Market cure for health care? That's a sick joke

One of the arguments often made against government involvement in health care is that it impedes the action of the marketplace which, if left unfettered, could solve all our problems.

Market advocates describe a utopia in which consumers of health services, aka patients, would shop around for whatever combination of quality and price suits their illness and pocketbooks.

I love markets, I think it's great when demand and supply match up in a lovely dance that profits both producers and consumers.

But the marketplace is not the cure for what ails U.S. health care.

I've recently had the opportunity to study this personally.

Last summer it became apparent that I needed a common diagnostic procedure that required going into a hospital and being put under an anesthetic.

Thinking I should accept responsibility as a consumer of health care, as I'm forever being told I should, I asked the doctor what it would cost.

"Don't you have insurance?" he asked.

Yes, I said, but explained why I was asking.

"Don't get me started," he groaned. "I'm the salesman and I don't even know what it costs."

He said he probably should know more about prices, except that there was never one price because providers negotiate different prices with various insurers.

Still, I put my question to pretty much everyone I dealt with as the process of scheduling, verifying insurance, etc., went forward. The closest anyone ever came to a price was "probably about $15,000 or $20,000."

(My topic isn't why costs are so high in the U.S. but I would point out that this is for a procedure that involved my being in the hospital for a total of about three hours, most of which I occupied reading a book on my Kindle.)

When it was all done and the results were in, bills from multiple sources began to arrive: separate charges for the room, the doctor performing the procedure, the anesthesiologist, the pathologist, the nurses, the pharmaceuticals and supplies, etc., etc..

I suspect that no one in my medical chain of care knew or knows the entire cost. In fact, I'm not sure it is even knowable.

Today, almost four months after the procedure, all the bills are in, or at least I think they are. Some are even paid.

But as I was making arrangements to pay the largest outstanding bill, another surprise popped up. Calling to set up a payment schedule, I was quickly told that I'd get a 20 percent discount, amounting to almost $700, if I paid it all now.

So, as a shopper way back last summer, if someone had actually given me a price, should I have assumed a 20 percent discount or figured I'd pay the full freight?

Using a spreadsheet I made some calculations.

As far as I can tell, what I'll call the list price was $14,878.26. Of this, my insurance either negotiated lower prices for or paid to reduce that by $10,798.15. That left $4,926.73.

If you figure a 20 percent discount on the appropriate bills (available only for charges over $200), that is cut to $3,971.78. I'll wind up paying something between the last two numbers because I didn't even know about the discount while I was knocking off some of the lower bills.

This brings up another question: what was the actual cost? Not to me, but to the providers?

We can assume, for example, that Toyota knows what it costs to bring a Camry to market, just as Lexmark knows for its printers. But, do health-care providers know what it costs to provide their services? Hard to prove it by me.

I took finance in business school and was a business reporter for years, but I've never seen anything quite like this. The very fact of all these bills and all these charges makes it hard to believe that anyone can see the big picture.

And if they don't know, how can the patient?

As a consumer of medicine you don't get price estimates, you just get bills after the fact. Imagine agreeing to buy a car and then receiving separate bills for the suspension, drive train, tires, electronics.

Even more peculiar would be paying a third party (such as insurance in medical care) to make mysterious side deals that affect your cost. Let's not even talk about the ex post facto 20 percent discount.

And think how medical professionals and patients would function in a more market-oriented environment.

What if my doctor named a price and I countered with a lower one? Where would that leave him ethically and me medically? What if I thought I could dispense altogether with the anesthesiologist and that big charge, relying instead on the deep breathing that got me through labor and delivery?

Put this way, the marketplace solution seems ridiculous. I can decide to wait a year to buy a car without any potentially irreversible downside, but not so with a diagnostic test. Conversely, if a hospital were offering a discount on the test I wouldn't be tempted to get it if I didn't need it.

And a marketplace presumes that supply and demand can meet each other in a reasonable time frame, mediated by pricing. It's possible to ramp up production when demand increases for cars or computers but medical schools can't spit out new neurologists, oncologists, pathologists if there's suddenly a bull market in those specialities.

Don't get me wrong, there's plenty of room for improvement in health-care delivery in this country. We don't even have a system, we've got something like a dysfunctional hockey game with every player — hospitals, pharmaceutical companies, insurers, physicians, medical equipment makers, you name it — a team of its own chasing after the puck, or buck.

I'm even on one of the teams. When the photos of my insides arrived showing there was nothing unusual there, I realized I own stock in the company that sells the machine that produced them. Score one for me.

But that doesn't change the fact that this game desperately needs a referee — a role better suited to government than the marketplace.