I’m writing mostly to think out loud, and because I don’t know what else to do. I have been quite interested in the health care debate playing out on the national stage as the government tries to slow down the escalating costs of health care. For the most part, I am extremely dissatisfied with their now mandated solutions, mainly because I don’t think they have addressed the underlying problems. I heard lots of politicians talking about the problem of rising costs, and few if any talking about the reasons behind the cost increases. Regardless of the blindness of government “solutions,” the problem remains. I am writing about one encounter we recently had with a local clinic in an attempt to understand the cost better.
A few weeks ago my son decided to put a small eraser up his nose. We tried to remove it without success. Instead of trying to use the hemostat from my fishing tackle box to remove it, we decided to go to the urgent care clinic. We waited about 5 minutes to see a doctor. After showing us to an exam room it took the doctor with proper tools less than a minute to remove the eraser. As there were no other patients, we chatted with the Dr. and staff for about another 5 minutes. We were within the clinic for about 12 minutes, 15 max.
Today we received the bill: $350.
$350 represents much more than a days wages for me. I exchanged it 1 minute of labor. Even though my insurance pays this amount – which is why we have insurance – I’m still a little floored by the amount. I realize that there were years of schooling, there’s probably mal-practice insurance, and there are facilities and maintenance worked into the cost. But where did $350 come from? Who came up with that amount? Is it a national standard for eraser removal? Is it decided by the insurance company? Who sets the amount?
Oh Brian, how much is your son's health worth? This is one of my frustrations. I didn't know until getting the bill how much I would be paying. Why wasn't it $500?
Yet, on the other hand, I don’t suppose I would like the Value Meal price approach to medicine where services and prices are posted on a marquee, or even a system where the consumer could choose between good, better, and best services. But the lack of price transparency and economic feedback is frustrating. Perhaps if I had known it would cost $350 to remove the eraser, I would have been a little more willing to get the hemostat from my fishing vest. With the money saved I could have bought a new sage fly rod.
Patients get free healthcare after deductibles are met, so utilization goes up. I am quick to go to the doctor instead of getting out my fishing vest. As utilization goes up, insurance companies lose money and increase the costs of premiums. I understand that side of the loop. But I'm not sure of the relationship between the procedure costs and the insurance allowances.
Does anyone have any insight as to how procedures get their prices? Why $350 and not $100 or $500?
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The best way I know how to explain it is, medicare averages the rates of particular services around the country and then requires a Doctor, or the institution they work for, to charge a least common denominator charge. Insurance use the same model they only they add 5, 10 and 15 percent what ever they are willing to pay in a particular region. So one procedure on the west coast will cost more than in the south because they know they can charge that and get away with it. Hospitals do not make money on the length of the stay they make money on the number of procedures they preform. So somewhere some one has decided that an erasure in the nose costs $ 360 in this area and somewhere else its $500 and yet in another area its $225
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