Medicine's New Car Pricing

One of the most distasteful moments in life is walking in to a car dealership and knowing that the prices on the vehicles mean nothing relative to the purchase price you must "negotiate."

Once you decide on a car (and your heart's set on it), you are immediately ushered to a nice desk and a polite salesman types on a computer, adds a few numbers to a spreadsheet, lets the speadsheet add in a little extras sales tax and numerous "fees," and then swivels the monitor your way to show you what the real cost of ownership. You smile politely, knowing he's padded the amount with his commission and dealer mark-up, then start negotiating.

At first the dealer is appauled that you would do such a thing. You threaten to leave. Magically a few thousand dollars disappears. You're still not impressed. He asks if you have a trade-in. You say, "No." He offers you dealer financing. You decline and offer cash. He gets his manager. His manager, looking like "Slick Willy," turns up the heat. They walk away. They return and remove a few hundred more. You know other dealerships can do it cheaper. They say best of luck. You walk out, thoroughly pissed. The salesman runs out to the parking lot and offers a final price two thousand cheaper. You stop, and wonder, "who the hell are these guys?" and drive off.

Such is the case with health care pricing, too.

The only problem is, of course, that you're dealing with your health at a very vulnerable moment in life. "List price" in medicine means nothing any longer. Whether your insured or uninsured, the prices that appear initially on your bill mean nothing. You must haggle.

Insured folks have agreed to let most of the haggling be done for them by the insurer, since the prices insurers pay for health care are pre-negotiated with hospital systems beforehand. You, in accepting a particular policy plan, get to "pick" your deductible and co-pay amounts, knowing full well that the negotiators are taking their piece. But that's the price the War Lords of health care system have exacted on the common man in the name of "transparency."

Noninsured folks have it much tougher. They get the list price sent to them after their care and get to feel the impending doom of realizing they've bought a Mercedes when they could only afford a Hyundai. So they make an appointment with the financial assistance office at the hospital. The nice lady there determines your ability to pay. If your "lucky" enough to be unemployed and have little income, you might get a flat 35% off. If not, no worries, an easy payment plan will be arranged. Never mind the bills will continue for years. Never mind that you have to have another operation and another admission in three months.

But even worse are to poor saps who have insurance and come from out of state, or those with tons of cash and don't want the world to know about their illness. They pay full fee. That's how the game goes. And that's why hospitals inflate their prices: "there's money in the thar' hills!" That extra money pays for lots of little extras at hospitals.

To be fair, hospitals aren't the only ones to blame. Like a co-dependent spouse of an alcoholic, the payment system that only pays only 80% of costs and leaves the rest to be paid by secondary insurers or the patient (as Medicare does) further enables this dysfunctionality. The lack of price transparency for our entire health care system is staggering. No wonder no one knows what things really cost in health care and no wonder ANY attempt to estimate costs always underestimates reality (poor CBO).

And so, when we see survey's from the New York Times finding that there are high fees in medicine, I can only say, "Duh!"

Welcome to the world of obfuscation and new car pricing.

Real reform would require no-haggle CarMax pricing but none of the current proposals require this.

If they did, then maybe we'd get somewhere in the health care debate.

-Wes