Posted on March 2, 2003
Deborah Socolar, MPH, Co-Director, Health Reform Program, Boston University School of Public Health, comments on price disparities, using the example in the comments about the deficiencies of health reimbursement arrangements: Here's one thought on a issue you touch on. Some might quibble with saying that this is an $85,000 procedure -- "out-of-pocket expenses for the patient of a total of $84,240. That is quite a tab for an $85,000 procedure" -- since one place is CHARGING $108K and the other $56K. It would of course also be quite a tab for even a $108K procedure. But further -- the price disparities help highlight the point that in today's unfree market, where big buyers have the market power to negotiate discounts, charges tend to bear little relationship to costs, and the uninsured and those in smaller plans face big cost-shifts, subsidizing those who could often afford to pay more. If it were a free market, competition would mean prices would tend to converge (as happens with, say, prices in pizza parlors). Of course today's such wild disparities in prices make it absurd to think that people can do very much to price the care they think they might need in the coming year and estimate their o-o-p costs to help decide on plan/"level" of coverage, etc...even assuming no major changes in health status. (Obviously folks just all need comprehensive coverage...) And in a rational system, although I hope we'd pay for much care through global budgets, prices in cases where we do pay for individual services would bear a close relation to costs. Health Reform Program, Boston University School of Public Health: http://www.healthreformprogram.org/
D. Socolar on health care price disparities
Deborah Socolar, MPH, Co-Director, Health Reform Program, Boston University School of Public Health, comments on price disparities, using the example in the comments about the deficiencies of health reimbursement arrangements: Here's one thought on a issue you touch on. Some might quibble with saying that this is an $85,000 procedure -- "out-of-pocket expenses for the patient of a total of $84,240. That is quite a tab for an $85,000 procedure" -- since one place is CHARGING $108K and the other $56K. It would of course also be quite a tab for even a $108K procedure. But further -- the price disparities help highlight the point that in today's unfree market, where big buyers have the market power to negotiate discounts, charges tend to bear little relationship to costs, and the uninsured and those in smaller plans face big cost-shifts, subsidizing those who could often afford to pay more. If it were a free market, competition would mean prices would tend to converge (as happens with, say, prices in pizza parlors). Of course today's such wild disparities in prices make it absurd to think that people can do very much to price the care they think they might need in the coming year and estimate their o-o-p costs to help decide on plan/"level" of coverage, etc...even assuming no major changes in health status. (Obviously folks just all need comprehensive coverage...) And in a rational system, although I hope we'd pay for much care through global budgets, prices in cases where we do pay for individual services would bear a close relation to costs. Health Reform Program, Boston University School of Public Health: http://www.healthreformprogram.org/