Thursday, January 31, 2013

Healthcare In America Is Not A Marketplace

$100? Yes if your insurance is buying it for you.
One of the ideas that gets batted around when politicians discuss ways to reduce healthcare costs is to have patients shop around for the cheapest services they can find. After all when people buy a car, they usually visit several dealerships and try to negotiate the best deal possible. Pure American capitalism. Shouldn't medical care work the same way? Unfortunately it doesn't. Imagine if you went to a McDonald's and ordered a Quarter Pounder with Cheese but there are no prices listed on the menu. One McDonald's might say the burger costs $2.99. Go down the street to another McDonald's and they charge $29.99. Go yet to another McDonald's and the Royale with cheese costs $99.99. And you wouldn't know it unless you went to every single McDonald's to compare prices for yourself. That's more reflective of how health costs work here.

Previously I wrote about the ridiculous charges hospitals bill to uninsured patients in California for healthcare. These prices include outrageous sums like $11,000 for a colonoscopy or $110 for a simple plastic tubing to hang blood. But don't think that only the uninsured get shafted in this system. The insured patients also get a royal screwing. They just don't know it because the insurance company pays for it. But in the end we all pay through higher insurance premiums.

The L.A. Times reported on a teacher by the name of Lynne Nielson who went to Advanced Surgical Partners, an ambulatory surgery center, for a simple knee arthroscopy. The procedure lasted about twenty minutes. A few weeks later, the insurance company mailed Ms. Nielson the check for the procedure which she was supposed to forward to the center. The ASC had billed her insurance $87,500. This for a procedure that usually cost $3,000. The charge did not even include the surgeon's or anesthesiologist's fees. She was so astonished and angered by the amount that she refused the pay it and referred the matter to the attorney general, for possible fraud.

Part of the reason the bill was so high was because the ASC did not belong to her insurance company's network. Her teacher's union had negotiated a deal with Blue Shield, her insurance carrier, that it would pay all costs, even for out of network service providers. When confronted by this angry patient and possible legal repercussions, Advanced Surgical's lawyer, Henry Fenton, agreed that there was a mistake in the bill. They and Blue Shield negotiated the bill down to $15,000. That's still far above the $3,000 that a knee arthroscopy normally costs but now everybody's happy. Except of course you the insurance holder who will just see another jump in your premiums next year.

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