Indeed, I once had a chat with a healthcare economist - she was Deputy Director for Heathcare econ at the CBO - about insurance. She was of the opinion that the presence of insurance companies in the equation inflated prices simply by being willing to pay that rate. That is, their presence led to a smaller amount of cost-saving innovation in the industry because there wasn’t the downward price pressure that a true market would place on prices. How much that is? I don’t know and I don’t think she did at the time, either.
I do have confidence in the market that this series of events:
I provide service X.
Patient needs service X.
My prices are such that patient can’t afford service X.
I need to find some way to lower costs for service X.
will lead to lower costs over time. Now it’s not perfect because healthcare isn’t a truly elastic market: people NEED to buy certain healthcare services and can’t decide not to buy. But there’s at least a grain of truth to the fact - in my opinion at least - that prices are higher due to the market distortion of insurance companies.
However insurance companies do have this information while negotiating rates with providers. But rates only probably make sense in the aggregate - over thousands of patients for a given problem you can figure out the mean cost, but there is a lot of variance for individual patients.
Plus, doctors might be forgiven for concentrating on the treatment with the best chance of a cure rather than the cheapest one. Not knowing what the evidence says about a treatment is probably more important than not knowing about the price.
Both these are usually optional. That means a customer can shop. It is hard to shop for the cheapest emergency room.
I doubt it would make us better off in the long run. First,one can make the counter argumentation insurance companies themselves should be enough to lower cost as they have an incentive to pay out as little as possible to providers. Similar to how Walmart squeezes it’s suppliers.
Secondly, the reality is that the market for a good amount of healthcare is essentially coercive, which means markets will fail A LOT. The market price for a setting a broken leg might be a few hundred dollars, but would you balk at paying $2k in the moment? Dynamic pricing has to occur to make the market profitable for providers, but I think most people would balk at that. There also the information asymmetry that exists between doctors and most patients, and the fact that the bare costs for many medical procedures and drugs are more than most can comfortably afford. There is simply no way a guy who has gone to school for more than 12 years to become a specialist is gonna work for peanuts. Lastly, people want an affordable, MORAL healthcare system. Even if the market can provide the former, people won’t like the fact that it’s gonna leave many, many people to die of fairly pedestrian things due to lack of money.
The treatment you can afford works better than the one you can’t. There are lots of medical situations that aren’t optional, but aren’t urgent, either: hernia surgery, gall bladder surgery, labor and delivery, joint and back surgery . . tons of common procedures. The fact that it is often simply not possible for out of pocket patients to predict the costs of these sorts of thing in advance means that there is no shopping on price at all, so no market forces.
In addition to this, while you can shop for the cheapest place to deliver a baby, you will be limited to those places close enough to be practical. There is such a wide variety of potential procedure even for relatively simple things like labor that few people can characterize them all. If one hospital was cheaper than another in all procedures that would be one thing, but that isn’t usually the case.
Having your car worked on is similar in the sense that sometimes they discover stuff that costs more. However for cars you can limit expenses to the value of the car or less. Not so easy for surgery.
Given the wide variance of costs for hospitals close to each other in that recent report, it is clear that the market does not work. And insurance is part of the market!
I bet you could get one if you wanted to. I don’t remember if I got a list of their charges or not - but the body shop billed the insurance company directly (just like a medical preferred provider plan) so I didn’t care much. I bet the insurance company got a good deal by driving business to the body shop.
I was looking at the itemized costs for my first carpal tunnel release surgery in September–and just had the other arm done in December–and noticed that the cost for the gauze dressing and ACE bandage came to $40.00.
Hell, I’ve got brand new packaged gauze dressing and ACE bandages in a bag in my closet that I would have brought with me had I been allowed to do so. That could have saved a bit of money. But then they wouldn’t have been able to bill for it. Or it wouldn’t have been sterile enough or something. Whatever. Forty bucks is a huge chunk for gauze and a stretchy band with two little metal clips…isn’t it?
After a recent accident, my car came back repaired and with an itemized bill. I paid the deductible directly to the body shop and the insurance company paid the rest. I did not see what was paid to the other party, but I probably could get it if I cared to. I do know the total cost of the claim and could subtract what the body shop got and see what went to the other people.
I bet you could get one if you wanted to. I don’t remember if I got a list of their charges or not - but the body shop billed the insurance company directly (just like a medical preferred provider plan) so I didn’t care much. I bet the insurance company got a good deal by driving business to the body shop.