. I really don't see how people tolerate such things.


In northern Italy‘ve gone ”right into” an MRI with the public health system twice (once when I had a migraine aurea of incredible intensity with visual hallucinations and disorientation) and another time when I had smashed up my ankle so badly they needed to figure out the effect on the soft tissues after a bunch of X-rays in the broken bones. There’s a lot of myths about queues and waiting times (in my experience at least). When I was in the UK (of which I am also a citizen) while studying in very early 2000s I had slightly longer waiting times for specialist visits (allergy specialist, and then a dermatologist) but certainly not the kind of waiting times I hear tossed around now (on the order of a couple of weeks, tops).


Well, actually, at least the reason why the very rich nationals from my country elect to have surgery in the U.S. is because the very best doctors are there - possibly because they're extremely well remunerated there, and the best research is done in the U.S. as well.

I wonder if the insurance we're talking about covers the kind of procedure people from other countries do in the U.S.

I absolutely trust medical professionals in my country and I believe we have some of the very best healthcare in the world - way better than in the U.S. - wait time for an MRI is same-day if needed (same as you say for the U.S.), surgery is 13 days and the cost is maybe 30 dollars for the ticket. No deductibles, no hidden costs. Zero people became bankrupt due to medical emergencies in my country (plenty of other causes like high taxes, but nothing directly medical-related).

But if I had the millions and I had to have open-heart surgery I would possibly choose the Cleveland Clinic, and similarly for other very serious health problems, the equivalent top clinic.


As an American working in healthcare tech: it is absolutely barbaric.

We have the most expensive medicine in the world, but it's all treatment, not prevention and both only for those who can afford it.


I think it's an important reminder that markets need some level of transparency to function. And perhaps that relatively simple regulation (like a requirement to publish the prices -- or in other areas the first sale doctrine) might be the best regulation where feasible....


Hospital chargemasters are required to be public in California https://www.oshpd.ca.gov/Chargemaster/

Unfortunately,

1) The price agreements between hospitals and insurance companies are confidential, as both sides compete in their own industry and don't want to reveal their hands.

2) Consequently, chargemasters post some ridiculous price per procedure (with discounts available, naturally, to insurance carriers, who are the bulk buyers in the business). Which makes chargemasters similar to list prices you see at most retail establishments - only schmucks are expected to pay those.


There is an Adam Ruins Everything episode about that. Basically hospitals were reasonable, then insurance companies came along and brought extra business to hospitals. For that, they felt they deserved a cut. Since the hospitals were mostly non-profits, or low profit, they didn't have anywhere to cut, so in response they raised their rates to provide a cut. There is more to it, but that's the origin of the charge master.

Of course regulation requires administrative staff which costs more money as well.

Malpractice is ungodly expensive too.

Other costs are the requirement that hospitals treat the uninsured. I was listening to NPR when the ACA debate was going on, and the CEO of a local large hospital said about 25% of his costs are due to treating people who couldn't pay. That's a huge number.


The American Hospital Association tracks uncompensated care (bad debt and forgiven bills):

https://www.aha.org/system/files/2018-01/2017-uncompensated-...

It's around $40 billion per year in recent years (for all US hospitals). With hospital spending around $1 trillion, it's 4 or 5% across the industry. There are of course individual hospitals that face higher costs.


That's an incredibly revealing document! I've been looking for something like this to explain to my more conservative friends why the ACA is actually a better way to reduce medical costs.


Thanks. I must have remembered it wrong. Even with a variance, 25% seems way to high.


Could be related to costs vs charges.

Would still be lots of net income though (for the uncompensated care to represent a larger fraction of total costs).

Could also be including Medicare and Medicaid (which the numbers in that pdf explicitly exclude). They pay, but not always enough to cover the cost of care delivered.


"The price agreements between hospitals and insurance companies are confidential, "

This is the number one issue that makes any kind of market mechanism impossible. These prices have to be made public. There should also not be much variation between prices for different insurers and not-insured. Hospitals should state a standard price like every other business has to do.


Seconded. The healthcare market is an exceptionally complex beast, with all sorts of information asymmetries, scarcity power and adverse selection problems. It's very hard to regulate and cannot be safely deregulated, and that's the reason many countries went with a top down single payer system: it's inefficient but prevents the failed market US has, where $20K out of pocket for a basic surgery is considered a good deal.


This is a very interesting case, but I'd be cautious about it. Its not that the surgery that costs 60k, will cost 16k if you don't have administrative staff.

Its true administration is a huge expense, but I doubt it can make medical care cost 1/4.

Also healthcare services can never be "all round service" because any complication could mean a million things from scans to medication. Even on primary care you cant really promise to give 100% service for a fixed fee without ending up working like an insurance.


Need surgery? Here are the prices:

https://surgerycenterok.com/pricing/


A price list like this should be mandatory for all doctors.


Should software developers and lawyers also have upfront pricelists for all services?

I will gladly develop a cure for cancer, for the low, low price of $20B.


When I hire a software developer or a lawyer I get an upfront price list. Would you hire a lawyer that either would not give you any price or told you "it costs between 2000 and 60000 depending on your insurance and some other factors we won't tell you"?


The difference is law, software, car repair, home remodels, etc, are all man-made systems. Medicine is dealing with a system that I think we can all agree man did not make.


A hospital is a very man made system and most tools they use are man made too. Most procedures are pretty standard too. There is no reason that they can't publish numbers other than that it's beneficial to them to keep them secret. Insurances have these numbers too but they don't want to publish them either. Everybody knows the pricing, the only participant being kept in the dark is the customer, aka patient who eventually has to pay.


Software folks mostly do: "I will do mgmt's random projects and requests for $xxxxxx a year."


Doctors mostly work on a similar principle: "I will take whatever comes through that door and then fill out the billing the hospital requests, which will be further worked out by the hospital, and hopefully I get paid after a month or so."


Article says:

  ..that price would include everything from airfare to the organization's only facility..
Their own pricing disclaimer says otherwise:

  Lodging and travel expenses are not included in the price of the procedures.
There seems to be a huge host of pricing disclaimers for every procedure, such as pre-screening and MRIs not included, etc. thus making the article's claim that "the all-inclusive price for every operation is listed on the website" to be false.


Its pretty ridiculous to have a single fee that includes airfare, doctor's are not travel agents...


From the web site:

"Expenses or fees resulting from complications subsequent to the completion of the surgery and discharge from the facility are also not included." https://surgerycenterok.com/pricing-disclaimer/

Complications e.g. infection can run up expenses almost without limit. And you're likely to be in no condition to get up and take your business elsewhere.


> Setting and casting a basic leg

Oh good God, I’d never thought of this... I’ve broken more bones than I care to count (wrist, triple torsion fracture in my ankle, two ribs twice, shoulder) and I’ve never paid a penny (here in Italy). I’d never even remotely contemplated it might be a cost beyond the annoyance.


How does one break so many bones?


By accident... but it’s pretty unusual because I’m a fairly inactive nerd. First was the ankle which I broke in torsion while skiing in a freak accident, the next year I decided not to ski and had to amuse myself somehow so I picked skating and that’s how I broke the wrist... two ribs when tossed in a ditch by a hunter that noticed we were in the unwitting line of fire of another hunter (I was just there to photograph the hunting dogs), another two ribs accidentally throwing myself out of a first-floor window while putting up Christmas decorations...


Free healthcare is a great incentive to be careless with your body. /s*

edit: I was being sarcastic


I see you're being voted down but you might actually be right... if I feared that kind of monetary consequence I'd never walk out the door.


I walk around fully aware I am one slip and fall away from inescapable, permanent financial ruin. I have insurance, but my $8,000 deductible means if I break my leg falling down a flight of stairs, I'll be in bankruptcy court once the cast comes off.


yes: only people who are wealthy enough to pay out of pocket for emergency medical treatment, should ever go skiing, or ride a bike, or even drive their car to work.


Free healthcare is a great incentive for the state to ban alcohol, sugar and drugs.

Not /s if you look at actual argumentation on soda taxes.


Ironically, the obese tend to have low overall healthcare spending. You die early and spare them the extreme levels of spending that typically occur during care of the elderly.


Time to do some sugar subsidies


You're getting voted down but you might actually be right... if I had ever suspected this I wouldn’t even leave the house.


Access to free healthcare does not result in better health outcomes, at least in the US.

http://www.overcomingbias.com/2007/05/rand_health_ins.html


Such a novel concept that when we seek to provide health care, we actually pay for care instead of insurance.

Rand Paul made a similar case last summer that if the government is seeking to to provide care for people who can't afford it, it should put the money into care instead of into insurance companies. It would be much cheaper an much more effective.

Note that if you go to the highlighted facility, you can still contact your insurance to pay for the procedure - its just that the doctors in this case are not doing that for you. I've never understood why doctors involved themselves in dealing with insurance companies. It's the patient's company, so the patient should deal with it. If more doctors did this, patients would realize that the real problem is the insurance companies. Market forces might even cause insurance companies to provide better service.


I like that they take responsibility for complications. Instead of shoddy work being an opportunity for future revenue like with the rest of the system, it's an actual disincentive.


Cash payments don't count toward a patient's (insurance) deductible

This seems like a problem. How is this not an anti-trust violation? In order to benefit from the insurance contact you purchased, you must use a provider who will submit to an insurance company's capricious payment system.


This is probably a simplification. Normally if you use an out-of-network provider, the cost counts against your out-of-network deductible, which is significantly higher than your in-network deductible. So it may well be that his insurance would count this against his out-of-network deductible, which is so high that he would never reach it anyway.


No. In order to utilize your insurance plan's out-of-network services, the insurance company has to be in the loop. A cash-based system completely circumvents insurance.


Right, you certainly have to loop in your insurance company, by filing a claim (which they won't pay, obviously).


I've seen similar trends in post-Communist EU countries. We are importing the worst patterns from US. Public health insurance is most of the times miserable.


> Public health insurance is most of the times miserable.

I expect that your statement is about public health insurance in post-communist EU countries (I have no experience of this). Public health insurance in Australasia is very good (though has arguably been better in the past in some senses and could obviously be better in the future).


What about making a website people can enter the price of past procedures, their insurance plan and note where it was done. Then you could help people comparison shop before hand by showing typical prices.


That seems interesting. Such a site would be prone to fake entries/astroturfing though. I wonder how that could be avoided?


Just ask for a receipt to be scanned in.


Since their surgery center does not employ the army of administrators that is often required to haggle with insurers and follow up on Medicare reimbursements, their overhead is smaller.

This is part of why Obamacare is fundamentally broken. Using the existing commercial insurance system to try to provide universal coverage injects unavoidable extra expense and complications.

Really happy to hear about the trend the article is describing.


This may work for chronic conditions and non-lethal problems, but creates a problem when you're talking about urgent care: stroke has a 2-3 hour window for administration of TPA. The goal for intervention in a myocardial infarction is under an hour, same for trauma, where people may be in the ICU for days to months (a lot of months). Who covers those costs?


Ideally, a single payer system.

I am not advocating for this cash only option to be the entire system. I am merely saying that Obamacare is broken and I am glad to see alternatives emerging, given that Trump has so far failed to provide a real solution at the federal level.


Every insurance company in the United States, along with Medicare and Medicaid, already has a fixed amount that they will pay the caregiver for administration of TPA. I guarantee it, even without bothering to look up what TPA is. If the procedure is covered by insurance at all, there's a pre-approved reimbursement amount for doing it.

Outside of an expensive, time-consuming, and almost always useless appeals process, that flat rate is all the doctors are going to get. They can take it or leave it.

There are medical codes for every imaginable procedure, and essentially every medical code has a fixed, preset amount that the insurance company will pay to have it performed.


I get that. Do you know the history of the CMS billing schedules? They called Dr. DeBakey and he sent a couple of his fellows to Washinton and they priced out every single thing. That has been revised, amended, and addended many times since, but yes, I'm well aware.

The point is that there's no shopping around in the emergent cases. You can't say "Well, in my incapacitated, mid-stroke state, let me check the menu of the 3 nearest hospitals for the cost of a stroke admission." It ranges from "nothing to do here, looks like it was a TIA, patient demands to go home" to "We need to take your wife to the OR for an emergent craniotomy and clot removal to decompress the foramen of Monroe. Right now. Because minutes are brain cells."


"The point is that there's no shopping around in the emergent cases."

Why would "shopping around" matter if the amount the doctor was going to get paid was fixed (and published) in advance?

I don't understand why you think that pre-published fees would make this (alleged) problem worse rather than better.

In the (unlikely, IMO) scenario where one hospital really was massively more expensive than another, patients will almost certainly know that in advance, just as they know that they're going to pay more at Wolfgang Puck's restaurant than McDonalds.


The rates generally are published, via CMS. This whole thing is barking up the wrong tree. The rates are one thing. Coding is the real art. Making sure you captured every RVU, CPT code (do you have any idea how many arterial lines might be started on a patient dying of diffuse intravascular coagulopathy?) How do you capture all that?


Your point is irrelevant to whether or not pricing transparency has value for customers. It's like saying that it doesn't matter at all if mechanics provide pricing transparency because you could break down in the middle of nowhere in the desert somewhere, and then what good does that do you?


> This may work for chronic conditions

According to the CDC, 75% of healthcare spending in the US is spent on chronic conditions or issues comorbid with chronic conditions.

So system changes that only help with chronic conditions could still be very worthwhile.


> If unforeseen complications arose during or after the procedure, the Surgery Center would cover those costs

Doesnt this expose the facility to additional risk? Overall healthy patients and those with sufficient insurance coverage do not have a reason to visit this place, while those without insurance coverage (who I assume are likely to be less healthy and hence have more complications) are more likely to visit the place.

If instead they accepted insurance, and charged people based on complications, they would have a more average risk profile while being able to maintain higher profits, and keeping a USP of transparent charges (which would apply to non insurance patients w/o complications)


Interestingly, all-inclusive medical packages have been very common in India since last 10-15 years.


We could adopt two simple precepts from this example of private enterprise. transparency and consistency. If this were applied to our healthcare system pricing would fix a lot.


"If unforeseen complications arose during or after the procedure, the Surgery Center would cover those costs. Villa wouldn't see another bill."

So there is a sort of built-in insurance to this system. Those who don't have any complications are paying more to cover patients who do. They're simply passing the first line of medical costs (known, anticipated, where a price estimate can be created) on to consumers while letting insurance handle un-estimatable medical emergency type situations.


Man you guys have to be busy beavers for this. Cheers frome europe.


[flagged]


> Orthopods might be able to replace knees on a fixed budget, but I'm thinking neurosurgeons and trauma surgeons would have a heckuva time.

Why would they? That's basically how existing insurance companies work, dude -- they typically pay doctors a specific amount for a specific procedure.

> This whole thread is full of young, SV libertarians who haven't really thought out what healthcare involves.

In my youth, I worked in a drug store. Part of my job was to hassle insurance companies for payment, any time I wasn't busy doing something else. Not only have I "thought it out", I know exactly how it works from personal experience. It works the same way for surgery and other medical procedures, too. The insurance company has a specific amount they'll pay (assuming you can convince them to pay you at all).


> they typically pay doctors a specific amount for a specific procedure.

No, they only pay specific amounts for specific procedures.

> In my youth, I worked in a drug store

Do you realize pharma is only 10% of the problem?


There's some things that definitely are going to be uncertain, but there are a -lot- of procedures that could be given a price tag. I can't even get info like, "How much will it cost to have an ultrasound? Not doing anything after that, but just for the ultrasound itself?" I've had somewhat similar issue with getting bloodwork done too. A lot of stuff can be broken down into smaller parts and put a price tag on that. Sure, it might take 5 years to diagnose, but that can be broken down into (5 hrs with doctor examination, 10 bloodwork tests with XYZ factors, 4 checkups, 10 months of X pill, etc).

Unfortunately it's not that simple, the hospital doesn't want to charge everyone the same amount. They want to get the most they can out of everyone. Insurance companies want to pay less. Government laws get thrown in.

There's a lot of issues with healthcare but knowing the general actual cost of standard procedures isn't one of the big problems. That's worked down to an art, after all insurance companies have to estimate that cost.


What about a dermatologist? An appointment has a set fee. If you need treatment for something out of the ordinary, they give you options and prices. Then, you get to decide on how you proceed.

Seems pretty simple.


Have you seen a dermatology textbook? They're the thickest books on my shelf. And as a pathologist, I'm only seeing the stuff that merits "I'm not exactly sure what to do here, let's get a biopsy and see if that provides us more information."

Then I, as the pathologist, provide some hedgy answer that's not in the textbook, because the patient's disease didn't read the textbook. And we have to jam that all into CPT codes, SNOMED codes, LOINC codes, ICD9 and ICD10 codes, complete with conversions between major and minor releases of those code lists, etc, etc.


That would be a problem, I can't even withdraw more than €1000 from an ATM. Most of my transactions are plastic or digital, like 99%.


"Cash" here means 'not wacky insurance schemes'. Their FAQ says

"To keep our prices as low as possible, cashier’s checks or cash are the methods preferred. Credit cards are accepted on a case by case basis. Human resource departments or divisions of self-insured companies can make other arrangements if necessary."

(They also have a partnership with some sort of personal loan/financing company which presumably would take credit cards or bank transfers.)


It would be silly for a doctors office to accept only suitcases full of $100 bills, not only would that be highly impractical for both parties, it would make them a prime target for robbery so they'd have to invest a ton in physical security.

"Cash only" means "not insurance claims" in this context - usually when you go to the doctor you give them your insurance information and your expected copay the doctor (actually their admin staff) then submits a claim to your insurance company for payment. If the company doesn't pay, or pays less than expected, they will bill you.

Large "cash" transactions aren't a problem.

Multi thousands of dollars+ "cash" transactions are done all the time (such as a down payment on a house), you go to the bank and get a cashier's check. There's no reason you couldn't take out cash instead of getting a cashier's check, but it wouldn't be secure or practical. And your payee may have an issue with accepting physical cash from a risk perspective.


"Paying cash" in this context doesn't mean a briefcase full of $100 bills. It means direct payment from the consumer to the provider. That direct payment could be in the form of a check or credit card.


Pretty sure they can take a debit card, which even in the U.S. is a chip + PIN transaction, with a minimal transaction fee rather than the substantial percentage applied to credit card transactions. Anyway, by cash they mean full payment now, rather than invoiced to an insurance company.


You should maybe read the article then since it's about something else.


You son has broken his arm. The doctors in your town will only take cash.

One of the doctors charges $50 to set the broken arm. The other doctor charges $500.

Which one are you going to take your child to? Most likely, the $500 one. Because going to the bargain basement doctor is not something you do when dealing with medical issues if there is absolutely any way to afford it. It creates what I call 'reverse capitalism.' You can only draw more customers by charging the highest price in the area.

If your customers stop even being the ones footing the bill, it accelerates to a patently insane level. That makes footing peoples insurance bills a ludicrous and idiotic business to get into. Unless, of course, you've got protection from the government or special considerations where antitrust laws do not apply to you so you can engage in price-fixing, intimidation, and other tactics.

Made to compete fairly, medical insurance companies would be out of business overnight because it's a downright stupid business to begin with.


I don't think thats true. There is a price bias, but thats not the only quality signal for medical care. There's reviews, facility and installations, reputation, etc.

People are price sensitive regarding their own life and their children's. You can find how much they value things with "revealed preferences", an economists principle.

Its a bigger problem that as a consumer you don't have to or face the decision of choosing by price, eliminating marketing mechanics from healthcare.


"Little Billy - would you mind biting on a bullet for an hour while I check Yelp and online reviews to find the cheapest doctor to set your broken arm."

...said no one ever.


"No time to look for the closest hospital, we need to drive straight to the one I know thats 1h away, lets go".

Also, most care is not urgent care.


Pre Obamacare, the son of a friend of mine broke his collarbone skateboarding. His parents decided he should just tough it out, because they couldn't afford to take him to the ER.

We tried to intervene by offering them money, but they refused to take it. We got their church to intervene, after 3 days.

Very fortunately, xrays showed it was a minor fracture, no surgery needed. But that poor kid.


> If your customers stop even being the ones footing the bill, it accelerates to a patently insane level.

The customers are the tax payers in many countries, and the bills there are much lower than in the US. Yes, those systems have problems, but this one is on a much smaller scale.




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