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September 5, 2007
By: Kevin Drum

HEALTHCARE WATCH....Marc Cooper spends 20 hours in the hospital and tells his story here. Price of stay without insurance: $116, 749. Price with insurance: $4,730. Only in America, folks.

Kevin Drum 9:50 PM Permalink | Trackbacks | Comments (30)

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Why is this not considered price gouging of the worst sort?

Posted by: notthere on September 5, 2007 at 11:07 PM | PERMALINK

I spent 5 days in the hospital. No insurance. Total about $2500 dollars. Most hospitals have aid programs for those not on medicare or caid. Cooper's type of story doesn't fly.

Posted by: mick on September 5, 2007 at 11:12 PM | PERMALINK

Two rules for entering a hospital without insurance:

1) Do not sign any document that allows the hospital access to your finances (read carefully before you sign anything.

2) For major procedures, hire a lawyer immediately after leaving the hospital. Make sure the hospital understands you will do this before they send you a bill. Lawyers are expensive, but they are cheap compared to how much hospitals overcharge.

Posted by: fostert on September 5, 2007 at 11:17 PM | PERMALINK

Unfortunately it does, if he was in the CCU. ICU stays are hideously expensive.

Negotiating with the hospital is possible, though, even for self-pay patients. Like student loan and mortgage companies, they'd rather get something than incur the costs of going to collections.

Posted by: chinois on September 5, 2007 at 11:18 PM | PERMALINK

Did you see the comment by Woody blaming it all on malpractice? New Zealand does it better, apparently:

"A couple of days ago, I read about a woman in New Zealand who was treated by the government doctor and had her little finger amputated by him for no good reason. She took her complaint to the government commissioner in charge of such accusations, and he found the doctor at fault and instructed him to apologize to the woman. No money, just apologize. The doctor did not and there is no penalty if he doesn’t follow the order. The woman said, “All I wanted was an apology.”"

Posted by: Roddy Pudding on September 5, 2007 at 11:19 PM | PERMALINK

Cooper's story is probably correct. Hospital typically mark up the cost of items 300% and charge for everything they can think of (taking vitals,etc.) However since most health insurances, including medicare, pay per DRG (diagnosis related group), they laugh at the charges and pay the negotiated fee in the contract the hospital signed. For uninsured patients who try to pay their bills, I advise them to tell the hospital they will pay the medicare rate- hospitals would rather get something than nothing at all.

Posted by: gyp on September 5, 2007 at 11:21 PM | PERMALINK

Hospital typically mark up the cost of items 300%

Must be the same guys who price movie theatre concessions;>

Posted by: Martin on September 5, 2007 at 11:49 PM | PERMALINK

Well, if you don't have "insurance" (read: protection), then clearly you have saved so much money on premiums that you can afford a bazillion dollars for a band-aid and some aspirin.

Posted by: craigie on September 6, 2007 at 12:04 AM | PERMALINK

...5 days in the hospital. No insurance. Total about $2500 dollars. Most hospitals have aid programs for those not on medicare or caid...

Don't know what state you are in, mick. but most of the "hospital aid programs" you mention are actually per incident Medicaid which have been instituted to prevent smaller hospitals from folding under the uninsured onslaught. Medicaid usually pays 10-15% of actual costs which is why hospitals then feel justified in gouging others.

Many, if not most, uninsured don't qualify for one of these programs either, which is why medical horror stories continue to abound. You were lucky, buddy. Very, very lucky. Don't generalize your situation.

For the vast majority of uninsured who do not have mick's luck, gyp's advice is good. If you really can't get them to do that, offer to pay the DRG rate prevailing at the largest local HMO. Either will be far less expensive than the rack rate the uninsured are otherwise charged.

Finally be sure to talk to someone from the financial office before you leave the hospital. It's usually easier to get that rate down if it's negotiated in advance rather than after they've piled up the charges. And talk about a payment plan also.

Just what you need when you're sick and frightened, I know. But that's the reality in America today for the uninsured - which is everyone when your insurance carrier wriggles out of paying...and they very often deny legitimate claims just to see if they can get away with it.

Don't forget the appeals process and lawyers in that case, although you'll probably end up in collections before they finally pay up. Negotiating with the hospital can delay or forestall that.

Jolly, huh?

Posted by: caduceus on September 6, 2007 at 1:17 AM | PERMALINK

I was about to chastize mick for assuming that those hospital aid programs even begin to cover the number of people who need them, and inform him that most don't even qualify for them, but caduceus did it much more thoroughly and eloquently.

Posted by: shortstop on September 6, 2007 at 8:31 AM | PERMALINK

Falling through the cracks in America:

A 12-year-old boy from El Salvador (legally here) who is on the soccer team I coach twisted his knee while walking the dog three weeks ago. He loves soccer and came limping to practice & to a recent tournament. I asked him if he had seen a doctor, and he said no, his family doesn't go to doctors -- they take care of themselves. Needless to say the boy sat out most of the practices and games.

At that first practice after his injury he asked me to buy him an Ace bandage for his knee, and that proved to be it for his treatment -- a $10 bandage from CVS. No x-rays, no MRI's, just Dr. Coach.

That was two weeks ago. He says his knee doesn't hurt now and that he wants to play. I let him play as much as he wants, but I will always wonder about the condition of his knee.

Our kids deserve better than just Ace bandages for knee injuries.

Posted by: pj in jesusland on September 6, 2007 at 8:59 AM | PERMALINK

$4 grand is $200 per day for a hospital bed seems efficient. Doctor fees would be separate.

The point of the article is why are hospitals inflating their bills, fraudently, by $112,000?

The answer? The progressive insistance that government get involved with the insurance business. It is out and out, legalized fraud.

Posted by: Matt on September 6, 2007 at 9:24 AM | PERMALINK

I give you the Piss Rich government health system, consisting of a wad of cash and a personal computer somewhere in Washington DC.

Here is how it works.

The computer pays every North American citizen for a securely delivered bottle of piss. The actual peeing must be verifiable.

The computer programs then directs accurate immuno assay drug detection on the piss. Based on the result, the computer buys another bottle of piss from the citizen for a fixed time. Further the computer program offers piss incentives if the citizen can reduce a detected drug.

For example, my computer program might offer John Doe: " Stop smoking for 24 hours before you piss and I offer you an additional $100 for a bottle"

The computer might offer more for a bottle before next week, and so on.

My health system will be 50% more efficient than anything yet conceived. It will turn golden piss into golden dollars.

Posted by: Matt on September 6, 2007 at 9:41 AM | PERMALINK

Was this the hospital run by the two sisters who shipped small items to Iraq? Nine hundred thou for some washer rings, sounds about right.

Posted by: thethirdPaul on September 6, 2007 at 10:12 AM | PERMALINK

Earth to Matt. There is no government health care system in place other than medicare which by all accounts( other than the price of prescription drugs)seems to be working quite well. What are smoking crack or something. Get your facts staight.

Posted by: Gandalf on September 6, 2007 at 10:49 AM | PERMALINK

this sort of reminds me indirectly and perhaps inversely, of what happens with tuitions at well-endowed private schools. The "rack rate" tuition is outrageous, but a healthy proportion of the student body receives financial aid, up to a full ride (including no loans) for those who can't afford the full rate. Obviously there are differences--starting with the fact that the discounts are generally progressive (ie the richer you are, the more you pay, up to the full rate) and that there are still a fairly high proportion of students whose families pay the full rate (which indicates that economic integration in such places hasn't really happened to a huge degree). Still, there's that realization that the "outrageous number" shouldn't always be taken at face value.

So, when does a hospital or doctor ever receive the "outrageous number" in full? Who pays that amount? The more likely scenarios are that the patient has insurance and the hospital receives a much smaller amount, or the patient has no insurance, and likely also little money, so the hospital can't collect the money and either writes it off or puts the patient through bankruptcy, at which point they STILL don't collect the money. There seem to be few people with loads of money and yet no health insurance (the inverse of the private college scenario). So the question is, who are those inflated fees for? Why do they exist? What purpose do they serve?

I wouldn't be surprised if they are some mutated relic of a past system that made some sense, but they don't make much sense now.

Posted by: JMS on September 6, 2007 at 11:46 AM | PERMALINK

A few years ago I had a response to a bee sting and ended up taking a ambulance ride to the hospital (standard treatment for bee stings: give the patient a shot of adrenalin and tell him to relax, as if you can relax in the middle of an adrenalin rush). About six months later I received a passed due notice from the ambulance company. I called the ambulance company to assure them my insurance would eventually pay. The ambulance company representative asked me how much overdue the bill was, and when I said six months, she just laughed and said not to worry, there was no problem, and it typically took much longer then that for insurance companies to pay. I just wish I could get away with telling my creditors they will get paid sometime next year.

Posted by: fafner1 on September 6, 2007 at 12:44 PM | PERMALINK

I was between jobs (no coverage and no COBRA) and my son needed to go the emergency room twice over a short period of time. When the bill came I asked the hospital if they could charge me their negotiated rate with major insurers. The answer was no. I said look, I'm sure you have at least a 50% non-payment rate among those who are uninsured and I'm offering to pay (on a monthly payment plan) but I'd simply like the rate you consider 'full payment' for those who are insured. Response again was 'no'. Look I said if I don't pay you are going to sell this debt to a collection agency for a tiny fraction of the discount I'm asking for. Still no. I couldn't even get anyone to begin to consider a negotiation. I guess I should have gotten a lawyer.

Posted by: joe on September 6, 2007 at 1:16 PM | PERMALINK

So you are invoicing for a large amount, and then settling for a much smaller payment. Might there be some tax implications due to a write-off?

Posted by: royalblue_tom on September 6, 2007 at 2:05 PM | PERMALINK

I get the sense that this was a non-emergency procedure.

Did he ask for a price estimate in advance? Did he ask, as most of us do with all of our large purchases, for a written estimate or quotation? Did he get such estimates from two or three competitors? Did he shop around?

Of course not! Because in a system where someone else is paying the bills, we have not incentive to shop around. So providers have no incentive to compete on price or to worry about productivity and cost control.

If you went into buy a car, concerned only with the quality of the car, and never asked the price and then got a bill for $100,000 a few weeks later, would you be surprised?

So this is a dead-obvious outcome from the health care system we have. By the way, I have a high-deductable policy which causes me to shop around, because costs come out of my own pocket. I ask questions like, is that extra CT scan really necesary?

It's incredible to me that given this situation, the solution of this blog's author and most of his readers is not "we should find a way to have individuals experience both the cost and benefits of care, because only they can make these tradeoffs for themselves and shop around for better options" but is instead "lets just turn it over to the government, since they do such a good job with Iraq and the mail and our schools"

Posted by: coyote on September 6, 2007 at 2:29 PM | PERMALINK

Yep, it sure sounds like a good health savings account would take care of this problem.

Posted by: Keith G on September 6, 2007 at 2:37 PM | PERMALINK

One can certainly question the necessity of various procedures, or forego them altogether and take on the risk that entails, and save money that way. However, that is entirely different from shopping medical services based on price.

Call up some doctors' offices or hospitals and ask them what procedure X costs. You will likely get no answer or one so vague that it's useless to you. Likewise, procedure X probably means 10 different things to 10 different doctors. So, good luck getting an apples to apples comparison.

On my insurer's website I can look up prices for various procedures. The best they can offer is a range that covers a 30-40% variation in price...and these are the people the insurer actually has a contract with. No one would buy a car for $20,000, give or take 30%, so it's ridiculous to suggest that such a consumer approach works in regards to health care.

Posted by: Joe Bob on September 6, 2007 at 3:27 PM | PERMALINK

So many people seem to have not read the actual post: Cooper did not have to pay $4,000 for his hospital visit. He didn't pay a dime.

What happened is that his insurance company was presented with a bill for $100,000 and agreed to pay $4,000, which the hospital then considered payment in full.

Next time I buy a car, I'd love to be able to tell the dealership, "I know the sticker price is $30,000, but I'll give you $1,200" and have them agree as happily as the hospital did. I have a feeling they might not.

Posted by: Mnemosyne on September 6, 2007 at 3:28 PM | PERMALINK

Yep ,it sounds like Healthcare for profit is fixed.fixed.fixed.fixed.fixed.fixed.fixed.fix.........!!!??>?>?!!

Posted by: john john on September 6, 2007 at 3:32 PM | PERMALINK

Here's an even better idea for elective surgery, based on the 'as if I were buying a car' model.

After I got my diagnosis, I would go to TripleBypass.com and figure out surgeon's invoice for that procedure. Then, I would add in the options I want, like a private room at the hospital. Finally, I would come up with the price I were willing to pay, email it out to the internet sales departments of all the best hospitals in town. First hospital to agree to the price gets my business.

I know plenty of people who have bought cars just like that. So, there's no reason it wouldn't work for heart surgery, right?

Posted by: Joe Bob on September 6, 2007 at 3:36 PM | PERMALINK

So many people seem to have not read the actual post: Cooper did not have to pay $4,000 for his hospital visit. He didn't pay a dime.

What happened is that his insurance company was presented with a bill for $100,000 and agreed to pay $4,000, which the hospital then considered payment in full.

Yeah, but in those people's defense, the wording of Kevin's post does make it sound like Cooper's non-covered portion was $4,730. Cooper's post explains what really happened, of course.

Posted by: shortstop on September 6, 2007 at 3:47 PM | PERMALINK

A lot of the comments here are missing the point. Hospitals over-all have stated (list") prices that are 3 to 5 times the actual revenue they receive via negotiated arrangements with the payors. (About 3x for insurance, and 5x for Medicare.) This means that conventional market-based economic analysis *doesn't work*, because prices in the health care sector don't work to equilibrate supply and demand.

Posted by: Gwailo on September 6, 2007 at 5:06 PM | PERMALINK

Yeah, but in those people's defense, the wording of Kevin's post does make it sound like Cooper's non-covered portion was $4,730. Cooper's post explains what really happened, of course.

True. It didn't really annoy me until we got to the standard But-if-he'd-shopped-around-he-wouldn't-have-paid-that talking point.

Posted by: Mnemosyne on September 6, 2007 at 8:55 PM | PERMALINK

If only the DMV was running it, it would be completely efficient and cheap!!

Posted by: e.plurbus on September 7, 2007 at 2:19 PM | PERMALINK

insurance cheapest rate car

Posted by: car cheapest insurance bad on February 2, 2008 at 2:13 AM | PERMALINK



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