Cases for Competition, not Insurance

An Andrew Sullivan reader needed a (seemingly) straightforward outpatient procedure. Her bill was almost 300% of the estimate. She complains that “the price of health care procedures is nothing but a dart thrown at numbers on a dart board.”

Of course the provider has acted in bad faith, but I think the entire insurance system is the real culprit. Providers over-bill because a) someone else is paying (in her case they knew she was insured) and b) they know they’ll get away with it (who are insurance companies going to complain to?). A mechanic will have you sign off on some percentage above the written estimate, and clearly itemize your charges; because the competition will also. If you get ripped off, you won’t come back and you’ll try your best to make sure others won’t either. Also, it’s my hunch that medical providers who see you walk in the door as a future fight with an insurer (who might not pay them)–rather than as a direct customer–probably aren’t going to be as motivated to make you happy.

Another Sullivan reader is baffled trying to predict the cost of a child delivery…also due to an incredibly complex insurance system.

Of course it’s not practical for everyone to know the cost of most medical procedures, but in the system we have now, almost no one does, and that’s a great environment to produce costs that rise past their real value.

Update: Even more evidence that prices are screwed up by the insurance system.

Health reform is absolutely necessary, and I support efforts to prevent insurers from ripping off customers and making care more accessible to those who need it, but HR3200 means mandatory insurance for even smaller and more common procedures, which seems exactly the wrong direction to go if our goal is to control costs and encourage competition among providers.

Although undoubtedly there’s a level of anti-government propaganda in this piece, Stossel’s “Sick in America” is something every proponent of more insurance should watch:

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