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Health Care Politics

How Hospital Administrators Hide the Umbrella

From Megan McArdle on the absurdity of medical billing practices: It is clear our current system of medical billing is broken. (Follow the link for the umbrella story.)

But it set the tone for all that followed. It read, “1 ACETAMINOPHE TABS 325 MG.” The charge was only $1.50, but it was for a generic version of a Tylenol pill. You can buy 100 of them on Amazon for $1.49 even without a hospital’s purchasing power.

Dozens of midpriced items were embedded with similarly aggressive markups,

via How Hospital Administrators Hide the Umbrella – The Daily Beast.

Can you imagine going down to the Chevy dealer and picking out a new car, selecting the color and all the options you wanted including the engine, transmission and fancy wheels and then when you ask the salesman how much he won’t tell you?

“We don’t know the fee.” He says, “We will just send you a bill after you pick up the car.”

That’s nuts, no one would consider buying a car that way and yet that is exactly the way people buy medical care every day.

The only way this behavior, that is agreeing to purchase a service without knowing the price, is conceivable is that as the patient we actually don’t pay. The insurance company pays so we don’t care. If we were spending our own out of pocket money of course we would care. We would demand to know the actual fee ahead of time and we would carefully weigh the value of the service before agreeing to get it done. Third party payers whether they be an insurance company or the government distort the normal buyer seller relationship.

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