Healthcare Isn't A Free Market: It's A Giant Economic Scam

[23536]

This is a very lengthy article that is a close reading of an even lengthier article, but the kernel is that even though medical bills are irrationally and immorally high, the national conversation about health care seems to exonerate the usurious medical industry by shifting the focus away from the fairness of the rates.

http://www.techdirt.com/articles/20...snt-free-market-its-giant-economic-scam.shtml

Not long ago, someone I know who had no medical insurance, but who had some serious medical issues, ended up in the hospital for a few weeks. Some procedures needed to be done, but nothing that most people would consider too "drastic." Eventually, the bills showed up, and they were in the range of half a million dollars, for someone who did not have anything close to that. You hear stories about crazy medical bills, but what very few people realize is that the reality of hospital bills can often be orders of magnitude more crazy than what most people expect. Just last week, a friend of mine posted the following image to Facebook, noting that when his normal medical insurance billing statement has room for seven digits (i.e., millions of dollars) something is clearly screwed up.

A few years back, the folks at Planet Money tried to dig in and demystify some of the secrets of medical bills, but that only scratched the surface.

Stephen Brill has a very long, but absolutely gripping, detailed analysis of the insanity of medical billing for Time Magazine. It's a truly astounding piece, that hopefully will open many people's eyes. It will take a while, but find some time to read it, just to get a sense of how totally screwed up the entire system is. I've been working on some other stories about some really sketchy activity on the pharmaceutical side of things, but this article really shines a light on the disgusting underbelly of the healthcare system. As Brill notes, so much of the debate about healthcare is really focused on "but who will pay for these things." But what it tends to ignore is why are the prices absolutely insane.

When medical care becomes a matter of life and death, the money demanded by the health care ecosystem reaches a wholly different order of magnitude, churning out reams of bills to people who can’t focus on them, let alone pay them. Soon after he was diagnosed with lung cancer in January 2011, a patient whom I will call Steven D. and his wife Alice knew that they were only buying time. The crushing question was, How much is time really worth? As Alice, who makes about $40,000 a year running a child-care center in her home, explained, “[Steven] kept saying he wanted every last minute he could get, no matter what. But I had to be thinking about the cost and how all this debt would leave me and my daughter.” By the time Steven D. died at his home in Northern California the following November, he had lived for an additional 11 months. And Alice had collected bills totaling $902,452. The family’s first bill — for $348,000 — which arrived when Steven got home from the Seton Medical Center in Daly City, Calif., was full of all the usual chargemaster profit grabs: $18 each for 88 diabetes-test strips that Amazon sells in boxes of 50 for $27.85; $24 each for 19 niacin pills that are sold in drugstores for about a nickel apiece. There were also four boxes of sterile gauze pads for $77 each. None of that was considered part of what was provided in return for Seton’s facility charge for the intensive-care unit for two days at $13,225 a day, 12 days in the critical unit at $7,315 a day and one day in a standard room (all of which totaled $120,116 over 15 days). There was also $20,886 for CT scans and $24,251 for lab work. Alice responded to my question about the obvious overcharges on the bill for items like the diabetes-test strips or the gauze pads much as Mrs. Lincoln, according to the famous joke, might have had she been asked what she thought of the play. “Are you kidding?” she said. “I’m dealing with a husband who had just been told he has Stage IV cancer. That’s all I can focus on … You think I looked at the items on the bills? I just looked at the total.”

If we want a real fix to the mounting costs of healthcare (which are a massive drain on the economy), we need to start there. Unfortunately, those who are making out like bandits from this system have tremendous political clout, and they have no interest in letting the easy money go away.

Throughout the piece, Brill repeatedly discusses the "chargemaster," which is basically the internal price list at every hospital, which has no basis in reality whatsoever, but which the poorest patients, and those without insurance, or with limited insurance, are often hit over the head with. Throughout the article, Brill details over and over and over again how hospital administrators and spokespeople all refused to address the chargemaster at all, constantly blowing it off as no big deal, because so few people actually pay the list price. But they completely ignore a bunch of points, including that some patients are charged upfront for these things, and no one is ever told that the prices are negotiable, even though they all are.

What you see is a system where supposedly "non-profit" and "charitable" institutions are raking in massive profits -- while still begging the public for donations, and suggesting that any effort to reign in costs would put people at risk by cutting back on necessary hospital services. At times, these statements are so obviously bullshit, that it's really sickening.

cont. http://www.techdirt.com/articles/20...snt-free-market-its-giant-economic-scam.shtml

 

[michael]

but but FREEDOM but but

 

[marsmellow]

You could say the same about a lot of "free markets" in America. One phone company has a monopoly in my area, because they own the phone lines, and they charge me like $100 a month for 3mb DSL and local phone service. It's the same with cell phones. Verizon controls all the towers around here, and the bill for a plan with 10gb cap and 4 smartphones is around $320 a month. It doesn't need to be like this. It is quite different in most European countries. But these companies control the government, and Americans are apparentely okay with that.

By the way, I went to the ER a couple of years ago without insurance. All they did, was do some tests and give me potassium, and the bill was almost $5000.

 

[Escher's Waterfall]

By the way, I went to the ER a couple of years ago without insurance. All they did, was do some tests and give me potassium, and the bill was almost $5000.

Obviously, in the future, you will have decided that $5,000 is too much to pay and instead risk dying. Since other people will do the same, the price for ER care will go down.



Free markets, herp derp!

 

[choco1ate]

health insurance is a huge scam too. it's exactly why ACA was a terrible idea, it does nothing to fix the root of the problem and of course the insurance companies endorse it

 

[Care]

^ Obama, the nurses union, ect wanted single payer but the insurance and drug companies would have none of it. We're still living with the results of the smear campaign they ran against single payer.

Obamacare may not be perfect but it fixes some of the problems.

 

[23536]

it's exactly why ACA was a terrible idea, it does nothing to fix the root of the problem

If the root of the problem is exorbitant prices, the thing to do is maximize consumers' bargaining power, thereby negotiating the lowest rates possible. We lost that opportunity when we ditched single-payer.

 

[michael]

single payer? but but freedom herpaderp!!

 

[23536]

single payer? but but freedom herpaderp!!

One is always free to purchase boutique medical services.

 

[michael]

i am on my phone and it makes it somewhat difficult to post much besides quick derpy sarcastic comments, but you know the conservative mantra is that half of the country consists of non-productive wastoids who don't deserve any tax revenue to be spent on their healthcare.

 

[Escher's Waterfall]

^ Obama, the nurses union, ect wanted single payer but the insurance and drug companies and the idiotic American public would have none of it.

FTFY.

After all, as all good Americans know, single payer is what they have in places like Canada or Europe, and everyone there dies at the age of 30, when the death panels cut off all their health care.

*sigh*

 

[L2R]

back to the prices...

By the way, I went to the ER a couple of years ago without insurance. All they did, was do some tests and give me potassium, and the bill was almost $5000.

did you get an itemised bill?

 

[Care]

FTFY.

After all, as all good Americans know, single payer is what they have in places like Canada or Europe, and everyone there dies at the age of 30, when the death panels cut off all their health care.

*sigh*

The fact is that the average american individual is susceptible to the tactics of drug and insurance companies efforts to influence their opinion.

Its a sad, sad reality of our liberal democracy, and I honestly dont know what anyone can do to do to fix it. After all, the right of association is, in its most basic form, good. We should be able to form private groups to advocate for our interests through discourse with our elected officials.

However, it seems that more often than not, this does more harm than good for the general public seeing as how our current form of government has allowed power to coalesce into the hands of the few and that their "right of association" has turned more into a right to a monopoly on what government should do.

 

[marsmellow]

did you get an itemised bill?

Not really. It's long gone, but I do remember they charged me $2400 for lab work (standard blood and urine tests, which probably cost less than 10% of that), $80 for EKG leads, and around $30 for the single dose of potassium they gave me.

 

[Care]

2400$ for blood work? Jesus Christ that is insane. My cousin has a flobotomy license and cant even find work with it. And youre telling me it takes 2400$ to have someone draw and analyze blood? Unreal.

I used to get bloodwork done on a monthly basis and it would have been about 250 a month for liver function+ triglicerides without insurance. I cant imagine why they would charge 2400$.

 

[Spadez87]

All that can be said on this topic is you americans are just hurting yourselves. Up here in Canada we can all get health care for pretty much free and thats because everyone deserves it. Period

 

[MyDoorsAreOpen]

Yes, American healthcare is indeed a free market. But Americans are so cut off from truly free markets that we don't know one when we see one. If I walk up to a merchant selling his wares out of a burlap sack on the ground in central Nairobi, he's going to charge me whatever he thinks he can get away with charging me. It's up to me to recognize a ripoff when I see one, and haggle him down. If the merchant succeeds in ripping me off, there's no one I can appeal to who'll give me any sympathy. There are no rules in a traditional marketplace (still common in the developing world), and scant police presence generally -- it's every buyer and seller for himself. I think Americans need ask ourselves whether greater market freedom is truly what we want. It would be a different story if culturally, the set response to astronomical bills was to calmly call a number and scoff and haggle. But haggling and confronting enormously inflated prices isn't something we're culturally trained to do. We trust people who bill us to quote us a fair price, and they trust we'll simply pay it without complaint. Hospitals, it looks like, are abusing this trust to recoup losses.

If I end up opening up my own practice, I want to teach my patients how to anticipate and fight back against this kind of charging. I'll emphasize the importance of staying out of the hospital when at all possible. I also have no problem prescribing cheap generic drugs, only slightly less efficacious than the cutting edge ones, to patients without prescription drug coverage. To me, advocating for patients involves ensuring they don't go broke staying alive.

I don't hang with doctors who gloat on the golf course about how they pull some trick to squeeze more money out of their patients and/or their insurers.

 

[Jabberwocky]

All that can be said on this topic is you americans are just hurting yourselves.

Jeez that sucks because the thread is about ridiculously high medical costs.

I'll share my story:

At 23 I started a painting business here in New Hampshire. I started from scratch, with nothing, but I did well and put $140,000.00 through my checking account in the first year. I was working pretty much all day every day, and at the same time was experiencing some serious back pain. After numerous trips to the ER and a doctor, I was diagnosed with spinal stenosis, degenerative disc disease, arthritis, and a disc herniation. I had no insurance, so any type of procedure would have been out of pocket, and since I had already been diagnosed insurance wouldn't cover it anyway because it's considered a preexisting condition.

If I had taken the time off to do a procedure (surgery) then I would have lost my business and wouldn't be able to pay the bills anyway. So what did I do? Yup, you guessed it, I got hooked on pain medication. At least I could still work and make money, which was useful because after 3 years I was taking so much, it started to cost me around $800 for oxycontin, $90 for oxycodone, and $150 for the doctor visit (pain center) EACH MONTH. These were valid prescriptions by the way.

After a while the addiction took control of my life, and it wasn't about the pain anymore, it was about the pills. You know the story, taking too many, selling some to pay for the script, running out early and having to pay 4 times as much on the street as from the pharmacy. I tried to go to a rehab, but there are VERY FEW in NH, and every one I called had that question everyone hates: "What type of insurance do you have"? Well when I said that I didn't, they would give me the number of "a place that might help someone in your situation". Well I called every place, and actually made a full circle back to the first place I called. No help there.

Well one day I decided I didn't feel like paying for the prescription (actually I didn't have the money) and I did what any normal citizen would do in my situation. I put a ski mask on and robbed the pharmacy. (a different one that i didn't go to regularly thanks). Well I got caught and was sent to prison for 4 years. Not cool.

After a couple years in the prison my pain got so bad that I couldn't walk without the help of a cane, I couldn't do anything, sit, stand, lie down, shave, shower, etc. I finally got the medical staff to realize I wasn't just faking it for pills, and they realized it with the help of mri's and x-rays. All at the state's expense. And finally last March I had a spinal fusion (L4+L5) while incarcerated, again all at the state's expense. Just amazing how much the surgery helped me, I'm able to do just about everything I used to be able to do.

So in the end, I did get a much needed operation, I stopped the medication, and am generally doing ok. But my life is so fucked because now I'm a felon. I just wish at the beginning, I could have somehow got the operation done and not got addicted to pills.

 

[23536]

Yes, American healthcare is indeed a free market. But Americans are so cut off from truly free markets that we don't know one when we see one. If I walk up to a merchant selling his wares out of a burlap sack on the ground in central Nairobi, he's going to charge me whatever he thinks he can get away with charging me. It's up to me to recognize a ripoff when I see one, and haggle him down. If the merchant succeeds in ripping me off, there's no one I can appeal to who'll give me any sympathy. There are no rules in a traditional marketplace (still common in the developing world), and scant police presence generally -- it's every buyer and seller for himself. I think Americans need ask ourselves whether greater market freedom is truly what we want. It would be a different story if culturally, the set response to astronomical bills was to calmly call a number and scoff and haggle. But haggling and confronting enormously inflated prices isn't something we're culturally trained to do. We trust people who bill us to quote us a fair price, and they trust we'll simply pay it without complaint. Hospitals, it looks like, are abusing this trust to recoup losses.

I can certainly relate. Everywhere I've gone outside of the US, every price is negotiable. You go into a store, browse, then begin to walk away and the merchant will chase you and offer discounts. Every transaction involves a friendly haggle. It's the same way in the ethnic neighborhoods in the US. But just try going someplace corporate, like Best Buy, and bargaining with them. It'll generally get you nowhere. The salespeople will look at you like you're insane when you look at something that's $49.99 and tell them, "I'll give you 20 dollars for it." But this is perfectly normal in every other country I've been in.

I recently haggled with a cardiologist and got myself a general consult for $133. An excellent bargain. Except a month letter I get a letter from the company that runs his clinic saying I was undercharged by $200 and could I please remit payment or be referred to a collection agency. They're not getting a fucking dime from me.

 

[MyDoorsAreOpen]

I can certainly relate. Everywhere I've gone outside of the US, every price is negotiable. You go into a store, browse, then begin to walk away and the merchant will chase you and offer discounts. Every transaction involves a friendly haggle. It's the same way in the ethnic neighborhoods in the US. But just try going someplace corporate, like Best Buy, and bargaining with them. It'll generally get you nowhere. The salespeople will look at you like you're insane when you look at something that's $49.99 and tell them, "I'll give you 20 dollars for it." But this is perfectly normal in every other country I've been in.

Japan is the only other culture I've been to where haggling is not done. I've heard this is true in Azerbaijan and Switzerland too, but haven't been to either.

I've had actually quite a bit of luck haggling in the US, as long as I seek out the right person, and am unfailingly polite to that person. It's truly an underrated and lost art here. One of the keys to successful haggling is gauging who is open to the idea of lowering their price to begin with. And that's part of the problem here: an official-looking bill on hospital letterhead implicitly says "non-negotiable" to most Americans. Most Americans who haggle are used to doing so in informal situations like flea markets, yard sales, and mom-and-pop stores, where payment is in cash and paperwork and bureaucracy are nonexistent.

I've had luck haggling at grocery stores. I once asked to speak to the produce manager with a pound of green peppers that were clearly past their prime and listed at $4/pound. I politely and obliquely implied to the produce manager that he soon wouldn't be able to sell them, and I was willing to give him $2. He barely paused for a second before agreeing, and made me a new price sticker to put on my bag. I thanked him profusely.

The same could be done in a hospital. It's just a matter of seeking out the person capable of lowering the price, and making him or her the proper pitch. But if this individual is hidden behind multiple thick layers of titles and bureaucracy, such that the uninsured unsophisticated debtor gets the runaround, then that's sneaky and predatory.

Haggling with hospitals is a skill I'll be happy to teach my uninsured and underinsured patients. I'll probably even make a pamphlet to give them which teaches them how to haggle down ridiculous hospital bills. I'd like to give them a list of links to resources online that are there to help people too poor to pay their medical bills.

But most important is preventative measures, and not landing yourself in the hospital in the first place.

As a geography nerd and someone who might do a side practice in travel medicine, I'd also be happy to provide uninsured patients resources for medical tourism abroad, at least for those medically stable enough for a long flight. A lot of times, even with transport and other incidental costs, this ends up being cheaper than a hospital stay in the US out of pocket, and not necessarily worse quality care.

I recently haggled with a cardiologist and got myself a general consult for $133. An excellent bargain. Except a month letter I get a letter from the company that runs his clinic saying I was undercharged by $200 and could I please remit payment or be referred to a collection agency. They're not getting a fucking dime from me.

I sure hope you have paper documentation of the reduced price this doctor gave you. If this price was merely a "gentleman's agreement", don't count on this cardiologist not to backslide on it.

Speaking of this, price matching is another money saving technique that can be applied to hospitals too. If you walked into a store with proof that a competitor was selling the item you wanted for less, the shopkeeper would match that price if he wanted to keep you as a customer. I highly recommend seeking out a family member or friend who had similar services rendered by the same hospital or healthcare group, not all that long ago. Saying to the right person, "Look, I see that your hospital is willing to part with Tylenol pills for fifty cents each, so that's what I'm willing to pay", works wonders.