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0 pointsbzbarsky9y ago0 comments

> A hospital cannot "publish prices" because prices vary wildly based on many factors.

Here's a question: Dentists routinely publish prices. If you ask them how much some procedure will cost, they will tell you. If there is uncertainty, they will give you a range (e.g. to account for the possibility that complications will arise during an oral surgery). What is different in the hospital situation, apart from some rather extreme measures taken to obfuscate pricing?

> And, of course, the most expensive medical care is emergency

Is it? Or is it end-of-life? Genuinely curious to see numbers here!

> I also have no idea how it will drive down costs

Prices, not costs. The current situation is that in a lot of states there are somewhere on the order of 1-3 companies offering insurance of certain types at all. For example, for Maryland, I believe there is only one company offering an ACA-compatible PPO (everyone else has HMOs or even EPOs). See https://news.ycombinator.com/item?id=13393287 for where I got that data.

Of course in a monopoly situation there is absolutely no incentive for a monopolist to cut prices. Why would they? So to the extent that prices represent excessive profits (as opposed to the actual costs of health care), allowing cross-state insurance sales should drive them down. People who believe insurance companies are price-gouging should be _very_ in favor of removing restrictions on such sales.

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4 comments · 2 top-level

fattire9y ago· 1 in thread

So should they explain the pricing schedule while you're still unconcious from the accident at the crash site or when your eyes are fluttering in the ambulance? Then at the E.R., they can talk you through your various choices in surgery, a menu of blood products, and let you peruse through a catalog of doctor histories. If you decide this isn't the place you'd like to have the steering wheel removed from your rectum, you can always go online and browse a few local options from the dozens of hospitals in your area until you find a price point and payment plan that's right for you and your intestinal needs.

Similarly, when your diagnosis comes in and surgery is required, you can take time off from your three jobs to carefully research the pros and cons of various procedures to determine which is most financially appropriate for you. I mean, it's not exactly heart surgery we're talking about here. Well, technically and literally it is, but it shouldn't be too hard for anyone to understand the pros and cons of different surgical equipment and procedures to evaluate the risks and cross-compare with the clear apples-to-apples data sets to arrive at a medically and economically responsible decision while blood is pouring out of your extremities and your body feels like it's on fire. Take the time and shop carefully. You are a model fiscal actor and will make the right call.

Free market forces will make this system work and work well. The invisible hand has been after all such a huge success in setting health care prices and has proven to be the model every modern industrial country has taken because it's so intuitive and has great proven results.

bzbarskyOP9y ago

> So should they explain the pricing schedule while you're still unconcious

A lot of hospital care is non-emergency, but they don't explain pricing schedules for _that_ either, now do they? I think everyone understands the impossibility of comparison-shopping on emergency care.

> I mean, it's not exactly heart surgery we're talking about here

No, it's hip replacement surgery. And people _already_ do comparison shopping on things like that as much as they can, including comparing to and shopping in other countries. See medical tourism.

More to the point, people do comparison shop just like that for oral surgery. Yes, they may not have all the data they might like. Yes, they don't always make the right decisions. But by and large, dentistry works OK.

Again, the "stuff that must be done RIGHT NOW" thing is a strawman: there's plenty of hospital care that is not that sort.

> The invisible hand has been after all such a huge success in setting health care prices

The invisible hand has absolutely nothing to do with most health care prices today (at least in the US). There are some exceptions: plastic surgery, laser eye surgery, dentistry, some forms of occupational therapy, and maybe family medicine.

> and has proven to be the model every modern industrial country has taken because it's so intuitive

Various industrial countries have price transparency for their medical care. If want to know how much my hip replacement will cost in the UK not via the NHS, I go to http://www.privatehealth.co.uk/conditions-and-treatments/hip... and I get all the data I could want, including prices and the hospitals charging those prices. Importantly, those hospitals publish their prices. If I did go via the NHS, I suspect there is no real difference in the pricing, but would welcome data on how it really works.

Anyway, knowing how much medical procedures will cost you is not an uncommon situation. Except in the US, of course, where hospitals will never tell you ahead of time how much a procedure will cost.

Note that price transparency is necessary, but not sufficient, for some sort of sanity in the discretionary medical care market.

stinkytaco9y ago· 1 in thread

Insurance companies don't really make that much money. Neither do hospitals. The median profit margins are between 3-4%. The problem isn't an insurance monopoly.

Pharmaceutical and medical equipment companies are raking in double digit profits. And they can sell wherever they want.

bzbarskyOP9y ago

There's a lot of argument as to how much money insurance companies make, and whether the right thing to measure is profit margin, or return on capital, or something else. For example, an insurance company that gets $100 in income, then spends $90 on medical care and $7 on lobbying to keep its monopoly has a profit margin of $3, which is not very much. But it's not obvious to me that a company that spent $90 on care, nothing on lobbying, and got $2.50 in profit by charging $92.50 would not be viable, absent the lobbying.

And you're right: by no means are insurance companies the only ones in this sector that engage in attempts at regulatory capture and creation of monopoly profits.

Though I should note that pharma companies have a lower return on capital than insurance companies last I checked, because pharma is so capital-intensive in practice. I haven't really looked into medical device manufacturers.

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