# Can we talk Medicare pricing? **URL:** \ **Category:** Factual Questions\ **Created:** [May 9, 2019, 5:16pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734 "2019-05-09T17:16:14Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [May 11, 2019, 10:45am UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/21 "2019-05-11T10:45:47Z")
> [@Slash1972](#): > > But isn’t there an association of health insurance companies? Why don’t they ALL vote to only pay the Medicare rate together? In addition to violating monopoly and price fixing laws, it misunderstands the nature of quantity discounts. If I sell widgets, I can offer my best customers a quantity discount, making less marginal profit on each product because I am guaranteed a large amount of business from the good customer and make it up from the one off customers. This breaks down if all of the customers band together and demand the same quantity discount because they are all now part of one large group. No business can have every single customer getting a reduced rate. It would be like an argument for lowering taxes by pointing to a group of poor people and saying that since they pay no income tax, there is no reason why rich people should pay any income tax. I mean, it works for poor people, why not the rich? ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [May 11, 2019, 12:50pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/22 "2019-05-11T12:50:39Z")
> [@UltraVires](#): > > In addition to violating monopoly and price fixing laws, it misunderstands the nature of quantity discounts. How is it price fixing? The insurance companies aren’t the ones setting the price, the health providers are. The insurance companies just get together and say “None of us are paying more than the Medicare rate” I’m pretty sure the government says “We are only paying this rate for these services”. Why don’t the insurance companies do the same? ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [May 11, 2019, 2:10pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/23 "2019-05-11T14:10:45Z")
Isn’t this what happens in the commercial world? There are several organisations in the UK that sign up independent grocery stores to a group contract deal. This can give them almost the same purchasing power as the big supermarkets while remaining [almost] independent. ---
**Author:** ![jasg](https://avatars.discourse-cdn.com/v4/letter/j/f0a364/32.png) [@jasg](https://boards.straightdope.com/u/jasg)\ **Post date:** [May 11, 2019, 2:56pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/24 "2019-05-11T14:56:28Z")
nm ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [May 12, 2019, 7:13am UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/25 "2019-05-12T07:13:32Z")
> [@Slash1972](#): > > How is it price fixing? The insurance companies aren’t the ones setting the price, the health providers are. > > The insurance companies just get together and say “None of us are paying more than the Medicare rate” I’m pretty sure the government says “We are only paying this rate for these services”. Why don’t the insurance companies do the same? Price fixing, collusion, and monopoly don’t only apply to the end supplier in the chain; they apply to anyone who acts in concert with another who will impose an anticompetitive force in the market which acts to set an end price. The insurance companies are not the consumers. That is an important distinction. ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [May 12, 2019, 12:49pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/26 "2019-05-12T12:49:12Z")
The BBC has an article on price fixing by drug companies. I have quoted it in full, because I tink that the BBC is behind a paywall for some. MODERATOR NOTE: Removed excessive quote. Colibri General Questions Moderator ---
**Author:** ![bardos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bardos/32/1069_2.png) [@bardos](https://boards.straightdope.com/u/bardos)\ **Post date:** [May 12, 2019, 2:34pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/27 "2019-05-12T14:34:48Z")
> [@bob\_2](#): > > The BBC has an article on price fixing by drug companies. I have quoted it in full, because I tink that the BBC is behind a paywall for some. > Within that piece was a link to this: One of the saddest posts ever ---
**Author:** ![Arcite](https://avatars.discourse-cdn.com/v4/letter/a/67e7ee/32.png) [@Arcite](https://boards.straightdope.com/u/Arcite)\ **Post date:** [May 12, 2019, 3:08pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/28 "2019-05-12T15:08:06Z")
> [@Riemann](#): > > That first “amount charged” is a fictitious massively inflated number that is typically 2X - 10X the fair price. If the provider has stated that they accept Medicare, or if the provider is in-network with your private insurer, it is meaningless. The _actual_ charges are the Medicare rates or the rates that your insurer has pre-negotiated with the provider for the specified service. > > That fictitious wildly inflated price comes into play only if you have no insurance, of you inadvertently (or because of emergency) go to an out-of-network provider. Then it’s the rip-off price that the provider will claim you must pay them. What you are actually liable to pay under these circumstances (when you have been treated without any pre-agreed price) is a complex question, but at the very least you are faced with a long and extremely stressful process trying to negotiate the bill down to something sensible, being threatened with collections, even bankruptcy. The massively inflated charge isn’t primarily an effort to soak the uninsured, it’s a crude negotiating tactic with insurers: [http://truecostofhealthcare.org/outpatient\_charges/](http://truecostofhealthcare.org/outpatient_charges/) ---
**Author:** ![Mdcastle](https://avatars.discourse-cdn.com/v4/letter/m/958977/32.png) [@Mdcastle](https://boards.straightdope.com/u/Mdcastle)\ **Post date:** [May 12, 2019, 9:52pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/29 "2019-05-12T21:52:50Z")
It works the same in theory with private insurers, except if Medicare approved $91.42, it probably costs the hospital in the neighborhood of $100-$125 to provide, and the allowed amount from private insurance is $150 or so. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [May 12, 2019, 11:37pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/30 "2019-05-12T23:37:19Z")
> [@Mdcastle](#): > > It works the same in theory with private insurers, except if Medicare approved $91.42, it probably costs the hospital in the neighborhood of $100-$125 to provide, and the allowed amount from private insurance is $150 or so. Given the wide range of charges across hospitals, it may cost one $100 and another, more efficient one, $80. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [May 13, 2019, 12:30pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/31 "2019-05-13T12:30:48Z")
> [@nelliebly](#): > > The _Harvard Business Review_ article was great. However, if you’d read the whole thing, you’d know that it says **the loss of money is due to hospitals’ inefficiency, poor planning, and wasteful practices** : > > Medicare forces hospitals and doctors to function in the efficient way they should be doing anyway, and it penalizes them for sloppiness in patient treatment. That’s better for all patients, whether they’re covered by Medicare or private insurance. This is true if the definition of “efficient” means “losing money overall.” Regards, Shodan ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [May 13, 2019, 6:11pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/32 "2019-05-13T18:11:12Z")
> [@Shodan](#): > > This is true if the definition of “efficient” means “losing money overall.” > > Regards, > Shodan So, you’ve never worked in a place that could be more efficient? There are tons of reasons hospitals are not efficient. The managers probably want shiny new toys to advertise and to make sure they don’t lose patients. They want shiny new buildings. The power of many managers is a function of the size of their organizations, so they tend to want to expand even if it is not necessary. These things are not exclusive to medicine. Pricing pressure forces companies to eliminate waste. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [May 14, 2019, 1:43pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/33 "2019-05-14T13:43:03Z")
Yes, I’ve worked in places that could be more efficient. The ones that lost money, I didn’t work at for long. > [@](#): > > Pricing pressure forces companies to eliminate waste. Okay, let’s cut property taxes so the school systems become more efficient, and wages so people work harder. Regards, Shodan ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [May 14, 2019, 5:24pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/34 "2019-05-14T17:24:30Z")
> [@Shodan](#): > > Yes, I’ve worked in places that could be more efficient. The ones that lost money, I didn’t work at for long.Okay, let’s cut property taxes so the school systems become more efficient, and wages so people work harder. > > Regards, > Shodan Already done in lots of places. I don’t see lots of waste when I volunteer in our school system. I do see parents being asked to send supplies that the school paid for when I was a kid. And do you really think people work harder when their pay gets cut? Ask the WalMart employees hiding out in the stock rooms about that. Ask the high tech employees who started coming in later and leaving earlier when the company decided to forgo raises about that. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [May 14, 2019, 7:33pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/35 "2019-05-14T19:33:38Z")
> [@Voyager](#): > > And do you really think people work harder when their pay gets cut? Ask the WalMart employees hiding out in the stock rooms about that. Ask the high tech employees who started coming in later and leaving earlier when the company decided to forgo raises about that. My point is that is what is being expected under Medicare for All. Doctors lose money treating Medicare patients, and make up the difference with patients with private insurance. Doctors being reimbursed only under Medicare pricing don’t have any other patients to make up the difference. So even if they apply these efficiencies of Medicare, they will still lose money. Because they lose money treating Medicare patients already. So, either a pay cut, or some other un-named efficiencies that they aren’t already applying to their patients. Keeping in mind that the projections for Medicare for All already assume significant reductions in administration costs, and even so, doctors will still lose money under the plan as proposed. Suppose a given procedure is reimbursed at $91. It costs $100 to deliver - $50 to the doctor, $20 to the nurse, and $31 for supplies. Where does the $9 come from? Unless you can spend $9 less on supplies (and heating and air conditioning and parking and the lease on the building and electricity and magazines in the waiting room and managing the medical records and janitorial services and certification and IT services and etc. etc.) somebody is going to be making less money. And as I think we agree, paying less is not the way to get more out of your doctors and nurses and X-ray techs and pharmacists and supply-chain managers and schedulers and the guy who cleans up the fluids. Regards, Shodan ---
**Author:** ![Colibri](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/colibri/32/1841_2.png) [@Colibri](https://boards.straightdope.com/u/Colibri)\ **Post date:** [May 14, 2019, 8:03pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/36 "2019-05-14T20:03:42Z")
> [@bob\_2](#): > > The BBC has an article on price fixing by drug companies. I have quoted it in full, because I tink that the BBC is behind a paywall for some. > MODERATOR NOTE: Removed excessive quote. > > Colibri > General Questions Moderator **Moderator Note** I have removed very extensive quoted material form another source. Do not repost extensive material, ESPECIALLY IF IT IS BEHIND A PAYWALL. Colibri General Questions Moderator ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [May 14, 2019, 11:02pm UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/37 "2019-05-14T23:02:16Z")
> [@Shodan](#): > > My point is that is what is being expected under Medicare for All. > > Doctors lose money treating Medicare patients, and make up the difference with patients with private insurance. Doctors being reimbursed only under Medicare pricing don’t have any other patients to make up the difference. So even if they apply these efficiencies of Medicare, they will still lose money. Because they lose money treating Medicare patients already. So, either a pay cut, or some other un-named efficiencies that they aren’t already applying to their patients. Keeping in mind that the projections for Medicare for All already assume significant reductions in administration costs, and even so, doctors will still lose money under the plan as proposed. > > Suppose a given procedure is reimbursed at $91. It costs $100 to deliver - $50 to the doctor, $20 to the nurse, and $31 for supplies. Where does the $9 come from? Unless you can spend $9 less on supplies (and heating and air conditioning and parking and the lease on the building and electricity and magazines in the waiting room and managing the medical records and janitorial services and certification and IT services and etc. etc.) somebody is going to be making less money. > > And as I think we agree, paying less is not the way to get more out of your doctors and nurses and X-ray techs and pharmacists and supply-chain managers and schedulers and the guy who cleans up the fluids. > > Regards, > Shodan You must never have gone through the process of becoming more efficient. The large difference in costs between medical facilities in the same city that has been found in studies shows that either not all facilities are on the razor’s edge or that some are very inefficient at supplying the services that others do for less. My center at Bell Labs became a lot more cost effective without lowering anyone’s salary. People did get laid off who weren’t essential. If you had said that some fat would go I’d agree with you. It is possible that surgeons would be bumped to the top 2% from the top 1%, which would be a tragedy of course, but more likely newer doctors would have to expect a bit less. My former step-brother - a psychiatrist who complained about Medicare reimbursement - did his continuing education at ski resorts. You are invited to not cry for him. A practice with a single doctor might be mostly salary based, but the big costs come from hospitals and big clinics. I’m getting an MRI tomorrow and I’m driving to the nifty new MRI machine, and not using the older (and cheaper) MRI machine in my local clinic. I mentioned places with 61% bed occupation buying up new capacity. That’s where the saving is going to come from, not cutting doctors salaries. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [May 15, 2019, 12:09am UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/38 "2019-05-15T00:09:32Z")
> [@Shodan](#): > > Suppose a given procedure is reimbursed at $91. It costs $100 to deliver - $50 to the doctor, $20 to the nurse, and $31 for supplies. Where does the $9 come from? Unless you can spend $9 less on supplies (and heating and air conditioning and parking and the lease on the building and electricity and magazines in the waiting room and managing the medical records and janitorial services and certification and IT services and etc. etc.) somebody is going to be making less money. But “making less money” does not mean “losing money”. In your example, the doctor only gets $40 instead. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [May 15, 2019, 12:11am UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/39 "2019-05-15T00:11:11Z")
> [@UltraVires](#): > > Price fixing, collusion, and monopoly don’t only apply to the end supplier in the chain; they apply to anyone who acts in concert with another who will impose an anticompetitive force in the market which acts to set an end price. > > The insurance companies are not the consumers. That is an important distinction. I actually want to understand this. So, when Walmart says “We are not paying more than $2 for that widget” it’s okay. But if they got together with Target and agreed that both of them would only pay $2 for that widget, that’s illegal? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [May 15, 2019, 5:38am UTC](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734/40 "2019-05-15T05:38:11Z")
> [@Slash1972](#): > > But “making less money” does not mean “losing money”. In your example, the doctor only gets $40 instead. Which could be a reduction in money if the doctor sees the same number of patients. If the clinic becomes more efficient, and the doctor has less down time, the doctor could see more patients and thus make as much or more money with lower individual fees. The place I go to has all its records on line, so the specialist I saw for the first time had all my information easily available without having to sort through any paper. [Previous page](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734.md?page=1) [Next page](https://boards.straightdope.com/t/can-we-talk-medicare-pricing/833734.md?page=3)