# Why exactly can't hospital price limits work? **URL:** \ **Category:** Great Debates\ **Created:** [September 4, 2014, 4:04pm UTC](https://boards.straightdope.com/t/why-exactly-cant-hospital-price-limits-work/697489 "2014-09-04T16:04:41Z")\ **Posts on this page:** 10\ **Page:** 2
**Author:** ![leahcim](https://avatars.discourse-cdn.com/v4/letter/l/b4bc9f/32.png) [@leahcim](https://boards.straightdope.com/u/leahcim)\ **Post date:** [September 5, 2014, 2:19pm UTC](https://boards.straightdope.com/t/why-exactly-cant-hospital-price-limits-work/697489/21 "2014-09-05T14:19:13Z")
> [@clairobscur](#): > > People sue less often and are awarded lower damages when they do. I’m not aware of the existence of “ambulance chaser” over here, for instance. It’s something of a viscous cycle in the states. Part of the reason medical malpractice awards are so high is that healthcare is so expensive. If you’ve been injured, you need a lot of money to cover future medical costs, which may not be insurable, and since you don’t know what those costs are going to be so you aim high in your claims. In public health care systems, you know that your health problems as a result of the accident are already taken care of, so there is no need to award huge damages just to cover future medical costs. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [September 5, 2014, 2:57pm UTC](https://boards.straightdope.com/t/why-exactly-cant-hospital-price-limits-work/697489/22 "2014-09-05T14:57:57Z")
I’m skeptical of all these claims that the legal landscape is different in other countries primarily as a result of their socialized health care. American juries tend to award big awards for all sorts of torts and not necessarily those involving medical care. > [@casdave](#): > > If you put price caps in place, you have to define the standards and procedures pretty exactly - but medical practice is simply not like that, every task or procedure will have a number of different pathways. > > Calculations can be made to set a cost that average things out, after all this is exactly how insurance works. > > Your problem is this, each and every medical practice will ensure that every procedure falls into exceptional work categories - they will simply game the system - this is always what happens when you set controls on complex systems and put rigid targets in place, and the profit motive is an extremely powerful one. I don’t understand what you’re saying here. Every reimbursement scheme - private insurance, Medicare/Medicaid or anything else - already works pretty much with the standard “task and procedure” approach. A price cap would just mean making a law that applies to all services versus negotiated rates, but it would not involve any fundamental change such as you suggest. ---
**Author:** ![Bone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bone/32/407_2.png) [@Bone](https://boards.straightdope.com/u/Bone)\ **Post date:** [September 5, 2014, 3:32pm UTC](https://boards.straightdope.com/t/why-exactly-cant-hospital-price-limits-work/697489/23 "2014-09-05T15:32:18Z")
> [@Nava](#): > > A childhood friend of mine died in a clear case of malpractice, but one which was also clearly a honest mistake on the caretakers’ part (bad protocols, bad communication, bad training). The hospital updated its protocols (medical, communication and training) and is paying all out-of-pocket costs of the education of the deceased’s child up to and including one graduate degree (books, uniforms, tuition, dorm/apartment; if it’s something the family would normally have paid for, the hospital pays it). The only lawyer that got involved is the one called in to make sure that the agreement the family and the hospital had reached was legal and put it down properly. The agreement was in place less than six months after the death; a suit could have dragged for years. Do you think this is a just outcome? Simply paying for school/housing/food, etc? That seems that the hospital got off easy, based on the fact pattern. ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [September 5, 2014, 4:43pm UTC](https://boards.straightdope.com/t/why-exactly-cant-hospital-price-limits-work/697489/24 "2014-09-05T16:43:48Z")
> [@Northern\_Piper](#): > > Not necessarily; that assumes that health care is always a form of insurance. I think my point is narrower than that. I’m just saying that in Canada, the province pays for part of the damages arising from a personal injury tort that in the US would be borne by the tortfeasor (or his insurer) – the victim’s medical costs. As such, it’s insuring the tortfeasor against part of the cost of his negligence. ---
**Author:** ![GrumpyBunny](https://avatars.discourse-cdn.com/v4/letter/g/bc8723/32.png) [@GrumpyBunny](https://boards.straightdope.com/u/GrumpyBunny)\ **Post date:** [September 14, 2014, 11:55pm UTC](https://boards.straightdope.com/t/why-exactly-cant-hospital-price-limits-work/697489/25 "2014-09-14T23:55:37Z")
> [@Velocity](#): > > The usual economic argument is, “Price controls/ceilings are bad because they lead to shortages.” > > But: > > 1. I can’t believe that a hospital can’t make ends meet unless they charge $20,000 for an appendectomy, $5,000 for stitches. Unless they have horribly, ludicrously high operating costs. > > 2. Putting a price control on, say, gasoline could lead to a shortage because people would buy more more. But nobody goes to get an appendectomy unless they need one. Therefore, “consumption of health care services” might not necessarily rise much. Answers: 1. They don’t get paid $20K for an appendectomy. That said, their “costs” are unknowable, since no one has really priced costs for services. What hospitals charge varies widely – the uninsured, ironically, are charged the most. Hospitals bill each insurance company differently, based on the plan’s reimbursement guidelines. It would be nice to have single payer to beat some of the bullshit back. 1. Well…I’ve worked in an ER, and trust me, people come in with stuff that our parents (I’m 44) would have waited on, or treated at home (sprained ankle, run-of-the-mill menstrual cramps). I think use has increased since I was a kid. I don’t think the increase was due to insurance, though. ---
**Author:** ![wolfpup](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wolfpup/32/10618_2.png) [@wolfpup](https://boards.straightdope.com/u/wolfpup)\ **Post date:** [September 15, 2014, 2:49am UTC](https://boards.straightdope.com/t/why-exactly-cant-hospital-price-limits-work/697489/26 "2014-09-15T02:49:24Z")
> [@XT](#): > > It’s a game really, necessitated by our convoluted health care system. We basically have the worst of both worlds. It’s not actually a free market system, and it’s not a single payer UHC system. It’s a mis-mash system that evolved, not one that was planned out or thought through. Well said. > [@Mithras](#): > > If you’re controlling prices, will you also be controlling infrastructure and staffing levels? Just last night I heard an anecdote about a local hospital converting space into more elective and profitable procedures. Even if you don’t have increased demand, there could still be a decrease in the supply of routine care. That’s why it’s nearly impossible for government to control prices when it has no control over the rest of the system, as it does in single-payer systems where it not only negotiates hospital and physician fees across the board, but also determines many aspects of direct hospital funding. To conservatives and libertarians, this is “government getting involved in our private lives”. To progressives, this is government doing its job of providing essential public services. > [@kayaker](#): > > When I was discharged, my nurse urged caution, as she felt I was being rushed out. You probably were. The US has one of the shortest hospital stays among industrialized nations. For instance per a recent OECD study, average length of hospital stay for all causes combined was: Canada and UK 7.7 days, OECD average 7.2, Australia 6, USA 4.9. It’s hard to avoid the conclusion that in one situation, a patient stays in the hospital until healthy enough to leave, and in another, they’re out the door as quickly as the payer of their costs can get them out. The fact that US hospital costs are dramatically more than elsewhere – [by factors of 4, 6, or even 10](http://www.huffingtonpost.com/2013/03/26/charts-health-care-costs-americans_n_2957266.html) – doesn’t help, nor does the fact that the administrative costs of dealing with insurance companies typically absorbs [one-quarter of a hospital’s budget](http://www.pnhp.org/news/2014/september/bureaucracy-consumes-one-quarter-of-us-hospitals%E2%80%99-budgets-twice-as-much-as-in-ot). > [@GrumpyBunny](#): > > It would be nice to have single payer to beat some of the bullshit back Indeed. ---
**Author:** ![txjim](https://avatars.discourse-cdn.com/v4/letter/t/f07891/32.png) [@txjim](https://boards.straightdope.com/u/txjim)\ **Post date:** [September 16, 2014, 9:24pm UTC](https://boards.straightdope.com/t/why-exactly-cant-hospital-price-limits-work/697489/27 "2014-09-16T21:24:40Z")
Hospitals more-or-less do have price caps set by contracts with insurance companies and these have little relationship with the price a hospital would charge to an uninsured patient. My son was in the hospital for almost 2 months last year with 40+ days in an ICU. The bill from the hospital services alone (minus Physicians charges and other seperately billed expenses) exceeded 4 million! The insurance company paid less than $600K based on contract costs. We were out of pocket less than 3K. I would consider the $600K a price limit for the insured. The 4M for the uninsured is likely considered uncollectable by hospitals in most circumstances. ---
**Author:** ![wolfpup](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wolfpup/32/10618_2.png) [@wolfpup](https://boards.straightdope.com/u/wolfpup)\ **Post date:** [September 17, 2014, 12:08am UTC](https://boards.straightdope.com/t/why-exactly-cant-hospital-price-limits-work/697489/28 "2014-09-17T00:08:53Z")
> [@txjim](#): > > I would consider the $600K a price limit for the insured. The 4M for the uninsured is likely considered uncollectable by hospitals in most circumstances. And what would you say if the average cost in other countries for the same thing was, say, around $100K? Because that sort of relative differential is indeed what the numbers show. The outrageously high US hospital costs quoted in the article I linked upthread were from a study by the International Federation of Health Plans and were based on actual negotiated insurance company payouts, not on fictional “uninsured” prices. According to the study, the quoted US hospital costs were based on over 100 million claims that were actually paid to thousands of providers by almost 100 different health plans. And you may consider the $3K out of pocket to be a deal, but under most single-payer systems the out-of-pocket would have been zero, or close to it. ---
**Author:** ![txjim](https://avatars.discourse-cdn.com/v4/letter/t/f07891/32.png) [@txjim](https://boards.straightdope.com/u/txjim)\ **Post date:** [September 17, 2014, 3:28am UTC](https://boards.straightdope.com/t/why-exactly-cant-hospital-price-limits-work/697489/29 "2014-09-17T03:28:14Z")
> [@wolfpup](#): > > And what would you say if the average cost in other countries for the same thing was, say, around $100K? Because that sort of relative differential is indeed what the numbers show. The outrageously high US hospital costs quoted in the article I linked upthread were from a study by the International Federation of Health Plans and were based on actual negotiated insurance company payouts, not on fictional “uninsured” prices. According to the study, the quoted US hospital costs were based on over 100 million claims that were actually paid to thousands of providers by almost 100 different health plans. > > And you may consider the $3K out of pocket to be a deal, but under most single-payer systems the out-of-pocket would have been zero, or close to it. I would say that the delta between billed rates and insurance payouts is a good reason to have a well managed public system. On the other hand, 3K out of pocket was a deal. I have no doubts that had my son not been at one of two hospitals in the large city I live in that had the expertise on certain equipment and actually had the machine available, he would be dead now. I still need to get over the fear of availability with possible US-based government plans. ---
**Author:** ![wolfpup](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wolfpup/32/10618_2.png) [@wolfpup](https://boards.straightdope.com/u/wolfpup)\ **Post date:** [September 17, 2014, 4:21am UTC](https://boards.straightdope.com/t/why-exactly-cant-hospital-price-limits-work/697489/30 "2014-09-17T04:21:03Z")
As a father myself, and thinking of my son who was hospitalized once and required minor surgery, I fully understand your feelings and I’m gratified that all went well for your son and mine. And I agree with your sentiments about public health care. Your concern about availability under a public system is a valid one. No one – and certainly not I – can credibly predict what a potential US public system would look like, say one that was hypothetically mostly funded by the federal government and administered by the states. But here’s what I think can fairly be said. In systems around the world in all industrialized nations, urgent health care needs are being met in an appropriately timely fashion whether the systems are exclusively public single-payer or some mixed public-private system. This is generally due to an effective system of medical triage. In Canada where I live, the public system is legally the only option for medically necessary procedures if the province accepts federal health care money, which all do. But when my son – and my mother – needed emergency care they received it promptly and with the best possible quality of care. “Wait times” do indeed exist for some procedures but they exist in the form of annoyances for minor matters, not for urgent care. It can indeed be annoying, but the reward for that inconvenience is a per capita cost of health care this is barely more than half of what it is in the US, has basically the same medical outcomes (better in some cases, as indeed is true for many countries in comparison to the US), provides universal care, and has minimal direct costs and zero co-pays. In any US public system, no doubt those who are wealthy and want the convenience of minimal wait times even for minor stuff would be able get it by paying a premium for a private insurance and health care system, as they do in Germany. But the participation rate in a private system would probably be very low, as it is in Germany. The bottom line here relative to the OP is that the primary reason for excessive hospital costs in the US is that it’s a complicated set of inter-related circumstances that are fundamentally all intrinsic to the way US medical practice is funded. And the way that it’s funded, cutting through all the minor tweaks and bullshit, is that it’s funded by an unregulated private market. [Previous page](https://boards.straightdope.com/t/why-exactly-cant-hospital-price-limits-work/697489.md?page=1)