My wife is the manager of budget and reimbursement at a hospital, and from many conversations with her, I can imagine that this article is accurate. However, if I were writing this, I would have given greater emphasis to the effect that Medicare has on these problems.<p>The article does mention that Medicare typically pays fees that are <i>below actual cost</i> for the procedures, and that hospitals must therefore increase charges to other customers (the article says they must do this to make profit, but actually they must do this just to break even and stay in business).<p>But the problem goes even farther than that. Because Medicare is essentially a monopsony and gets to call the shots as far as charges are concerned, it actually matters far less what the actual costs are. As a result, few hospitals today have modern cost accounting processes, and so they only have wild guesses as to what a given procedure costs. Obviously, then, their charge list is going to be made largely from guesswork, and so it's very much expected that two different hospitals will, at the micro per-item level at least, have very different charges.<p>Medical care is the most highly regulated industry in the economy, and so nothing you see happening is going to bear very much resemblance to reality. And in the coming years this isn't going to get any better. What you are likely to see, though, is increased politicization of these charges, as the political process takes even greater control of the industry.
Bottom line is that if you're middle class and don't have health insurance, a serious accident could bankrupt you. The system was designed with the idea that you don't exist, and would never actually pay the rack rates that hospitals charge.<p>Planet Money had some good coverage of the joke that is medical billing a couple of years ago:<p><a href="http://www.npr.org/blogs/money/2010/07/06/128338526/ex-ambulance-driver-tries-squeezing-cash-from-health-insurance-companies" rel="nofollow">http://www.npr.org/blogs/money/2010/07/06/128338526/ex-ambul...</a><p><a href="http://www.npr.org/blogs/money/2010/07/01/128243987/medical-billing-is-a-hassle" rel="nofollow">http://www.npr.org/blogs/money/2010/07/01/128243987/medical-...</a><p><a href="http://www.npr.org/blogs/money/2009/11/podcast_paying_doctors.html" rel="nofollow">http://www.npr.org/blogs/money/2009/11/podcast_paying_doctor...</a><p><a href="http://www.npr.org/blogs/money/2009/08/the_wild_wild_west_of_health_c.html" rel="nofollow">http://www.npr.org/blogs/money/2009/08/the_wild_wild_west_of...</a>
I have spent a week in a hospital twice, once in the late 90s, once in the lates 00s. Different hospitals, different health plans.<p>Here's the thing: in the 90s experience, I received a complete itemized bill, organized by time and day, for everything that was done to me. I didn't have to pay, my insurance did, but I received copies of the bill. In the 00s, I received virtually nothing. Again, my insurance paid, and I was just given the very briefest of letters explaining that I was covered, and how to handle short term disability, and the like.<p>I found receiving the complete itemized bill truly enlightening. What I learned was:<p><pre><code> + exactly what was done to me in the hospital and when
(I was not in a position to understand when I was admitted)
+ exactly what was being charged
+ exactly how expensive everything was
+ some charges did seem erroneous, perhaps for treatments that did not take place
</code></pre>
The sum of the bill was staggering. But it was truly a good thing to see the bill. It helped me understand exactly what had happened. It served as a reference for googling my illness and treatment. It helped me understand the costs.<p>It helped me appreciate the efforts by others to get me that coverage. And it let me return some of that by giving me a way to check for mistakes in the billing.<p>I hope everyone has the coverage they need when they need it.<p>I do think that part of every medical service should be a completely itemized bill. I think it's a useful reference for the patient, I think it's a simple way to inform everyone on the complexities and costs of healthcare, and it's a simple way to encourage informed use, and correct mistakes.<p>If everyone had these bills, there would be websites developed to explain, compare, manage them, and it would help eliminate many of the games that hospitals seem forced to play.<p>So it would also encourage better accounting and put better incentives in place to have that better accounting.
My wife recently had some tests done. Hospital's receptionist forgot to add insurance information to wife's profile, so accordingly to hospital's records she was uninsured.<p>Month later we receive bill for ~$1,400. After quick googling we find that if she would go to any local hospital and pay up front with cash, it would cost her maximum ~$400. Obviously, she went back to hospital to find out what's wrong with them (hospital owned by insurance company, so it is very wrong). There they found they did not record her insurance info, excused and said they will send corrected bill.<p>Month later we received her new, corrected bill. $74.68<p>You guys in USA have something very-very-very wrong with health care industry =)
Something must be tightening up somewhere, though. Just before my daughter went through an outpatient surgical procedure, the hospital (which was acting as the surgical facility <i>only</i> here) called my wife. They noticed we had a high-deductible plan. Would we be willing to prepay part of the O/R costs now?<p>I talked to the hospital at length to try and understand this change in procedure. Apparently the number of patients with high-deductible plans is growing, and people don't realize what that means. When you visit the E/R and your plan has a $5000 deductible, that's what you're gonna pay. People freak out. People refuse to pay. The hospital starts calling to make sure people understand their obligations. It seems the people they use to rely on for cashflow are disappearing.
This article only scratches the surface of how messed up our health care system is. I'd be shocked if either hospital system was able to figure out how much money the writer's son actually cost the hospital... the organizations I've worked for take at least a year to calculate cost (if they ever successfully do it), making (as CWuestefeld said) many of their other calculations come largely from guesses. Sometimes that guess is as simple as "just multiply what Medicare pays by 3, and then charge the insurance company for that amount."<p>To compound this problem further, I've worked on federal grant applications that ask what the "cost of care" is. Since the hospital has no means of calculating this, I've been told to just sum the charges for each patient. As the writer experienced, the charges can often be a full order of magnitude greater than the cost. You can imagine how yucky this gets.<p>Someday I would like to walk in to a Best Buy, pick up a Playstation 3, and then inform the cashier that I will only be paying $20 for it. I wonder how well that would go over...
The real scam perpetrated by hospitals and doctor's offices is rebilling.<p>It works like this:<p>1) They send a bill with no information about the services performed.<p>2a) You waste your time tracking down what it was and then pay it.<p>OR<p>2b) You pay the bill without wasting your time to verify.<p>3) They wait somewhere between a month and 6 months.<p>4) After receiving payment, they bill you again for the same services.<p>5a) You waste your time tracking down the services and the fact that you already paid. Then you waste more time calling and forcing them to stop billing you. You get an "Oops, sorry! I can't imagine how that happened."<p>OR<p>5b) You pay the bill without wasting your time to verify.<p>Repeat steps 3 through 5 until they've sucked as much time and money out of you as possible.
Every time I read about the US health-care system it amazes me more (in a negative way).<p>The point that I find worrying the most is, that it is impossible to figure out the costs before you get treatment. Also I am surprised, that there are no prenegotiated rates for treatment-procedures. The way it works in Germany is, that there is a catalog which contains all the standard procedures and a price that can be charged for the treatment/procedure, this system dates back to 1924. While "upselling" (doctors performing tests that are not necessary) is pretty common, prices are quite reasonable. Actually there are two catalogs, one for private insured patients and people without insurance (its almost impossible to be uninsured in Germany) and another one for public insured, the later one is based on a points system rather than prices and is supposed to be an administrative nightmare for doctors.
Can someone please explain to me why it would be a bad idea to make it illegal for hospitals to negotiate rates?<p>It seems like the majority of the problem here is that we let the insurance companies bargain with hospitals, so everyone pays a different rate. Just make everyone pay the same rate and let insurance worry about how to drive the costs down across the board by encouraging people to get/stay healthier and reducing the burden on the hospital.
I'm in the US. I just recently switched to a high-deductible plan last year with an HSA account. My deductible is $5000 and my monthly premium is $98 (for an individual plan -- self employed here). I have and plan to always contribute the maximum amount to my HSA each year. My plan covers 2 checkup visits a year, and everything else I pay out of pocket up until I hit my deductible.<p>I really think this is the way insurance should be. I have a strong incentive not to needlessly get every possible test done or seek medical care that I don't need. I check my bills very carefully. I already located urgent care clinics that I can go to when I don't really need to visit the ER. I won't go to the doctor for a runny nose. It makes consumers care about costs.<p>I'm far from an expert on US healthcare and I'd love to get other peoples' more informed views on this. Could we put everyone on high deductible plans? If people can't afford their premiums or deductibles then perhaps there could be government assistance to pay those things based on their income. What would the pitfalls be in such a system?
I could never understand why there's such a huge financial difference in the way emergencies that threaten human lives are dealt with in the US. You never expect a huge bill from the fire department or the police department should you require their urgent help. How is ER different?
Tangent: I was curious about the widget the article uses to present the bill as it's really well done. It's provided by DocumentCloud, which I'd never heard of before:<p><i>DocumentCloud is a catalog of primary source documents and a tool for annotating, organizing and publishing them on the web. Documents are contributed by journalists, researchers and archivists.</i><p><a href="http://documentcloud.org/" rel="nofollow">http://documentcloud.org/</a>
Further obfuscation on the part of the medical industry to hide the cost of covering the uninsured. Hospitals need reimbursement, insurance only wants to pay for your procedures, not the cost of others receiving treatment without insurance.<p>Taxed as single payer or taxed as hidden costs, anyone with insurance is being taxed for those without insurance. At least with single payer, you know those receiving treatment are now kicking something in as well.
FYI: there is a recent big thread on reddit about how a man was charged $105k for one night hospital stay: <a href="http://www.reddit.com/r/WTF/comments/ngngy/merry_fucking_christmas_what_to_expect_for_1/" rel="nofollow">http://www.reddit.com/r/WTF/comments/ngngy/merry_fucking_chr...</a>
The more I see this prices, the more I think that: 1) we have too less doctors due to stupid closed numbers policies in schools; 2) we have a patent system that allows companies to legally rip us of for medicines and machinery. With an aging population, this is just not sustainable.
Interesting that California requires posted fees. I'd be interested to see a study of the effects.<p>Back when I was uninsured I was very frustrated that no one anywhere ever knew how much anything cost, and frequently gave false information.
tldr; (exactly from the article): "The driving force behind all this, according to Aetna, is the way hospitals and the government do business. The rates that insurance companies pay are negotiated based on what they believe a hospital’s true costs are. But then those rates are jacked up an average of 30% to 50% to make up for money that hospitals lose in treating patients who don’t have private insurance - which is the majority of them. So to make up the difference, they overcharge patients who are insured. This practice is called cost-shifting. In a typical hospital, upward of half the patients are covered by Medicare and Medicaid - neither of which pays the full cost of treatment. Another 10% to 15% of patients are uninsured; maybe they can afford to pay, but more likely they’re broke and can’t cover their bills either. Any profit the hospital makes must come out of the remaining 40% - patients with private insurance."<p>----<p>Considering that the per capita medical costs in the US are about twice that of the other OECD countries, clearly there's more than just cost-shifting going on.<p>Whatever your views, as a matter of law (well before "ObamaCare") we are still going to subsidize medical care for the old, poor, children, and the irresponsible through our taxes and direct payments.
How much of the silliness in U.S. health care is caused directly by the tax code? For instance the largest health insurance company in my area also owns several hospitals. The hospital charges the insurance company for a procedure. The insurance company pays only half that amount. The rest I believe is written off by the hospital as a loss which lowers their taxes. But both the hospital and the insurance company are the same company.
This contains a detailed explanation of why costs are so high:<p><a href="http://www.theatlantic.com/magazine/archive/2009/09/how-american-health-care-killed-my-father/7617/" rel="nofollow">http://www.theatlantic.com/magazine/archive/2009/09/how-amer...</a>
The print-friendly version, with no ads and all on one page:
<a href="http://www.nydailynews.com/opinion/anatomy-a-ripoff-article-1.1002077?print" rel="nofollow">http://www.nydailynews.com/opinion/anatomy-a-ripoff-article-...</a>
For anyone who smelled a startup opportunity increasing pricing transparency in healthcare, check out Castlight Health. They were founded in 2008 to attack this exact problem and are making a killing targeting large employers.
I find the name of the hospital highly ironic. After all, didn't the good Samaritan pay for the treatment and "hospitalization" of the victim?<p>One would expect a stay at the Good Samaritan Hospital to be free.
As far as I can tell from the facts given in the EU you would have paid about the same amount the author had to pay out of his own pocket (~ 700 USD). If you had no health insurance at all.