By Jan Greene
Hospitals are like the fanciest, most exclusive restaurants — the ones where the menus carry no prices. If you have to ask what it costs, the punchline goes, you can’t afford it.
The same goes for health care in America these days, sadly enough. If you’re on the hook to pay a big chunk of that MRI or knee surgery that’s not fully covered by your insurance, you’ll be looking for a price tag ahead of time to know whether you can afford it. In too many cases, the hospital or imaging center or surgical facility can’t tell you how much it costs.
In an interview on a blog called WorldFocus, Princeton economist Uwe Reinhardt explains in his usual clear and direct style how this came to pass. Read the entire interview to find out more about how the U.S. and Canadian health care systems compare.
Uwe Reinhardt: Well, I once did a dumb thing: I asked an insurance executive “What do you pay in New Jersey for a colonoscopy?”
And he just laughed at me and said, “What a silly question. There is no price for a colonoscopy. We have a different price for every hospital. And for the same hospital, we might have six prices depending on the insurance product, is it an HMO, etc.”
So I said, “This is mad. How many could there be?”
He says, “There could be 30, 40 for us, but then with Aetna, they could have another 30, and everyone has a different contract, so a hospital might receive 60, 80,100 different prices for a colonoscopy, depending on which insurance company and what contract it is. So when you say ‘What are the private market prices?’ there is no price.”
And I said, “Well how, when you have consumer-directed health care, where people are supposed to shop around, what are you going to tell them?”
And he said, “We can’t, really. What would you tell them?”
There is no real price, and every price has been negotiated and haggled over. So imagine what it costs compared to a system where a government negotiates with a physician association. Here’s the fee schedule, and that’s it, and everyone uses the same fee schedule. You can put that into a computer. You have a little card like an American Express card. The price list is already there. You swipe it through, the doctor keys what he or she did and here’s your bill. Well here you have to look at what contract was it and the coding turns out to be wrong, and the bill isn’t clean.